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All of Mark Douglas Teachings Explained in 27 Minutes — Transcript

by Dave Scott Trades · 5,289 words · 787 segments · language en · Watch on YouTube

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0:00So, I'm sure most of you guys have heard
0:01about the man, the myth, the legend,
0:03Mark Douglas, the absolute goat of
0:05trading psychology. This was a man who
0:07dedicated his entire life to cracking
0:09the code of what it means to be a
0:11successful trader. And not from a
0:12technical standpoint, but from a
0:14psychological standpoint. And what he
0:16discovered is that trading success comes
0:17down to five crucial frameworks that
0:19most traders never understand. Five
0:21crucial pieces of the trading puzzle.
0:24And in my personal opinion, you need all
0:26five of these understandings to really
0:27build sustainable success in trading. If
0:30you're even missing one of these pieces,
0:31then it's really hard for everything to
0:33come together. And I almost guarantee
0:35that a large majority of traders have
0:37never fully grasped or understood these
0:39concepts. And if they have, they have
0:41never fully lived them or actually put
0:42them into practice. So today, I'm going
0:44to break it all down for you in this
0:46short video. The first crucial piece of
0:48the puzzle is thinking in probabilities.
0:50And I know that sounds obvious. Yeah,
0:52trading probabilities. I get it. But
0:54have you actually fully grasped the
0:55weight of this concept? Because if you
0:57truly understood probability at a deep
0:59emotional level, then you wouldn't get
1:01pissed off when you took losses. So if
1:03you still get unreasonably frustrated
1:05every single time you take a loss, then
1:07you're not truly thinking of the big
1:09picture and of probabilities. If you
1:11truly and deeply understood it and it
1:14was really internalized and baked into
1:16your brain, then it would feel crazy for
1:18you to revenge trade, to move your
1:20stop-loss, to size up because you know
1:23mathematically you'll make money if you
1:25follow the process. So, it's very
1:27possible if you're struggling with
1:28trading, you have not fully internalized
1:30this concept yet. You don't fully trust
1:33it or you don't fully trust your
1:35strategy. Cuz just imagine a casino who
1:37has a statistical edge on every single
1:39game. It would be crazy for them to
1:42break what they've been doing that has
1:44been making them money year after year
1:46and to start doing something different
1:48if one of their clientels started going
1:50on a winning streak in blackjack. It
1:52would be psychopathic.
1:54But we do this in trading. And I think
1:56it's for two main reasons. Either you
1:58have not fully understood and
2:00internalized the concept of
2:02probabilities or you do not have an edge
2:04that you trust enough to put your full
2:06trust in to trust the math of
2:08probabilities. And here's the key. You
2:11never know what your next outcome of
2:13your trade will be. So, you need to
2:16expect uncertainty in the market. You
2:18need to never get locked into the
2:20illusion that this trade has to be a
2:23winner. Or, I've lost the last two
2:25trades. This means this trade has to
2:27win. Or, wow, this setup looks so
2:30amazing. I know this is going to be a
2:31winner. I think this is one of Mark
2:33Douglas's most important points is that
2:36everything is across a distribution of
2:38trades. You never know when you're going
2:41to have a losing streak. You never know
2:43when you're going to have a winning
2:44streak.
2:45So, if you get your ego in there and
2:47start setting your own expectations on
2:49what's supposed to happen, you screw up
2:51all the math. You screw up the basic and
2:54simple math of an edge. And if you truly
2:56trusted probabilities and you trusted
2:58your edge, then going off your plan
3:01feels pretty stupid because you're going
3:03off something that is proven to make you
3:05money. So he talks about thinking in
3:07probabilities at a fundamental level,
3:09not just an intellectual level. You need
3:12to actually operate from the belief that
3:13this is true, that the math works out.
3:16Without that deeper core belief, when
3:19you go on a losing streak or things
3:20start to not go your way, what do you
3:22do? You start to change up the plan. you
3:24start to size up, move stops, overtrade,
3:27do all this crazy stuff. So, stop giving
3:30a crap about individual trades. One
3:33trade means absolutely nothing in the
3:35grand scheme of if you're actually
3:36successful at trading or not. And you
3:39can really gauge it how good at this
3:40you're getting of how frustrated you
3:42feel by losses.
