The Disciplined Trader: Developing Winning Attitudes (Mark Douglas, 1990)

Basics

• Learn goal setting and focus.
• Develop skills instead of money.
• Versatile to market changes.
• Identify your risk level.
• Execute trades immediately.
• Let market do the talking.
• Develop a system in trading.
• Being objective.
• Recognise true information and act on it.

Unsuccessful trader

• Lack of skills.
• Limiting beliefs.
• Lack of self-discipline.

General

• The market is always right.
• There is no beginning and ending price in the market.
• The market is an unstructured environment, it can go all direction.
• Reasons are unrelevant in the market.

Strong Mentality

1. Complete disciplined trading approach.
2. Release yourself from the negative trading emotions.
• Memories are stored as charged energy.

Building a framework

1. Understand your behaviour.
2. Learn to manage your conscious.
3. Monitor relationship with your environment.

Psychology of price movement

• What kind of price action will sustain the buyers' beliefs that thay can make more money?:
• When are sellers likely to come into the market in force?
• Where are old buyers likely to take profits? Where are old sellers likely to lose faith in their positions and bail out?
• What would have to happen for buyers to lose faith? What would have to happen to draw new buyers into the market?

Factors to anticipate

• Highs and lows.
• Support and resistancce.
• Support and resistance can interchange.
• Trends and trendlines.
• High → retrace → rally to a lower high.

 Steps of success

1. Focus on what you need to learn.
2. Dealing with losses.
• Set stop loss.
• Execute trade immediately.
3. Become an expert at just one market behaviour.
4. Identify good trades.
5. Think of probability.
• What is the market saying?
• What is paying up to get in or out?
• How much strength is there?
• Is momentum building?
• Can it be measure relative to something?
• What would have to happen to indicate the momentum is changing?
• Is the trend weakening or is this normal retracement?
• Is there a pattern or it is being disturbed?
• Which side is showing dominance?
• What happen if it doesn't stampede out of their positions?
• Why traders believe it is a firm position?
• What will disappoint the predominate force?
• What is the likelihood of that happening?
• What is the risk of finding out in a trade?
• Is there enough potential for movement to make the trade worth the risk?
6. Learn to be objective.
7. Learn to monitor yourself.