There are five truths about trading that, once you really absorb them — not just read them, but feel them in your bones — will change the way you show up to the markets every single day.
I've been trading for over 27 years. I've sat in prop trading rooms, run hedge fund capital, blown up accounts, and rebuilt them. And after all that time, all those trades, all those lessons learned the hard way, I keep coming back to five simple ideas that underpin everything I do.
Here they are:
1. Anything can happen.
2. You don't need to know what is going to happen next in order 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 an indication of a higher probability of one thing happening over another.
5. Every moment in the market is unique.
That's it.
Read them again if you need to. They sound simple. Almost too simple. But simple and easy are not the same thing, and the distance between understanding these truths intellectually and actually trading in alignment with them? That's where most traders spend their entire careers stuck.
I know I did.
These five truths are not original to me. They come from Mark Douglas's brilliant work in Trading in the Zone, a book that I recently revisited (it had been too long). But knowing them and living them are two very different things. I've read them many times and I still catch myself drifting away from them in the heat of a trade.
Over the coming days, I'm going to take each of these truths one at a time and explore what they really mean, as practical, actionable frameworks for how we approach every trade, not just as abstract concepts. We'll start tomorrow with a deep dive into truth number one: anything can happen.
Because until you truly accept that anything can happen as an operating principle and not just a cliche' — you'll always be fighting the market instead of flowing with it.
Stay tuned.
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Sean McLaughlin | Chief Options Strategist, All Star Charts
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