3:44If you truly believe that everything is
3:46on a probabilistic scale and you're
3:48going to take losses and it's a cost of
3:50doing business, if you have that right
3:52trader mindset, then you're going to
3:54feel less and less frustrated when you
3:56take a loss. If you feel extremely
3:59frustrated when you take a loss, then
4:01that means that you probably have not
4:03fully internalized this belief yet and
4:05you're not fully trading from a place of
4:07probabilities where you trust an edge.
4:09And the overall premise is that a losing
4:11trade is not necessarily wrong. As long
4:14as you followed your edge, then the
4:16trade is right. But we like to get in
4:19there with our little minds and make it
4:21mean something that it doesn't. This
4:22means I'm a loser. This means I'm a bad
4:24trader. And we're going to get deeper
4:26into that as the video goes on. So, we
4:28need to have a general emotional
4:29detachment from the results. Traders
4:32create pain for themselves by expecting
4:33certainty in an uncertain environment.
4:36and they have so much attachment to the
4:37results of each trade that it creates a
4:40lot of pain. You take a trade, you
4:42expect it to work, you put all of your
4:44hopes and dreams behind that and then it
4:47doesn't work out. And what do you feel?
4:49Frustrated because you're not thinking
4:51in a large sample size. But the
4:53expectation itself was the problem. The
4:55trade never had certainty and no trade
4:58ever will. But beginners especially love
5:01to believe that there's a certainty out
5:02there, that there's some way they can be
5:04certain about the result. And
5:06unfortunately, that's not possible. But
5:09people crave that so much that they
5:10constantly look for it and they think
5:12they found it. And then when a trade
5:14doesn't go in their direction, they get
5:16even more frustrated because of those
5:17expectations that they placed on it. So
5:20individual trade outcomes are
5:21meaningless and the market owes you
5:23absolutely nothing on any one trade.
5:26Your edge doesn't owe you anything on
5:27any individual trade. It's like poker.
5:30If you pick up pocket aces and you go up
5:31against pocket kings, you should win
5:33that, but you won't always win that. And
5:36so, expecting certainty on that, that my
5:39aces will always win is insane.
5:43But yet, we still think that exists in
5:45trading, a game where anything could
5:47happen at any moment. Trump could come
5:50out and say something psycho tomorrow
5:51and it could tank the market or pump the
5:53market and you never know what's
5:55happening next. So stop believing
5:57there's any certainty. All your edge
5:59promises is that over a large sample
6:01size, you're going to come out on top
6:02and that's it. So when you truly
6:05internalize this and think from a place
6:06of probabilities, you stop trying to
6:08predict what trades will work, what
6:10trades won't. You stop feeling as
6:12frustrated and pissed off when you lose
6:14and you just focus on executing just
6:16like a casino would over and over
6:19knowing that things will play out in
6:20your favor. So that's the first very
6:22important piece of the puzzle. The
6:24second piece of the puzzle is what Mark
6:26Douglas calls the five fundamental
6:28truths. And these truths are basically
6:30the foundation that everything else is
6:31built on. If you don't accept these at a
6:34deep level, then nothing else works. So,
6:36we already slightly touched on some of
6:38these, but we're going to get deeper
6:39into them. So, the first fundamental
6:41truth is that anything can happen at any
6:43time. You can have the most perfect
6:45setup in the world. It can look
6:48beautiful with every single confluence
6:50aligning and you can still lose.
6:52If that happens and you take that loss
6:54after waiting for that perfect setup and
6:56you get super pissed, then you have not
6:58fully internalized the teaching that
6:59anything can happen at any time. You
7:02still think that there's some way to
7:03control the outcome. And the moment you
7:06forget this truth, you start to make
7:07mistakes. You size up on trades that
7:10you're really confident in. You size up
7:12too big thinking, "Oh, this is a sure
7:14thing. I know this is going to work."
