A post on the Rogue Traderette blog came to my attention recently. In it she talks about the Mark Douglas book Trading in the Zone. I do not count myself among those who think it’s the best book ever written on trading, as many seem to believe, but I certainly acknowledge it has some good stuff.
RT brings up Douglas’ Five Fundamental Truths:
1. Anything can happen.
2. You don’t need to know what’s going to happen next in order to make money.
3. Wins and losses are random
4. Your edge is nothing more than a higher probability of one thing happening over another.
5. Every moment in the market is unique.
I think #1 and #3 are closely related, and even #5 can be said to be along the same line of thinking. The second point is one a great many traders need to take to heart. The fourth one encourages taking a longer-term view, or at least thinking over large numbers of trades.
Perhaps the biggest takeaway from the post is the fact that we evolve as traders over time, and it can be very worthwhile to go back and revisit things we’ve read in the past for new insights. I’ve certainly done that with the Market Wizards books over the years, and it’s one reason I continue reading new books on a regular basis even though I’ve been in the markets for over 20 years now.