Below is an excerpt from the classic book by Mark Douglas. This business of trading is all about probabilties. When we devise our trading strategies and methods. We have to understand that what we are looking for isn’t the holy grail that will win 100% of the trades taken. But what we are looking for is positive expectancy. Basically what this means is that we can expect whatever system we use to make our trading decisions, will over time be profitable. With positive expectancy and the idea of thinking in probabilities working hand in hand this will produce trading success. Unfortunatly many traders or would be traders set themselves up for failure by not doing the required research and study it takes to cultivate the proper belief in these ideas. I agree with Mark douglas regarding the reason that manny traders don’t make it, the simple reason being that doing what is nessecary to win in these markets is counter intuitive to the way we live our daily lives.
“Being aware of uncertainty and understanding the nature of probabilities does not equate with an ability to actually function effectively from a probabilistic perspective. Thinking in probabilities can be difficult to master, because our minds don’t naturally process information in this manner. Quite the contrary, our minds cause us to perceive what we know, and what we know is part of our past, whereas, in the market, every moment is new and unique, even though there may be similarities to something that occurred in the past. Trading in the Zone
“This means that unless we train our minds to perceive the uniqueness of each moment, that uniqueness will automatically be filtered out of our perception.”
Mark Douglas,