7:16You don't set a stop loss because you
7:17think, "Oh, there's no way this is going
7:19to go against me." and you hold on to a
7:21loser because you think, "Oh, it has to
7:23come back. There's no way it can keep
7:25going down. Anything can happen on any
7:28trade, always forever." Truth number two
7:31is you don't need to know what happens
7:32next in order to make money. And this
7:35one screws with people's head because
7:36the entire financial industry is based
7:38on people predicting, oh, what's going
7:40to happen next? And that's how they end
7:42up making money. But in trading, it's
7:44not our job to predict what is going to
7:46happen next. It is only our job to
7:49follow a statistically proven process.
7:51Anybody who tells you, "Oh, I know
7:53exactly where price is going or I can
7:55predict price with near certainty are
7:58full of crap." There's no other way to
8:00put it. It just doesn't exist. So, stop
8:02trying to predict and just start
8:03executing your edge. Truth number three
8:06that you need to even extra internalize
8:08is that there's a random distribution
8:09between wins and losses. It's just like
8:12the flipping a coin analogy. You could
8:14flip it over and over and over and you
8:16could get seven tails in a row, eight
8:18heads in a row, but over 100, over 1,000
8:22flips, you're going to start averaging
8:23out to 50/50.
8:25So, this is where traders go wrong
8:26because they take three or four losses
8:28in a row and then they think, "Okay,
8:30this means my edge sucks."
8:32But it actually may not mean anything.
8:35If you have done the work to actually
8:36prove your edge over a large back test
8:38sample size and it's mathematically
8:40proven, then that three or four losses
8:42could just be a random distribution of
8:45wins and losses and actually mean
8:46nothing.
8:48And it's so important that you have a
8:49deep belief that this is true because
8:51you can see how this would be
8:52emotionally hard for the mind to handle.
8:55If it doesn't fully understand this and
8:57if you don't fully trust your edge, then
8:59in the midst of going through a losing
9:01streak, you start to spiral and start to
9:03blow up.
9:04and the sequence is always going to be
9:06completely random. Only the overall
9:08distribution matters. Truth number four
9:11is that an edge is nothing more than an
9:13indication that something has a higher
9:15probability of happening than another
9:17thing. Your edge is not a guarantee.
9:20It's not a crystal ball. It's just a
9:23mathematical advantage and that's it.
9:25The illusion that your edge
9:28is some magical or crystal ball is what
9:31leads a gambling type behavior. Because
9:34when you see the edge, you get excited
9:35because you've been waiting for that
9:36edge for maybe days, for maybe hours,
9:39maybe even weeks or months if you're a
9:41swing trader. So when you finally see
9:43that edge show up, you think, "Oh, I'm
9:45going to put size on this." You know,
9:46you get over excited. This has to work.
9:49But all an edge is is a mathematical
9:51advantage. So stop being under the
9:53illusion that it means anything more
9:54than that. It certainly doesn't mean
9:56that anything has to work. Truth number
9:59five is that every moment in the market
10:01is unique. This one is subtle but
10:04crucial.
10:05Every single moment in the market has
10:07never existed before and will never
10:09exist again. And why does this matter?
10:13It's because traders love to think in
10:15terms of past patterns. Like, this
10:18worked in the past and this means that
10:19it has to work again. Or they think back
10:22to three weeks ago and they say, "Oh my
10:25god, this looks the exact same as how it
10:27looked 3 weeks ago." And they delude
10:29themselves into thinking this has to
10:31play out the same way again. But every
10:34single moment is unique. The
10:36participants are different. The context
10:38is different. Whatever is driving the
10:40move is different. This doesn't mean
10:42that patterns are totally useless,
10:44especially when they're combined with
10:45context.
10:47But at the end of the day, it's still
10:49just an edge. And each pattern, even if
10:51it looks like your perfect edge, is a
10:54new unique situation.
10:56When you truly internalize these five
10:58truths, something starts to happen
11:00within you. You stop trying to fight the
11:02market because you understand the nature
11:05of the market. The nature of the market
11:08is uncertain. But problems arise when we
11:10start trying to enforce our certainty,
11:13enforce our expectations
11:15on a wild beast.
