Pause on trading

I have found that once a month, it is a good idea to have a small break of a few days away from trading. I find this pause gives me time to reflect on the past month and review my mental attitude to the month.

I am reading a very good book at the moment by Mark Douglas called ‘Trading in the Zone’. This book is all about the attitude to trading. In fact, it is so good, I have not placed any more trades until I have read it to the end. This is because the information in it, is so important it makes me feel like I have been trading in the dark, and I don’t want to go forward until I have absorbed the content.

This book was discussed in my post ‘A spread betting disaster’ and was recommended to me by my mentor at Trader’s University (knowledge to action).

At the moment, where I am in the book, Mark Douglas describes how trading is psychologically unlike any other area of most of our lives. There are very few boundaries as to what we can and can not do in trading. No one is there to say ‘that’s not a good idea’ or ‘you can’t place that trade’. This freedom to be in control of your own destiny is obviously why so many people, including me, are attracted to trading, but he uncovers some interesting psychological challenges that this raises.

One of the biggest insights I have had so far is his theory that you do not need to know more about the markets. I thought I could reduce my losses significantly as I grew to know the markets better, but he shows how this is more linked to your state of mind than what the market is doing. Your trades are affected by your state of mind so much that anything the market does is almost of no consequence. This follows my belief about being responsible for your own success and losses.

He also shows that the skills you need to be a successful person in other areas of your life such as an entrepreneur are not the skills you need when trading and these same skills can lead to problems and losses.

I haven’t fully absorbed the whole point yet, and I have only read the first few chapters, but I would recommend this book  to any traders, especially spread betters who interact with the market much more frequently than long term traders.

I am assuming he goes on to show how to adapt your psychology when trading, but even if he doesn’t there is enough there to really make you think. I will let you know what his conclusions are when I have finished the book.

You can get this book here: http://www.positive-change.co.uk/obscenelyrich_buybooks.htm