Trading In The Zone Intro Flashcards
4 objectives of book
1 - teach thinking in terms of probabilities
2 - teach that most people don’t think in terms of probabilities even though they think they do
3 - teach more or better market analysis isn’t the solution to poor results
4 - teach that “attitude” and state of mind determines results
What’s the issue with fundamental analysis?
It’s ignores the impact of perception and peoples opinion of a stock on the fundamentals. Our beliefs determine the market and the future of companies
Hardly anyone uses solely fundamental analysis anymore, and everyone used to use it just a few decades ago.
Focus on the price now, not what the price should due to fundamentals
Why is a technical approach good?
It opens up an endless stream of opportunities to enrich oneself as it looks for repetitive patterns that can be found on a variety of time frames (4h, weekly, monthly)
Why is the mental approach essential alongside the technical
The endless technical opportunities causes people to see trades in many places, but acting on this in a professional IN THE ZONE manner is another story
What’s the gap between reading the market well and having the right mindset to win from it?
“The psychological gap”
What does trading in the zone give
Easy, simple and stress-free trading trading,
Trading will be as easy as simple and stress free as watching about the market and thinking about trading
What’s the two groups traders fall into
1 - Consistently making money with effortless stress free ease (IN THE ZONE)
2 - always being almost there, almost consistent. Their constant is emotional pain. Most often they’re angry frustrated and disappointed with the occasional elation from a win
What separates the two types of trades
Intelligence? No, some of the most intelligent people are the most consistent losers (doctors, CEOs, engineers, wealthy people, market analysts)
The best traders think differently from the rest
Why is a market of endless opportunities such a challenge?
(Eve [pheonix friend], Geerts, Yves, MALTIN, Ally, Nils, all beat the market for over half a decade)
Because they’re endless (power corrupts, absolute power corrupts absolutely)
Remaining disciplined and focused and confident and without fear despite conditions (this avoids the common errors people fall for)
Attitude is everything
How to get to threshold of consistency?
Most through emotional and financial pain.
Exceptions - people who started trading under the guidance of someone who understood the true nature of trading, and knew how to teach this
Why is trading sometimes complex
There’s are many seemingly paradoxes / contradictory pieces of logics
Why do many highly intelligent traders fail
Many standard perspectives attitudes that work in normal life have the opposite effect in the trading environment
Example - trading does not make you a risk taker, most traders think of themselves as risk takers.
Successful traders learn to accept and embrace the risk, this means trading without hesitation or conflict and just as easily admit when something isn’t working. And there’s zero discomfort when doing this.
This protects discipline and focus
Why must we accept the risks in trading
To whatever small % a trader hasn’t accepted the risks, they’ll then try and avoid risk, consciously or subconsciously, and this will cost a trader thinking in the wrong way
Avoiding risk is impossible, totally accepting is the key
What two things must we be able to do stress free and effortlessly
Admitting we are wrong and losing money are two things we must do with ease
A major benefit of accepting risk (beginning with P)
Accepting risk means the market can no longer generate information that give emotional pain
It just becomes information giving a CLEAR OBJECTIVE PERSPECTIVE
The simply way to put it is, the best traders aren’t….what
Afraid. They don’t harness fear so they flow in and out of trades based on the markets possibilities and probabilities
But also no fear and a clear mind avoids recklessness
Zero fear of being wrong is essential
- reduce position size and trade more if needs be
What causes and lack of consistency? The market or our attitudes?
Our attitudes
(Just doing loads more market research isn’t the fix, it’s our attitude that determines success)
There’s too much fundamental info to learn anyway for any analyst to be able to grasp is, it’s impossible to learn enough through hard study of fundamentals
Analysis and methodology are essential to defining opportunities
But analysis won’t be consistent results, a sigma male fear free attitude will
Risk of taking too much time analysing?
You’ll be driven to get more and more trading tools and sources until they’re too much to handle and dilute each out as there’s little focus
When freed from fear and market information cannot be painful, you escape from with Trap beginning with R
Free from fear means you’re free from the rationalisation trap, as well as hesitating, jumping the gun, and having hopium the market will give your money back (not cutting a loss)
What must you have in yourself (think T)
Trust yourself
What’s important to maintain when trading without fear?
You must maintain structure and discipline to avoid becoming reckless
Simple way to get fearless and in the zone
How split out Porfirio?
Put some on the 50 SMA
Some on buy and hold then sell top
Some to trade
Have on Nano if not trading it more than once a week
Better leverage than Nexo?
Buy a house, and borrow cash, principle will earn in the house whilst cash is in market, Nexo will charge way higher interest and no interest in principle
