Mark Douglas's Principles of Successful Trading

Mark Douglas is one of the most renowned traders and authors of books on stock trading, or more specifically, its psychological aspects.

One of his works, " The Disciplined Trader, " is even featured on our website.

Mark believes that all trading is based on five core principles, the knowledge of which will allow for consistent profits.

These principles may seem difficult to grasp at first, but with time, they all become clear.

1. If there's a possibility of loss, it can be realized – considering this principle in a practical sense, we can say that the risk of loss always exists. And you shouldn't ignore the rules of capital management, no matter how profitable a trade may seem.

For example, John always opened positions with a volume of 20% of his available funds, but today a situation arose in which he had already made good money twice and he decided to risk all his funds, but this time the transaction resulted in a loss.

And this loss due to a spontaneous decision increased 5 times.

2. You don't need to know the future to make money – the main thing is to find a moment when an open trade is guaranteed to bring profit.

That is, when the price is in the most advantageous position.

3. Correct understanding of profitability – you should always evaluate your profitability not by the number of transactions, but over a certain period.

If statistically 60% of your trades are profitable, that doesn't mean that opening four losing trades will guarantee a fifth one.

It's just that over a given day, month, or year, you'll be profitable on 60% of your trades. And don't immediately open a fifth trade after four losing ones.

4. A good time is just a good time—no matter how attractive the market entry point, it doesn't 100% guarantee a profit.

It simply indicates that the price is more likely to move in one direction or another.

5. Every moment in the market is unique – no matter how much they say history repeats itself, there's always a high probability that the rule won't apply this time.

Therefore, you should be prepared for this and hedge your losses, no matter how standard the situation may seem.

From all of the above, we can conclude that if a trader uses the same trading system in different situations, that system will inevitably lead to losses.

Strategy is dictated by the market, not strategy that controls the market.

Mark Douglas