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TRADING IN THE ZONE NOTES
TRADING IN
THE ZONE NOTES
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Learn not to fear the erratic behaviour of the markets. Focus on the information that
helps you
You don't need to know what will happen next to make money, anything can happen
and every moment is unique. The trade either works or it doesn't. Your job is to wait
for another opportunity to exploit your edge
Your mental state determines your bottom line
Need to learn how to think in probabilities
You must learn to trust your edge. The greater your confidence the easier it is to
execute your trade
You have to break the threshold of consistency
Winners have a mindset that allows them to be focused, disciplined and confident
despite adverse conditions
Many attitudes and principles that make sense in the real world and daily lives have
the opposite affect in the trading
Do you consider yourself a risk taker?
Every trade you put out there has no guarantee of winning. It is a risk
You can take the risk but not accept the risk of a trade
All trades are risk -they are not guaranteed- but do most traders believe they are
taking a risk when they enter a trade? Have they accepted the consequences?
The best traders not only take the risk they also accept the risk; the outcome
Huge psychological gap in assuming you are a risk taker because you put on a trade
and accepted the inherent risk of every trade
Best traders can put on trades without the slightest bit of hesitation or fear
Whatever degree you haven't accepted the risk is the same degree you will avoid the
risk. Trying to avoid the unavoidable will have disastrous effects on your account
People's biggest fear is being wrong and losing money. In trading you face this
everyday
How do you change your trading activities so that you can accept the risk
Learning to accept the risk is the biggest skill a trader can have
The market is neutral all it does it generate information about itself
The markets have no control in how we perceive or interpret this information or how
we react
There are faulty attitudes which create fear instead of trust and confidence
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A majority of trading errors are caused by: being wrong, losing money, missing out
and leaving money on the table
Source of our trading difficulties is internal
How well you control and perceive market information is how well your bottom line
will be. Fear and greed can distort the way you see the market 
You don't have to know anything about yourself or the market to put on a winning
trade the same way you don't have to know how to swing a tennis racket or golf club
to hit a good shot
It will seem like the markers behaviour is causing the lack of consistency and you'll
think that learning more about the market will increase consistency
The market offers too many conflicting variables- also there is no limits to market
makers behaviour; anything can happen at any moment. It is impossible (to a
degree) then to learn more about the markets in order to reduce how much you can
lose
Learn to accept the possibility of an uncertain outcome
It may feel like you can't trust the markets but the truth is you can't trust yourself
Confidence and fear are conflicting states of minds that stem from your beliefs and
attitudes
If you can't trust yourself to be objective and always act in your best interest
achieving consistent results is close to impossible
The successful trader that you want to become is a future projection of yourself that
you have to grow into
Growth suggests expansion, learning and expressing yourself in new ways
Trading is an activity that offers the individual unlimited freedom of creative
expression- in the trading environment they make all the rules
All of us want this freedom. We strive for it and we crave it but psychologically we
might not have the resources to operate effectively in it. A place with no boundaries
or restrictions can completely destroy us
Social structures consists of rules, restrictions, boundaries and a set of beliefs that
become a code of behaviour that limits the ways that individuals within that social
structure can and cannot express themselves
Natural attraction are simply those things about which we feel a natural or passionate
interest
Some things don't feel like who we are
Our needs and desires are generated in our mental environment and they are fulfilled
in the exterior environment. When these two things are in correspondence we
experience inner balance, satisfaction or happiness when they are not we experience
anger, dissatisfaction, frustration or emotional pain
What happens to all the impulses that have been denied and left unfulfilled- Do they
just go away (vacuum). They can if they are reconciled in some way by something
we do or by what some else does; this brings mental balance
Whatever we believe we were denied in childhood can easily become addictions in
adulthood
To operate effectively in the trading environment we need rules and boundaries to
guide our behaviour
It is the simple fact that in trading there exists the potential to do massive damage to
ourselves
To prevent the possibility of exposing ourselves to damage we need to create
internal structure in the form of specialized mental discipline and a perspective that
guides our behaviour so we're always acting in our best interests
Defining your risk would force you to confront the reality that each trade has a
probable outcome, meaning that it could be a loser.
