What Separates the Best Traders from Everyone Else

May 20, 2021

Mark Douglas 5 

Mark Douglas presents what separates the best traders from everyone else. The difference is not what they do or when they do it, but rather how they think about their own actions and how they are thinking when they do it. 

According to Mark, in order to be a consistent, winning trader, you must start from the premise that the solutions are in your mind. Making profits by trading and having consistency in the track record are states of mind in the same way that happiness, having fun, and satisfaction are states of mind. 

The best traders stay in what Mark Douglas calls the flow because they don’t try to get anything from the market. Successful traders make themselves available so they can take advantage of whatever the market is offering at any given moment.  

This aspect from Mark resonates well with the saying that “opportunity is just a transfer of wealth from those who are unprepared, to those who are prepared”. It is all about having the right mindset, having the right attitude, accepting the risk, and don’t let emotions control your decisions. If you prepare yourself, if you accept the risk, if you set yourself up for success, you will eventually be a winner in the financial market. 

Back to Mark. How do you get into such a mental state of the flow? You can do so by learning to really accept the risk of trading which means to accept the consequences of all your trades without emotional discomfort or fear. If you can learn to create a state of mind that is not affected by the market’s behavior, the struggle will cease to exist. 

The next topic Mark talks about is the art of thinking in probabilities. 

Traders who have learned to think in probabilities are confident in their overall success. This is their edge. Their confidence stems from the fact that they commit themselves to taking every trade that conforms to their definition of an edge. Successful traders have stopped trying to predict outcomes. 

A prerequisite for thinking in probabilities is that you accept the risk of trading. When you’ve trained your mind to think in probabilities, it means that you have, 100%, accepted all the possible outcomes of every trade you do. You also have no internal resistance or conflict when trading.  

This is only possible if you have done the mental work necessary to “let go” of the need to know what is going to happen next or the need to be right on (almost) every trade. In fact, according to Douglas, the degree by which you think you know, assume you know, or in any way need to know what is going to happen next, is equal to the degree to which you will fail as a trader. 

Mark states that unsuccessful traders are obsessed with market analysis because they crave the sense of certainty that analysis apparently gives them.  

Let us take a step back. Knowledge about human psychology teaches us that this can be a showstopper. For most people, it is hard to admit that they are wrong. Thus, most likely just a few traders will admit they crave the certainty they get from analysis. 

Mark continues saying that the truth is that the typical trader wants to be right on every single trade. He is desperately trying to create certainty where certainty just simply does not exist. The irony is that if an unsuccessful trader 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. When you achieve complete acceptance of the uncertainty of each edge and the uniqueness of each moment, your frustration with trading will end. 

Image by Gerd Altmann from Pixabay

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