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THE DISCIPLINED TRADER REVIEW

Equity Edge

THE DISCIPLINED TRADER REVIEW

“Success will always seem so close, yet always so elusive.”- Mark Douglas.

Summary

Trading might be fruitful in terms of money. But the mental stress that the trader experiences make it a job that someone would refrain from. Mark Douglas being a part of the same profession encountered the same. He earned his success in his life was built on the concrete of the skills that he possessed. All these skills are Penn down in the book.

The CEO of CompTracMark Douglas is a well known name in the field of capital markets. But the scenario was a lot different in the 1960s. In 1960 Mark moved to Chicago to work as an account executive in Merrill Lynch. He had moved to Chicago to make big money to meet his expensive expenses. But to his disappointment, his expectations to become a high end trader crashed. It crashed when his colleagues who had worked for years were ambiguous about it too. The traders who made money in the first half of the trading hours would lose their money. Moreover it will lose some in the second half.

The book is a reflection of the life journey that Mark Douglas experienced before succeeding as a trader. The book begins with few points that Mark recognizes as key elements to trading. He stresses on the fact that trading is merely not a game of methodology and strategy. It is largely dependent on the psychology of the individual. Self –discipline, emotional control and learning to adapt are characteristics that one should imbibe within itself before beginning to trade.

Psychology of a trader

It proceeds to the section where he elaborates on the psychology of a trader. That is in line with making or losing money in the market. According to him every debutant trader is demented, frustrated and filled with anxiety in the initial years of his trading. This is a result of lack of market observation. Each trade that takes place in the market and the movement that it creates expresses the prevailing consistency in the market. Further the future potential that it holds. Remembering this can spare you the hurricane its negligence can cause in your mind.

Money is the pivotal element of being a trader. Losing and Winning both can make you lose your mind; though losing can have substantial effect. Some guidelines shared by him are predefining your losses, losing trades. The execution perceives and focuses your energy on one market behavior; don’t try to become market king.

The next point mentioned in the book is of prime importance. It is not only a professional necessity but also a personal peculiarity. Acknowledging the repercussions of your actions as a trader is the first step for the understanding the market behavior. There is blurry connection to ignorant mind but Mark is right. When you define your actions you pave the way for understanding the reason behind it. If analyzed further will give you the explanation as to why do the market behave that way.

The next part stands to be the most important part of the book; the stages of becoming a successful trader. 

  •              You create your experience of the market
  •              Perceiving opportunity
  •              Executing trades
  •              Accumulating profit
  •              Self-acceptance

Mark has generously shared his knowledge in his writing. The triumphant that he achieved would have been a lot earlier in his life. Further if he was aware about the skills that cleared the stones on the road.

Mark has mentioned 10 skills for all the traders, read them carefully they can be your point of initiation for becoming a successful trader.

  • Recognizing the patterns whose outcome might be trading error before it happens.
  • Channeling your energy on your favorable end-result and focusing on that. Avert from the fear of what might happen.
  • Adapting and responding to the dynamic market conditions.
  • Concede your risk appetite and amplify it over a period of time.
  • Simply recognizing an opportunity is not enough, immediate execution is the ultimate goal.
  • Don’t make decisions on floating information. Analyze the market; make analyzing the basis of your decision.
  • Develop self-control on your structure of beliefs, don’t predict the market movement.
  • Perpetuate state of objectivity.
  • Develop the skill of knowing what useful and what’s scrap.
  • Stay focused on developing yourself on the traits of a leader; don’t make money the alpha for your profession.

Review

In the final note Mark has imparted words of wisdom which are essential for sustaining self-motivation. He says that after you become a successful trader and develop the skills required for enduring progress. The one thing that keeps you on track is your degree of self-valuation. Altering and unfettering anything in your mental environment that doesn’t contribute to the highest degree of self-valuation.

The book focuses on the minute details that entail the profession of trading. It has been ignored by many. It lays down the framework for understanding the mental distortion that a trader undergoes and the incertitude that he faces. The book could have been better organized and embellished. The sentences are plain and grinding that can get the reader disinterested after the initial chapters of the book. Overall the book is a good read but writing wasn’t the best forte of Mark Douglas.

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