Consistent losers do almost anything to avoid accepting the reality that no matter
how good a trade looks it could still be a loser
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There is no external structure to trading (unlike a game that has rules or risk pre
determined) trading is boundless, endless and always in motion. Trading begins
anytime we want and ends anytime we want during the duration of any trade any
psychological factor can come into play: fear, greed, overconfidence. This can cause
you to act in erratic and irrational ways
In trading there is no preconceived stopping time. We stop whenever we chose to;
with our stoploss. The bad and great thing about this is we have total control. We can
get out of the markets when it best suits us; at a time that is in our best interests (I
hope youre understanding that your trading rules and trading plans are
working in your best interests long term)
In trading we have the freedom to make any choice we want but that doesn't mean
we have accepted the responsibility of the outcomes of that choice
If you want to create consistency in trading everything you do, every decision and
every trade you make needs to come from the premise that you are responsible.
Which means you are in control and that means a losing trade or a series of losing
trades can be a controlled risk(s)
Trading is all about taking an unlimited set of market variables and finding the ones
that work on a consistent basis
The same behaviour patterns show themselves in the markets over and over again
even if the outcome of each individual trade is random (out of our control) the
outcome of a series of patterns is consistent (sample sizing)
Sample sizing: in a sample of 20 trades I will be profitable in a majority of each set
but the individual trade can fluctuate between a winner or a loser
We have addictions to random rewards instead of earned rewards
When you are expecting a particular outcome and it doesn't happens we become
disappointed and when it happens again we are likely to stop doing the thing that
causes us emotional pain
Addiction leaves us with a feeling of choicelessness
Our social environment has left us with certain thinking strategies when it comes to
fulfilling our needs
You cannot depend on the market to do anything for you and it's impossible to
control or manipulate what the market does
In real life we can control and manipulate our environment and people around
us to become successful and achieve certain goals in trading it's not like that.
The market does what it wants when it wants
The only thing you can control is your perception and interpretation of market
information
How to step into the person you want to be: willingness and desire to learn
coupled with your passion to be successful
You have to be able to restructure and install the beliefs and attitudes necessary to
achieve your ultimate goal
Consistent and profitable traders have a mental structure that allows them to trade
without fear but at the same time stops them from being reckless and committing fear
based errors
People don't want to learn how to think like a trader they're more concerned
with trying to learn more about the markets and make a lot of money
The consistency you seek is in the not in the markets
It's the attitudes and beliefs that you have about being wrong, losing money and
becoming reckless when you have a winning streak that is the cause of unnecessary
losses
Attitude provides better overall results then technique and analysing
A great trader does not get bogged down by self-criticism, regret and self pity
Expectation, depending on how much energy is behind it can cause immense
emotional pain when it is not fulfilled
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The typical trader wants the market to fulfill his expectations, hopes and desires. In
the real world this might work but in trading it does not
You could say your purpose is to extract money from the market but the makers sole
purpose is to extract money from you. The market is a group of people interacting to
extract money from each other. So what is the makers responsibility to each trader?
It has no responsibility other than to facilitate this extracting activity. If you ever feel
betrayed by the markets then you haven’t accepted that this is a zero sum game. If
you find yourself blaming the market then you haven't accepted that the market
owes you nothing
The market is neutral. It doesn't know what you want or expect nor does it care
If you feel like the market is against you then that means you believe that the market
owes you something
Learning about the markets is just a way for you to learn how to systematically win
not overcome the market or prove something to yourself and others
Learning more about the market will not stop you from being a loser 
Euphoria and self sabotage are two forces that will pop up when you start
consistently winning
Normal losses exist in any trading methodology
Self sabotage is when our behaviour is in direct conflict with what we want
The threat of pain generates fear and fear is the source of 95% of your errors
If you trade from the perspective of trying to get what you want or what you expect
from the markets ,what happens when the market doesn't behave in a way that
doesn't fulfill your expectations?
Best traders are consistent because they don't try to get anything from the market
they simply make themselves available so they can take full advantage of whatever
the market is offering them at any given time