11:18You can't tame a wild beast, but we try
11:20to do that and then we get frustrated
11:22and pissed off when we can't. It's
11:25insane behavior. But when you just
11:27accept that it's going to be a wild
11:29beast, and instead of trying to fight
11:30it, you start to flow with it, that's
11:33when things start to change for you. And
11:35you may even hear me repeat some things
11:36in this video, but that's because it's
11:39so important that these become core
11:40beliefs for you. You honestly need to
11:43hear this over and over again to really
11:45get deeper into your mind and start to
11:47believe these things that I'm telling
11:48you because like I said, it's easy to
11:50intellectually understand it, but to
11:53actually deeply understand it and
11:55believe it on an internal level when
11:58it's how you operate and it's the actual
11:59selfidentity that you're running from,
12:01that's a completely different thing. And
12:03I've been trading for close to three
12:04years now. And I still work on these
12:06concepts on a daily basis to get my
12:09brain more and more on board with
12:11understanding these things because it's
12:13the foundation for long-term sustainable
12:16success in my opinion. All right, so
12:18this leads us into the third piece of
12:19the puzzle, which is true risk
12:21acceptance. And I feel like this is
12:23where most traders go wrong. Everyone
12:26thinks they accept risk. They think,
12:27"Yeah, I can lose money. You know, I use
12:29a stop loss. It can go down and hit my
12:31stop loss." But Mark Douglas makes a
12:33distinction that most traders miss.
12:35There's a huge difference between
12:37intellectually acknowledging risk and
12:39then actually accepting risk at a deep
12:41emotional level. Here's how you can tell
12:43if you truly accepted risk. When you
12:46enter a trade and it immediately goes
12:47against you, how do you feel inside? Do
12:50you feel anxious, frustrated, pissed
12:52off? If you immediately feel not in your
12:55stomach in the urge to do something like
12:57move your stop loss or enter more
12:59positions or exit your trade, then you
13:02haven't fully and deeply accepted the
13:03risk. You've acknowledged the risk
13:05intellectually, but emotionally you were
13:07expecting to win. True risk acceptance
13:10means genuinely being okay after taking
13:12a loss. Genuinely feeling like, okay,
13:15that's just a part of doing business.
13:16It's no big deal. not hoping you won't
13:18lose, not believing you won't lose, and
13:21actually being at peace with the loss
13:23before it even happens. So, I think this
13:25is a really important part of Mark
13:26Douglas's teachings, and that's to
13:28emotionally process the loss before you
13:30even take the trade. So, already accept
13:33that the loss has happened and already
13:36visualize yourself taking that loss
13:37before you even enter. So when you enter
13:39that trade, you already expect your
13:42account to be lower than it was before
13:44because you've already fully
13:45internalized the fact that you can lose.
13:47And when you do this, instead of
13:49expecting the trade to win and expecting
13:51it not to lose, then something beautiful
13:53happens where if the trade goes against
13:56you, you're immediately less pissed off
13:58because you've already deeply accepted
14:00that risk. A lot of the frustration we
14:03feel when we take a loss is a cognitive
14:05dissonance between what happened in the
14:07trade and what we are expecting to
14:09happen. When we're expecting something
14:11to win and then it doesn't, then we feel
14:14cognitive dissonance and we feel pissed
14:16off. But if we're expecting something to
14:18lose and then it does, then we don't
14:20feel any cognitive dissonance. And if it
14:22wins, then you just feel good about it.
14:24So when you're about to get into a
14:26trade, fully visualize the loss
14:27happening and then see if you feel
14:29emotionally comfortable with that.
14:31If you don't feel emotionally
14:32comfortable or you still get pissed off
14:34after taking a loss, then size down
14:36until you feel emotionally comfortable.
14:39For a lot of things trading, sizing down
14:40is a cure all. It helps you think more
14:43in probabilities. It helps you keep a
14:45more centered mind and helps you be more
14:47easily able to accept losses.
14:50But even after sizing down, it is
14:52incredibly hard to take a loss still
14:54because the mind is wired biologically
14:57to seek certainty and avoid uncertainty.
15:00So no matter what with all of this, your
15:02mind is still going to get triggered
15:04after taking a loss. But what we're
15:06doing is trying to get our beliefs and
15:08our overall framework on board with
15:11understanding this,
15:13understanding where our mind is coming
15:14from, understanding why we get pissed,
15:16and then combating it with certain
15:18measures. The fourth piece of the puzzle
15:20is accepting that the market is neutral
15:22and your beliefs create your experience.
