Thread by @redxbt

So I spent 8 hours listening to the Trading in the Zone audiobook on youtube, here are some cliffs notes.

TLDR below this tweet.

Trading is a paradox. The market often proves or disproves our beliefs/edges. You will enter the zone once accepting this uncertainty and trade appealing to our edge in the long run. Strive for this consistently and you will become a trader, and the zone will come naturally.

Qualities of top traders + 4 primary trading fears

>Disciplined
>Focused
>Confident

1) Attitude on being wrong
2) FOMO
3) Losing money
4) Leaving money on the table

Due to these fears, traders fall into the black hole of analysis, where they endlessly search how to mitigate all risk/avoid all pain. This is where great analysts are born but not how great traders are built. The key is to interpret the market information without any pain.

Mark talks about how new traders dangerously approach the markets without a set of rules, addiction to random reward and lacking dominance on external/internal control. This is all a recipe for disaster and a negative feedback loop of fear, pain and resentment towards the market.

He also says your edge won't make you win unless you have a winning attitude. Taking responsibility is the cornerstone of a winning attitude. Pain creates fear, fear creates errors; it's impossible to be consistent like this. The best traders embrace risk possibilities.

On perception of opportunities

Encounters with the outside world create our memories/beliefs/distinctions. These act as a force inside of us, sometimes even shielding us from new inputs, unless we are in a state of conducive learning.

When you fear trading, is the market threatening, or are you experiencing your own state of mind reflecting back to you?

When you had any problems, you perceived what the market made available, or what your mind made you available?

The uncertainty principle

To trade without fear or overconfidence, perceive what the market is offering from its perspective, stay focused in the Now Moment Opportunity Flow and spontaneously enter the flow.

"Strong belief of an uncertain outcome with an edge in your favor"

Mark compares the zone to a flock of birds turning at the same time or a school of fish navigating in sync. You are in tune with the market and the collective consciousness of it, the "Now Moment Opportunity Flow."

You wont be a top trader until you develop an unshakable belief in uncertainty. Knowing this doesn't mean accepting it. Only when there is no conflict between it and yourself, it is accepted.

Only the best traders predefine their risk, cut their losses without hesitation and have a good system to take profit.

Traders don't adhere to these principles because they believe they already know what's going to happen.

The traders edge

Random outcome, consistent results. Recognize patterns, understand they are unique. If even one variable is off, the outcome might not be the same. Best traders are confident in overall success of their edges and commit to trade every one the market gives them.

"Unsuccessful traders are obsessed with market analysis because they crave the sense of certainty that it appears to give them. They try to create certainty where it doesn't exist."

Our beliefs can block us from perceiving new market information, making us trade wrongly. When we are neutral to an outcome, we are more open to current market information, allowing us to trade effectively without pain.

"You have to be rigid in rules and flexible in expectations. Rigid to protect us from uncertainty and flexible to interpret every new bit of information as clearly as possible to make the next best decision. The losing trader is rigid in expectations and flexible in rules."

You have to adopt a probabilistic mindset and avoid determining your edge with unusual information, adding randomness and decreasing confidence. The less you associate, the more you are open to new information the market is giving you.

1) Anything can happen
2) No need to know what'll happen 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 indication of a higher probability of one thing happening over another
5) Every moment in the market is unique

Trading in the zone

When you accept the risk of trading, you eliminate perceiving the market information in painful ways, so there is nothing for your mind to avoid, so you'll have access to everything you know about market movement, discovering new edges you would've avoided.

The impacts of beliefs in trading

1) Beliefs resist any force that would alter their present form
2) All beliefs demand expression
3) They keep working even if we're not aware

The key to consistency as a trader: deactivate bad beliefs and create better ones

Thinking like a Trader

It's a pattern recognition numbers game. You have to operate in a state of not having to know to properly manage expectations over a large number of trades.

The 3 stages of development of a trader

Mechanical stage
1) You build self trust to operate in an unlimited environment
2) Learn to execute a trading system
3) Train mind to think in probabilities
4) Create unshakable belief in your own consistency of a trader

Subjective stage
Use all learning of markets to do anything you want to do - trade. very free, so monitor yourself to fix self valuation linked errors.

Intuitive stage
This is the most advanced stage, you can't try to be intuitive, only create a mindset facilitating it.

Observe yourself

Monitor yourself when trading. The idea is to become an objective observer of your own thoughts, words and deeds.

When you observe yourself objectively, you do so without judgement. If you do so without judgement, there won't be any pain.

Mark makes the analogy of risk and a bridge over the grand canyon. More risk = thinner bridge. A trader running low risk has a lot of room to work around. The higher risk, the more focused and perceptual of every new bit of information the trader needs to be.

Mistakes are okay. Do not judge yourself. By doing so you will denigrate yourself and create a negative feedback loop of fear and pain. If you have a positive expectancy and a winning attitude you will prosper.

Mark calls these the 7 principles of consistency

"I am a consistent winner because...
1) I objectively identify my edges
2) I predefine the risk of every trade
3) I accept risk and willing to let go
4) I act without hesitation

5) I pay myself as the market makes money available to me
6) I continuously monitor my susceptibility to make errors
7) I understand the absolute necessity of these principles of consistent success and therefore never violate them"

Hope it helps any of you that made it this far and acts as a refresher for those of you that already knew most of this but still struggle with it. Full audiobook below.

Good luck, safe trading!