What is the harshest truth of stock trading?
The 5 fundamental truths of trading from Mark Douglas to review and remind yourself everyday.
- Anything can happen.
- You don’t need to know what is going to happen next to make money.
- There is a random distribution between wins and losses for any given set of variables that defines an edge.
- An edge is nothing more than an indication of a higher probability of one thing happening over another.
- Every moment in the market is unique.
Trading is hard because you have to operate in a state of not having to know, even though your analysis may turn out at times to be perfectly correct.
To operate in a state of not having to know, you have to properly manage your expectations.
To properly manage your expectations, you must realign your mental environment so that you believe without a shadow of a doubt in the 5 fundamental truths.
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