15:25The market does not know you exist. It
15:27does not care about you. It does not
15:29care about your problems. It's not out
15:31to get you, even though it certainly
15:32feels like it can be. Sometimes price
15:34moves in your favor, sometimes it
15:36doesn't. And it just is. There's not
15:38necessarily any malice or intention
15:40behind it towards you personally. But
15:43the way that you experience the market
15:45is completely driven by your beliefs and
15:47the filter that you put in your head of
15:50how you see things. Whatever happens in
15:52the market, you will use your beliefs
15:54and your filter to confirm. So this
15:56means if something happens to you like
15:58for example getting stopped out and you
16:00have a deep belief that they're hunting
16:02my stop loss personally then this leads
16:05to more frustration than it needs to be
16:07because you're not at a neutral place
16:09with the market where you just see it as
16:11simple data or something happening that
16:13just is you see it as a personal attack
16:16on you. So there's different beliefs
16:19that traders hold and one of them is
16:20when it hits their stop loss they think
16:22this means I'm bad at trading. This
16:24means I suck. They experienced their
16:26stop loss getting hit as pain of their
16:28inadequacy. Whereas this trader over
16:31here might have a more healthy
16:32relationship with losses and have more
16:34of the belief of, okay, losses happen.
16:36There are cost of doing business. It's
16:38no big deal. So, which trader do you
16:40think is more likely to be successful?
16:43The one that gets pissed off and puts
16:45meaning around every loss or the one who
16:48takes a loss, is like, "Eh, it's no big
16:50deal." And then just continues on as if
16:52nothing happened. The exact same thing
16:54happened to each trader, but internally
16:57they had two completely different
16:58experiences of it. So their actual
17:00beliefs created the reality of that
17:02situation, which also triggered a
17:05certain emotional response. This is why
17:07two traders can have the exact same
17:09experiences and even be following the
17:11exact same edge, but one trader does
17:14good and the other one doesn't. And you
17:16might think, okay, how's that even
17:17possible, Dave?
17:19Well, the thing is is what I talked
17:21about before about the random
17:22distribution.
17:24If someone understands this information
17:26and they've totally internalize this and
17:28believed it
17:30and let's say we have trader A and
17:32trader B and they're both following the
17:34exact same edge and both traders go
17:37through a losing month on the year their
17:40strategy may return 76% overall but
17:43trader A crashes out after going on a
17:45losing streak and trader B continues on
17:48as if nothing happened and the month
17:50after that losing month ends up being
17:52trader B's best month of the year just
17:55hypothetically.
17:57But because trader A couldn't handle
17:58losses and he took it personally and
18:00thought it meant he was a bad trader and
18:01put all this meaning behind it and he
18:03didn't understand the random
18:05distribution,
18:07he actually ended up sizing up and
18:08blowing his account and then he didn't
18:10get to experience that great month after
18:12the losing month. So the filter in which
18:14you see the market is extremely
18:16important. So you basically need to go
18:18into your brain and remove the beliefs
18:19that are hurting you and install them
18:21with new beliefs and new ways, helpful
18:23ways of seeing the market. Beliefs that
18:25hurt you are things like I need to be
18:27right. Losses mean I'm failing. The
18:30market is against me. I should be able
18:33to predict what happens next. Good
18:35traders never lose or good traders don't
18:38have losing months or weeks or trades.
18:40Whereas beliefs that help you are things
18:42like losses are expected and normal. My
18:45job is to execute and not to predict.
18:48The market is neutral. Consistency comes
18:51from process and not outcomes. And I
18:54don't need to be right to make money.
18:56This shift from one set of beliefs to
18:58another is a huge part of the journey of
19:00becoming a successful trader. It's not
19:03necessarily about finding the best
19:04strategy or another strategy. It's about
19:07changing the way you relate to trading
19:09itself and having the correct belief
19:11system, the correct viewpoint of the way
19:13trading actually is. Because of course,
19:16we want to deal in reality. You know, if
19:19the reality was there is certainty in
19:20the market, then I'd be sitting here on
19:22camera and I'd be telling you there's
19:23certainty, guys. It's amazing. There's a
19:25magical, beautiful unicorn strategy. But
19:28that's not how it is. So, this is what I
19:30need to tell you. And these are the
19:32beliefs that you need to internalize to
19:34get yourself on board with the actual
19:36reality of the way things are if you're
19:37going to be successful in this game. But
19:39here's the thing, you can't just decide
19:41to believe something new. Beliefs are
19:43formed through experience. Beliefs are
19:46formed through doing. So you can
19:48intellectually understand these things,
19:50but actually internalizing them comes
19:52through repetition.
