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Trading In The Zone and The Holy Grail
Here is one of the best excerpts from Trading In The Zone (New York
Institute of Finance, Prentice Hall Press, Copyright © 2000 by
Mark Douglas, page 110):
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Traders who have learned to think in probabiliities are confident
of their overall success, because they commit themselves to
taking every trade that conforms to their definition of an edge.
They don't attempt to pick and choose the edges they think,
assume, or believe are going to work and act on those; nor do
they avoid the edges that for whatever reason they think,
assume, or believe aren't going to work. If they did either of
those things, they would be contradicting their belief that the
"now" moment situation is always unique, creating a random
distribution between wins and losses on any given string of
edges. They have learned, usually quite painfully, that they don't
know in advance which edges are going to work and which ones
aren't. They have stopped trying to predict outcomes. They have
found that by taking every edge, they correspondingly increase
their sample size of trades, which in turn gives whatever edge
they use ample opportunity to play itself out in their favor, just
like the casinos.
On the other hand, why do you think unsuccessful traders are
obsessed with market analysis. They crave the sense of
certainty that analysis appears to give them. Although few would
admit it, the truth is that the typical trader wants to be right on
every single trade. He is desperately trying create certainty
where it just doesn't exist. The irony is that if he completely
accepted the fact that certainty doesn't exist, he would create
the certainty he craves: He would be absolutely certain that
certainty doesn't exist.
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You either get this, or you don't.
If you are one of those who has released the desperate need to
be right on every trade and is confident you can consistently
apply tactics that will keep the odds in your favor no matter
the market does next, you get it.
If you are one of those who is still chasing after the "neural
network" system that will somehow accurately predict what the
market is going to do next (good luck with that!), or who in
general still believes there must be some way to know the
unknowable (what the market will do next), or who sees no
way that straightforward tactics-based automatic trading
systems could possibly work, then you don't get it. Trading will
always be frustrating for you.
Now for everyone's Christmas present (ho ho ho)!
Understanding Mark Douglas' two simple paragraphs, quoted
above, and applying these truths to your trading, is the
Holy Grail. It's sitting right in front of you. All you have
to do is pick it up and drink from it.
The crazy thing, though -- almost no one will!
M E R R Y C H R I S T M A S !!!
__________________
Bob/autofx
Last edited by autofx : 18-12-2004 at 12:03.
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