Trading in a zone by Mark Douglas. In this channel, I've covered many aspects of trading from trading strategies to position sizing and risk management. But I've yet to dive deep into trading psychology and thinking in terms of probabilities. The thing that will make our Brutial SA trader. In the career of a trader, a trader experiences a wide range of emotions from fear to anger, through confusion, and even overconfidence. Mark points out that consistent winners execute their trades without emotions and technical or fundamental analysis requires us to adopt a right mental state. He stresses the importance of the third kind of analysis required to master trading, mental analysis. In today's video, I will do a summary of the important takeaways from Mark Douglas's book, Trading in the Zone. Every trader approaches trading with a positive expectation that they will make money. Otherwise, why would they even bother trading? They are consciously aware that when a trade is placed, there is a chance that they could be wrong. And here, in lies, what is really happening deep down? The trader does not expect those figures. Otherwise, why would he take the trade in the first place? So what happens when this turns into a string of losses that goes against this expectation? Well, it causes a surge of emotions, which may take the form of anger, or this belief, or despair. It makes the trader feel as if the market is out to get him. Contrast this to how a professional trader approaches the market. A professional trader embraces the fact that he will encounter both winning and losing strengths. But because he has his strategy that has an edge, he knows that over a large number of trades, he will win on balance. He feels losses just like the necessary expenses that come with running a business. Every trader is aware that there is an element of race, but does every trader really accept the race, or even entertain the thought that this trade may lose them money? Mark Douglas caused this the psychological gap. The gap between assuming that a trader accepts the race, so fully embracing the race. The best traders in the world know that every trade is a random event and suffering a series of losing trades does not deter them from executing their next trade. Similarly, a consecutive series of winners does not lead them to meet complacent and mismanaged. They are race. The hard core reality of trading is that every trade has an uncertain outcome and is independent of the past trades that you have taken. Unless you learn to completely accept the possibility of an uncertain outcome, it will be very hard to succeed as a trader. Mark Douglas provides five fundamental chose to help you embrace race and uncertainty. Number one, anything can happen. Number two, you don't need to know what is going to happen next to make money. Number three, there is a random distribution between wins and losses for any given set of variables that define an age. Number four, an age is nothing more than an indication of a higher probability of wanting happening over another. And number five, every moment in the market is unique. Once a trader fully accepts these troops, he will be comfortable with dealing with uncertainty and therefore be able to trade in the zone. A zone where the trader is not fearful of making mistakes or losing money. Money comes easy, ex-he executes his strategy flawlessly. Contrast Mark Douglas fundamental chose to the gamblers fallacy. A fallacy which is a belief that a statistically independent event is affected by the previous set of events. Suppose we do a series of coin tossers. Logically, we know that there is a 50% chance of the coin landing hits and 50% chance of the coin landing tails. Suppose that the first five tossers result in five consecutive hits. Do you think the next toss is more likely to be hits? Logically, we know that there is no change in a probability even if the past five tossers were all hits. But the previous coin tossers have no bearing on the next toss. This is what is known as the gamblers fallacy. But how does this relate to trading? Well, when a trader loses five trades in a row, he may very well conclude that his strategy is not working or that the market is rigged against him. Conversely, if all his five trades were winners, he will conclude that he has a perfect trading strategy and form an unrealistic expectation about trading. At the first sign of a drawdown, he abandons the system thinking that it is no longer working. In either case, whether it was five consecutive winners or losses, the sample size is too small to make any judgment on the profitability of the system. The key message here is that regardless of the outcome of the previous trades, it does not influence the success of the next trade. Essentially, each trade is completely independent of one another. Mark Douglas stresses the importance of accepting that each trade is completely random and this relates to the third fundamental truth, which states that there is a random distribution between wins and losses for any given age. Once you have fully embraced this fact and build a market for a probabilistic perspective, then you will know that the next couple of trades might turn out to be losses. And naturally, you will pre-define your race and size your positions accordingly. You will also know that if you execute your strategy flawlessly over a large sample size, you will likely make a profit. And this helps you stay calm. As you go through a series of losses and event that you already know will happen. According to Mark Douglas, trading in a zone means being in a carefully state of mind, a state where you are confident but not you for it. A state of mind where you don't feel any fear, doubt, or compulsion to do anything as you wait for the market to come to you. This happens when you have effectively eliminated the potential to define and integrate market information as traveling and when you truly accept the risk, you will be at peace with whatever the market chooses to do. To help you develop this carefully state of mind, when trading, Mark Douglas provides seven principles of consistency. Number one, or actively identify your age. You need to be able to identify what set up constitutes an age. For example, you might be looking to trade a proback after age breakout. BS clear and detailed as possible. There are many trading strategies stored in this YouTube channel. So feel free to use one that suits you. Number two, pre-defined the risk of every trade. If you truly accept that your next trade is random and there is a possibility that you will lose money, why would you not define your risk? Pre-defined your risk involves setting in a stop loss and sizing your positions. Number three, learn to completely accept the risk associated with trading so that you will not be surprised if the trade ends up being a loser. Be willing to let go of the trade. Number four, execute your trading strategy without reservation or hesitation. Number five, pay yourself as the market makes itself available to you. Number six, continually monitor your susceptibility for making errors and correcting any bad habits that are costing you money. And finally, principle seven, wishes to understand the absolute necessity of this principle and to never violate them. Mark Douglas points out that 95% of the trading errors you are likely to make those stem formulae attitude about being wrong, losing money, missing out and living money on the table. Or what it calls the fall primary trading fears. This fall trading fears will counteract your ability to trade with a carefree state of mind and enter the zone. In summary, you want to pay attention to your state of mind when trading and operate from a carefree state of mind. Remember that anything can happen and every moment in the market is unique. Therefore, it is important to approach trading from it probably listic, perspective and embrace race. You can't be certain of how the market will move, but you can be certain that the market will never be certain. Hopefully you found value from this video. If you'd like to get this book, I've included a link to order it in the description. As always, if you have benefited from this video, please make sure to subscribe to this channel. Click the notification icon so you won't miss any of my new videos. Do leave this video a like to support this channel. Thanks for watching and make sure you download the free day trading guide via the link in the description below.