19:53Repetition of thought, repetition of
19:55action,
19:57doing the thing over and over again. So
19:59Mark Douglas suggests the sample size
20:01mindset.
20:03Basically saying to yourself, okay, for
20:0520 days, I'm going to follow my rules.
20:08I'm going to follow my process and my
20:09plan to a tea. I'm going to set these 20
20:12days aside. And the only way I'll
20:14measure success for these 20 days is if
20:16I follow the plan or not. Doing this at
20:18first is going to be extremely hard,
20:19especially if you've been going in the
20:21opposite direction, not following your
20:22rules, going all willy-nilly.
20:25But after 20 days of doing this, you're
20:28going to start to build trust in
20:29yourself and you're going to start to
20:30see, oh, I can do this. You know, it is
20:33possible for me to go for 20 days and
20:35only follow the rules. And when you
20:38reframe your mindset away from I need to
20:40make money trading, I need to win. I
20:42need to be a winner
20:44into I'm a winner if I follow my rules.
20:46I'm a winner if I follow my plan.
20:49And this begins to reprogram your actual
20:51brain and the way you think about
20:52trading. All right. So the last piece is
20:54where everything comes together. Mark
20:56Douglas talks about different stages of
20:58a trader's development. Most traders are
21:00stuck in what he calls the random stage.
21:03They have no consistent rules. They make
21:05decisions based on fear and greed. And
21:08their results are entirely
21:09unpredictable. Supporting a family or a
21:12lifestyle in this stage of trading
21:14impossible. could have wins here and
21:16there, make a little money, but to
21:19actually sustain monthly income or
21:21sustain a yearly income, impossible. The
21:24goal is to reach what he calls the
21:26intuitive stage. This is where you can
21:28trade from complete psychological
21:29freedom without fear, without
21:31hesitation, and in a state of flow where
21:34execution feels effortless. But you
21:37can't just jump from being random and
21:38all over the place to all of a sudden
21:39intuitive where you're just flowing with
21:41the movements of the market. there's a
21:43stage in between and there's work that
21:45you need to do. Most traders skip the
21:47mechanical stage. They lie to themselves
21:50saying, you know, I can just use my
21:52magical discretion and my intuitive
21:54vibes to find winning trades. But the
21:58problem behind that is they haven't
22:01built up great habits yet. They haven't
22:04built up the ability to follow a
22:06mechanical edge.
22:08And they also have not built up enough
22:09screen time to have true intuition.
22:12So there's a period you need to go
22:14through is what Mark Douglas says where
22:17you're building this out in yourself so
22:19that you're able to reach a place where
22:21you can make intuitive decisions,
22:22fearless decisions and execute like an
22:25absolute beast. So during the mechanical
22:27stage, you follow your rules with no
22:30hesitation.
22:32No. Okay, this trade looks pretty good
22:34here, so I'm going to size up a little
22:36on this. This trade doesn't look as
22:38good, so I'm not going to take this. No,
22:41no, no. you have an edge and you do not
22:44break your rules under any
22:45circumstances. You write your rules
22:47down. Everything is laid out and your
22:49only job is to prove to yourself that
22:52you can show up and do that and that's
22:53the only way that you gauge your
22:55success. And to most traders, this
22:57sounds boring. It sounds limiting. And
22:59most traders will resist this because
23:00they think, "Okay, but my judgment adds
23:02value. My discretion adds value." And
23:06you wouldn't be wrong. Of course, adding
23:07context and discretion adds value. But
23:10this is a phase that you're going
23:11through. It doesn't mean you can never
23:13have context and discretion in your
23:14trading. It just means that you need to
23:16go through this phase to get to that
23:18point. And the biggest point of this
23:21process is to build trust in yourself
23:23and build the belief system and the
23:25understanding of the market that will
23:27carry over into a full-time career. So
23:30every single time that you show up and
23:32follow your rules, you build trust in
23:34yourself. You build that extra belief
23:36that I am someone who can do this. And
23:39what Mark Douglas understood is that the
23:40reason most traders struggle isn't
23:42because they don't know what to do. Most
23:44traders know exactly what they're
23:46supposed to do. The problem is they
23:48don't do it. They hesitate on entries.
