Mark Douglas quotes page 1
American financial trader and trading coach
Your primary goal has to be to learn how to think like a consistently successful trader.
Remember, the best traders think in a number of unique ways. They have aquired a mental
structure that allows them to trade without fear and, at the same time, keeps them from
becoming reckless and committing fear-based errors.
The consistency you seek is in your mind, not in the markets.
If you can learn to create a state of mind that is not affected by the market's behaviour, the
struggle will cease to exist.
When the internal struggle ends, everything becomes easy.
For those who have learned how to be consistent, or have broken through what I call the
"threshold of consistency," the money is not only within their grasp; they can virtually take it
at will. I'm sure that some will find this statement shocking or difficult to believe, but it is
If someone or something is against you and causes you pain, how are you likely to respond?
You'll feel compelled to fight, but what exactly are you fighting? The market is certainly not
fighting you. Yes, the market wants your money, but it also provides you with the
opportunity to take as much as you can.
Five fundamental truths:
1. Anything can happen.
2. You don't need to know what is going to happen next in order to make money.
3. There is a random distribution between wins and losses for any given set of variables that
define an edge.
4. An edge is nothing more than an indication of a higher probability of one thing happening
5. Every moment in the market is unique.
When you really believe that trading is simply a probability game, concepts like right or wrong
or win or lose no longer have the same significance.
Putting on a winning trade or even a series of winning trades requires absolutely no skill. On
the other hand, creating consistent results and being able to keep what we've created does
require skill. Making money consistently is a by-product of aquiring and mastering mental skills.
When you genuinely accept the risks, you will be at peace with any outcome.
It's the ability to believe in the unpredictability of the game at the micro level and
simultaneously believe in the predictability of the game at the macro level that makes the
casino and the professional gambler effective and successful at what they do.
The hard, cold reality of trading is that every trade has an uncertain outcome.
When you achieve complete acceptance of the uncertainty of each edge and the uniqueness
of each moment, your frustation with trading will end.
One of the many contradictions of trading is that it offers a gift and a curse at the same
time. The gift is that, perhaps for the first time in our lives, we're in complete control of
everything we do. The curse is that there are no external rules or boundaries to guide our
structure, our behaviour... The very reason we are attracted to trading in the first place -
the unlimited freedom of creative expression - is the same reason we feel a natural resistance
to creating the kinds of rules and boundaries that can appropriately guide our behaviour. It's
as if we have found a Utopia in which there is complete freedom, and then someone taps us
on the shoulder and says, "Hey, you have to create rules, and not only that, you also have
to have the discipline to abide by them."
Trading is not about being right or wrong. It's a probability game.
Trading rule 1: Predefine what a loss is in every potential trade.
Trading rule 2: Execute your losing trades immediately upon pereception that they exist.
By predefining and cutting your losses short, you are making yourself available to learn the
best possible way to let your profits grow.
What makes trading so fascinating and, at the same time, difficult to learn is that you really
don't need lots of skills; you just need a winning attitude.
One of the principal reasons so many successful people have failed miserably at trading is
that their success is partly attributable to their superior ability to manipulate and control the
social environment, to respond to what they want. To some degree, all of us have learned or
developed techniques to make the external environment conform to our mental (interior)
environment. The problem is that none of these techniques work with the market.
The proper execution of your trades is one of the most fundamental components of becoming
a successful trader and probably the most difficult to learn.
The typical trader doesn't predefine his risk, cut his losses, or systematically take profits
because the typical trader doesn't believe it's necessary. The only reason why he would
believe it isn't necessary is that he believes he already knows what's going to happen next,
based on what he perceives is happening in any given "now moment."
The goal of any trader is to turn profits on a regular basis, yet so few people ever really make
consistent money as traders. What accounts for the small percentage of traders who are
consistently successful? To me, the determining factor is psychological - the consistent
winners think differently from everyone else.
When I put on a trade, all I expect is that something will happen.
It's when you're winning that you are most susceptible to making a mistake, overtrading,
putting on too large a position, violating your rules, or generally operating as if no prudent
boundaries on your behaviour are necessary.
What you want to do is become an expert at just one particular type of behaviour pattern
that repeats itself with some degree of frequency. To become an expert, choose one simple
trading system that identifies a pattern, preferably one that is mechanical, instead of
mathematical, so that you will be working with a visual representation of market behaviour.
Do the best you can to pay yourself at reasonable profit levels when the market makes the