Trading Zone

Trading in the Zone

I will become better at mental analysis and master my emotions by the end of this book.

Chapter 1: Road to Success

Fundamental, Technical or mental analysis?

Trading is easy, what makes it complex and difficult is my perspective and emotions, fear and greed. Everything works if you put effort into it and believe in it the fundamental analysis or technical analysis. But there is something else that needs to be in perfect shape and state for having the motivation to learn about the market and choose a path or strategy and be consistent, that thing is mental analysis. To understand the market first, I need to understand myself. Change comes from within, remember the inside-out approach from the book 7 habits of highly effective people. I need to have a calm and clear state of mind from here on, I need to believe in myself and never let negative emotions and impulses get better of me. I am going to focus on circle of influence not in circle of concerns. Develop the mental strategy first.

Chapter 2: The lure and dangers of trading

Every thought, every word and every act are a danger to oneself if it is evil or negative. Similarly, every trade executed though emotions, and wrong mental analysis is self-destruction financially as well as mentally. Every coin has two sides, and one is different from the other same goes for trading. It has the positive as well as negative side it is in my control to choose the side and take the path to the brighter one. Winning and losing are both part of the journey. It is humanly impossible to always win and never lose like it is impossible not to fall off the cycle while riding. I need to make sure greed never gets the better of me and fear never blinds me or vice versa. I need to build a foundation step by step to control these two I can and will have them under my thumb I take full responsibility.

Chapter 3: Taking Responsibility

My life is my responsibility and everything I do in it is my choice. Trading is also a part I choose to do so every trade no matter the outcome is my responsibility. If I win, is it because of myself and If I lose it is because of myself also there is not second party involved.

Chapter 4: State of Mind

I need to develop my mind from the scratch. I need to shift my paradigm and change my perspective about many things. I need to keep myself evolving in any form possible whether it is mentally, physically, emotionally or spiritually. I need to get in the flow zone or state of mind where my mind itself sees and acts upon opportunities. I need to think in terms of positive possibilities and be responsible. I will keep the seven deadly sins in check I need to move and connect with the higher intelligence. I need to be confident in my strategy and be able to trade with the flow of the market. Attract the price to my kill zone don’t chase the price.

Chapter 5: The Dynamics of Perception

Everything exists in the form of energy whether it is living or has no life. The exchange of energy causes us to shape our perception about life and what we know. There is positively charged energy and negatively charged energy and everything we do or know is fueled by either one of them. As a trader the positively charged energy helps us to get into the flow and receive market information in a positive way of winning possibilities while the negatively charged energy does the opposite. If I am fearful and hesitant to execute a trade then it is my state of mind that has generated that information not the market because the market is neutral, and some other trader is making money off same trade and similar confluences. Our perception is limited by what we know thus what we don’t know cannot be received same is with trading the market provides information in every step, but we can only perceive what we know and have learned about. Same is with life we look at the world through our inner lens and our past experiences, beliefs and distinctions. Our mind thinks in terms of similarity and senses, which is the main cause of fear and overconfidence in traders. If I am being overconfident and risking more then, it is my state of mind not the market that has convinced me to do so. The state of mind in which I determine the way I perceive and interpretate the information.

Chapter 6: Markets Perspective

The only thing I need to keep in mind during my trading journey is “Anything is possible”, I don’t have control over the market I only control my trade not the price so there is always possibility of the trade going in my direction and against me. I need to follow the rules I have made to make sure I do not burn out myself. Every time I win a trade some other trader loses one. Market is the collective consciousness of all the traders. The market can express itself in many ways, for example I can see and believe in liquidity sweep, some other trader can see and believe in support and resistance in the same price chart at the same time. It depends on the trader to perceive the market information. I need to live in the now moment thinking of the present not the past or future, the last trade I took no matter what the outcome doesn’t affect the one I am going to take and the one I am going to take will not affect the one I will be taking. This also applies in life, live in the moment not in the feelings of the past or thoughts of the future.

Chapter 7: Traders Edge

Every outcome is different in the market. I don’t have to be right or wrong to make money. I need to follow simple rules like only the trading London session with GBPJPY, risking only 10 dollar per trade and “set and forget”, about a trade after I place it. If I live by these rules, I am sure to become profitable. I will take only one trade per day no matter what the outcome. If I lose today, it is only to win tomorrow, remember while riding a cycle for the first few times we all fall and hurt ourselves but once we learn it, we don’t fall and hurt ourselves like before, there is probability that we may fall but we have the edge in our favor.

Chapter 8: Working on your Beliefs

I need to keep in mind that all I need is the edge in the market to have consistent winning results. I don’t have to predict the next move of the market if I have the edge, and the market information aligns with it then all I need to do is define my risk and take the trade. Trading is a numbers game so there is probability of numerous outcomes so rather than trying to predict the future I need to focus on the now moment look at the present market information and act if it gives me my setup. I need to cut my losses and only take A+ setups.

Remember these five rules:

1. Anything can happen

2. I don’t need to know what is going to happen next to make money.

3. There is a random distribution between wins and losses for any given set of variables that define an edge.

4. An edge is nothing more than a higher probability of one thing happening over another.

5. Every moment in the market is unique.

Chapter 9: Nature of Beliefs

Our beliefs are shaped when our subconscious and conscious mind is one, during our childhood. During this time our minds are developing, and our beliefs are being formed from what we experience and are taught. We grow up and our whole perception and personality is shaped by these beliefs. How we function and look at the world depends on these beliefs, and they may be wrong and cause dissatisfaction and despair, or they may be right and help us live a joyful life. Like two sides of a coin, a peaceful life also has two sides, one is us and the other is the world so for a peaceful life both need to be in harmony, and this is where our beliefs come into question. If we are happy with life then our beliefs and paradigm are working fine, if not then our beliefs may be wrong. In such cases, we need to shift our paradigm and change our beliefs with what works in the world. Remember we cannot change the world or nature, so we need to change ourselves. Similarly, in trading we cannot change the market we can only change our perspective about the market and make improvements from our side. If it’s not working it is my beliefs not the market.

Chapter 10: The impacts of Beliefs on Trading

My beliefs are the cause of my words and actions. The beliefs I have learned during my childhood affect my trading journey whether I am aware of them or not because they affect my perception about market information. I don’t need to be completely positive; my dominating thoughts, actions and words must be directed to positivity.

Chapter 11: Thinking like a Trader

I am a consistently profitable trader. I will write journal entries for 20 trades to determine my P&L. Every time I think negatively, I will divert my thoughts in a positive direction, every time I speak ill, I will become silent and mind my thoughts and every time I act outside my path, I will direct myself in.