23:51They move stops. They cut winners early.
23:53They let losers run. They know these are
23:56mistakes while they're making them, but
23:58they can't stop. And why can't they
24:00stop? Because they've not built up trust
24:02in themselves. And you can't build trust
24:05in yourself based on intention. You need
24:07to base it through evidence. You need to
24:10actually prove to yourself that you can
24:11follow your rules no matter what. And
24:14that proof only comes from actually
24:15doing it. This mechanical stage creates
24:18that proof. You commit to executing your
24:21system perfectly for a defined number of
24:23trades. And every single time you follow
24:25your rules despite wanting emotionally
24:28and mentally to deviate from them, you
24:30begin to build trust in yourself. and
24:32you begin to build self-belief and
24:34self-identity that I am a good trader
24:36and I am someone who can do this. After
24:38enough repetitions, starting to follow
24:40your rules becomes normal for you. It's
24:42like anything in life, anything you do
24:44consistently becomes your new normal.
24:47And every single good decision you make
24:48builds momentum in a positive direction.
24:51You stop fighting yourself because
24:53you've proven to yourself that you can
24:54be trusted. And from this place is where
24:57you're able to enter the zone. This is
25:00where you're able to find mental
25:01freedom. When you're sized down to a
25:04point where it doesn't bother you if
25:05you've taken a loss, you've built that
25:07trust in yourself that you're going to
25:09follow your rules. You don't have that
25:10fear you're going to go off track and
25:11start blowing up accounts. When you've
25:14built that screen time, that edge,
25:16things start to come together and you
25:19begin to enter the state of peak
25:20performance. When you're completely
25:22focused on what's going on in front of
25:24you and you're just flowing with the
25:26natural movements of the market without
25:28putting all this extra crap and filters
25:30on top of what's going on in this place,
25:33you're completely present, completely
25:35focused, completely at peace with
25:37uncertainty. And all of Mark Douglas's
25:40teachings are a road map to reaching
25:42this place in your trading. Because just
25:44think about it, if you're oversized, if
25:46you're risking more money than you can
25:47afford to lose, then you're not going to
25:49feel in a carefree state. You're not
25:51going to feel in a place of flow. If you
25:53have not fully accepted that trading is
25:55a random distribution, then you're
25:57always going to be fighting against
25:58reality and you're never going to be
26:00flowing with the actual reality of the
26:02market. And the five fundamental truths
26:04create this mental foundation. True risk
26:07acceptance creates the emotional
26:09foundation. Understanding that beliefs
26:11create reality helps you identify what's
26:13holding you back. And mechanical trading
26:15helps you build the trust necessary to
26:17let go and just trade. And the last very
26:20important piece of this entire puzzle in
26:23my opinion is having self-awareness.
26:26Understanding that you are not your
26:27mind. You are not your thoughts. You are
26:30the awareness or the observer of your
26:32thoughts. And you're able to step
26:34outside of your mind and watch your mind
26:37race around and watch what it's doing.
26:40You're able to watch your emotions in
26:41the moment.
26:44And you're able to build this buffer of
26:45awareness in between what you believe,
26:48what you think, how you feel, and the
26:51actual actions that you take. And it's
26:53easy to say, but harder to implement in
26:55your life. It's a constant commitment to
26:58stay conscious, to stay aware, and so
27:00that you're able to build this grounding
27:01in yourself. You're able to build this
27:04place of centerness where your mind
27:06isn't pulling you around to every single
27:08direction that it wants you to go. And
27:10when you're able to create this
27:11separation from your mind where you can
27:13just watch your thoughts
27:14non-judgmentally,
27:16then in that moment you are not that
27:18mind. You are not identified with that
27:20mind as being you. Because the second
27:23you become identified with that, you
27:25start following what it tells you to do.
27:27And it tells you to do some pretty
27:28stupid stuff. So that's about it.

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