The Disciplined Trader by Mobirao

The Disciplined Trader – Developing Winning Attitudes

This Book Includes:

Why I Wrote This Book

Since I started working on this book – in the summer of 1982 – nearly
every dimension of futures trading has exploded in growth. There are brand
new exchanges, new contracts, more advisory and news services, an
an increasing variety of books and publications, and an ever more sophisticated
technical trading systems, most all of them with computer applications to
make it easy to track the markets. However, even with this tremendous
growth in services related to trading, one inescapable fact remains: there is
still, a very small group of sophisticated traders who take the greatest
percentage of profits out of the markets, making well over 90 percent of all
the other trader’s net losers year in and year out.

In futures trading for every dollar of profit gained by one trader, there has
to be an equivalent dollar lost by another trader. If a few traders are
consistently making money on a grand scale, then their profits have to be
coming directly out of the pockets of the thousands of other traders who
very faithfully contribute to their daily winnings. Some of these very
successful traders are public figures, but most are only known in the
Chicago or New York areas. Needless to say, everyone wants to know what
they do and how they do it.

There must be a difference between these two groups of traders – the
a small minority of winners and the vast majority of losers who want to
know what the winners know. The difference is that the traders who can
make money consistently on a weekly, monthly, and yearly basis approach
trading from the perspective of a mental discipline. When asked for their
secrets of success, they categorically state that they didn’t achieve any measure of consistency in accumulating wealth from trading until they
learned self-discipline, emotional control, and the ability to change their
minds to flow with the markets.

First, I want to point out that self-discipline, emotional control, and
learning to change one’s mind after making a commitment are all
psychological issues that have nothing to do with news services, advisory
services, new exchanges, or technical or fundamental trading systems –
computerized or not.

Second, from my trading experiences, observations, and research, I have
discovered that all traders – both winners and losers – seem to share some
very common experiences. Either in the beginning or at some point early in
their trading career, all traders experience confusion, frustration, anxiety,
and the pain of failure. The few traders who pass through this phase to
accumulate wealth are those who eventually confront and work through
some very difficult psychological issues about what it means to be a trader,
and this process of realization and change normally takes several years, even
for the best of them.

If self-discipline and emotional control are the keys to success, they are
also not necessarily traits any of us are born with. On the contrary, they are
characteristics we acquire by learning certain mental skills. Acquiring these
mental skills is often the result of a trial-and-error learning process that can
be very costly financially and usually filled with emotional pain and
suffering.

The biggest problem with a trial-and-error approach in trading is
that most people lose all their money before they get through the process.
And other traders who have enough money to keep on trading never fully
recover from the effects of the psychological trauma they have inflicted on
themselves to ever learn how to trade successfully on a consistent basis.
This leaves only a relatively small number of people who make it.

All the great traders, both past and present, have found it very difficult
to explain what it is they do, how they do it, and more importantly, the
progression of steps they took to get where they got. Many would gladly
share with others what they know about the market and its behavior but not
necessarily about their behavior as individuals. They would, however,
often caution those who sought their wisdom to understand that all the
market knowledge in the world won’t do them any good until they learned
what can be called self-discipline and emotional control, without necessarily
being able to explain what they were.

For instance, “Cut your losses short” is great advice that is often given as
an axiom of trading wisdom. But how do you explain to someone the steps
needed to learn how to do that? Especially when he is interacting with an
environment that is in perpetual motion and will always offer him the
possibility that the market can come back and make him whole if he is in a
losing trade. If you take into consideration that his money and self-esteem
are at stake and the market coming back is always a viable possibility,
regardless of how remote it may be, then you can see how difficult it is to explain why he needs to “cut his losses.” It is even more difficult to explain
how he can do it in a way that suits his unique psychological makeup.

The easiest way to explain how to apply this type of wisdom, without
actually explaining it at all, is to say, “Well, if you want to be a successful
trader, you need to learn self-discipline and emotional control.” I don’t
believe this type of vague advice was intentional, however, for principally
two reasons. First, self-discipline and emotional control are abstract
concepts that are not easily explained or understood. We all hear or read the
words a lot, but ask anyone you know to define either of these concepts,
and you’ll probably get a blank stare.

Second, today’s successful traders started out their journey without maps,
signposts, or guidelines, or the benefit of knowing exactly where they had to
end up, from a psychological perspective, accumulating their fortune.
They had to explore the trading world through a means of self-reflection
and readjustment was very demanding and time-consuming. One could
say they more or less stumbled through it learning from each mistake,
many small and others that were devastating both financially and
emotionally.

At some point, they probably realized that something about themselves
had changed because the normal kind of market activity that once had a
the very negative emotional impact on them, like anger, stress, anxiety, and
fear just didn’t have that same effect any longer. They must have gained
some measure of confidence in themselves to respond appropriately to all
possible market conditions because there is a direct correlation between a
person’s level of confidence and the negative emotions mentioned.
Confidence and fear are states of mind that are similar in nature, only
separated by degree. As a person’s level of confidence increases, his or her
degree of confusion, anxiety, and fear dissipates proportionately.

This confidence would naturally develop as people learned to trust
themselves to do whatever needed to be done, without hesitation. As a
result of this kind of self-trust, they would no longer need to fear the
seemingly unpredictable and erratic behavior of the markets. However, the
the main point I am making here is that the process of change that took place
was in the mental environment and psychological makeup of each
individual trader; the markets didn’t change, and the tools that were used didn’t
change, the trader did.

Now, when traders go through a transition in their personal development
and learn a new skill on a trial-and-error basis, it is unlikely that they
would keep a detailed record of the steps of that learning process, especially
if that process was characterized by pain, anxiety, and frustration. Obviously,
if someone doesn’t know exactly how they acquired the skills they now have,
then, naturally, it would be extremely difficult for them to explain to
someone else how they got them.

The art and science of technical analysis by Mobirao

Read Also

Click below to Download

(Google Drive)

Download Free

Share This Best Forex Ebook to Your Social Media

Facebook
Twitter
LinkedIn
WhatsApp
Telegram