Susan Rizzi

​

Trading in the Zone Book Club

PRESENTED BY:

Trading in the Zone

Introductions

​

• Name - Susan Rizzi

​

• Live is Florida, mom to 6 yr old son & 8 yr old daughter, married 10 years in October, worked corporate 20 years, BS in Psych & MBA. Help at PCT with Tradebooks & BBT with Psych.

​

• Started with Andrews book May 2021

​

• I wanted to do book club because I enjoy learning with people. The books are too rich with content to absorb all in one reading. I feel to grow in probabilistic thinking and decision making; I need to hear and start examining things from all perspectives - book club gets me out of my brain & bubble as I hear others thoughts & opinions.

​

​

​

​

​

Book Club Ground Rules:

​

• Respect others when they are speaking - no interrupting, making jokes at others expense, have good manners and treat everyone kindly even if you disagree with them
• Give opinions while making sure we give others turns to also give opinions
• Differing opinions are good, but handle with respect and have intelligent discussions
• Be mindful (turn off as many phones/distractions as possible while in session)
• If actively in a trade and need to concentrate - turn off sound and camera - come back when you can (we get it)!
• Be honest - “Truth Seeking” for Annie Dukes fans
• Be ready to hear truthful responses
• Participate
• BE KIND - vulnerability is hard
• Make an effort to read in preparation for meeting, make notes, highlight - prepare
• Have fun, learn and grow from the experience

​

​

​

​

​

​

• Book Club System - WAS

​

• W - write
• A - analyze & apply
• S - share

Each week we will read the chapter on our own. We will underline or highlight key concepts. Once completed; you will pick your 1 or 2 top concepts. You will write them down in your Trading Psych workbook. You will analyze what you feel Mark Douglas is saying (write that down). You will apply this concept to your trading - what does that mean to your trading, how will this help you, what will you have to change, where are you struggling to implement this concept, etc. Lastly you will share 1 - 2 (or more) concepts to the forum each week for all to read/comment and you will come prepared each week to book club to share and gain feedback from other BC members.

• Each week myself or a MOD will kick off the concept sharing in book club

​

​

​

​

​

​

• Book Club - Trading in the Zone June 2022 - Other - Bear Bull Traders Forums

​

​

​

​

​

​

​

​

Example of my Forum Entry for Chapter 1:

• W - Whatever degree you haven't accepted the risk is the same degree you will avoid it

​

• A - If you can 100% accept the risk that you could lose $XXX; you will not make emotionally based decisions to enter/exit trades; you will be ok trusting your trade plan to see if it will work or fail. You fully embody the concept of probabilities and understand sometimes the trade plan will work and sometimes it will fail. You have sound data statistically telling you your odds and you fully accept the risk associated with playing those odds on every trade providing you with your A+ set up.

​

• A- Decisions do not need to be made during the trade; they are made prior to the trade. Once the trade is ‘put on’ and the stop loss is set; the only work is to set targets. Everything else is based on new data and easily becomes emotionally based as we are humans with emotions. As I gain more experience maybe this emotion will lessen during trading. I will make rules and can exit prior to target based on rules; not what I think I see - my perception during a trade is not always reality. My rules are based on many charts/data. After July if I find one of the rules must be amended - so be it.

​

• Share next week in Book Club

​

These are just notes I am sharing – no need to do anything with them, but they are here if you want to review them:

​

Forward Highlights:

​

• Nature vs Nurture - Are traders born or made - Mark thinks made when acquire traders mindset
• 95% failure rate makes sense when considering the skills we learn in school, professions, relationships
• Successful traders must think in probabilities & surrender to the skills we have acquired throughout our life

​

​

• Do you agree we can all be made into good traders or are there natural tendencies/traits that can help?

​

​

• Any skills come to mind or thought patterns/beliefs that you have had to surrender in trading?

​

Preface

​

• What accounts for the small percentage of traders that are consistent?
• Psychology according to Mark Douglas
• Profitable traders think differently from everyone else
• In many years in field - discovered there is a problem with the way we think at a fundamental level
• The ways our minds work don't fit with market
• Traders that trust theirselves and perform without hesitation; the ones with confidence in their trades…these are the traders that will be successful.

​

​

​

​

• Must learn to believe:
• Dont have to know what is happening next to make money
• Anything can happen
• Every moment in unique, meaning every edge & outcome is a truly unique experience

​

​

Preface

​

5 Major Objectives for Trading in the Zone:

​

1. To prove to the trader that more or better market analysis is not the solution to trading difficulties or lack of consistency
2. Attitude & state of mind determine results
3. Provide Trader with specific beliefs & attitudes that are necessary to build a winners mindset; learning how to think in probabilities
4. Address the many conflicts, contradictions, & paradoxes in thinking that cause the typical trader to assume that he already does think in probabilities, when he really doesn't
5. Take trader through a process that integrates this thinking strategy into his mental system at a functional level

​

• Assuming you have an edge - you must learn to trust your edge
• Edge: higher probability of one outcome than another.
• Greater confidence = easier execution of trades

​

• This book designed to give us insight into ourselves & the nature of trading sp that when we trade it is easy, simple, & stress free (like we are just watching the market).
• Attitude Survey - Take now and at the end of the book - we will share what we have learned…

​

​

• Chapter 1 Notes- The Road to Success: Fundamental, Technical or Mental Analysis?

​

• Fundamental Analysis - attempts to take into consideration all the variables that could affect the reactive balance or imbalance between the supply of and the possible demand for any particular stock, commodity or financial instrument
• This was considered only analysis until late 70s, early 80s when trading communities started accepting technical analysis as a viable tool
• Rarely factor other traders as variables

​

​

​

• Technical Analysis - a method that organizes the collective behavior of individuals interacting with one another on a consistent basis. The interactions form patterns that give a clear indication of when there is a greater probability of one thing happening over another.
• It allows us to see how the same repeatable behavior patterns happen in every timeframe
• Making the market an endless stream of opportunity to enrich oneself

​

​

​

​

• The problem: the huge gap between what you understand about the markets & the ability to transform that into consistent profits and a steady rising equity curve

​

• The psychological gap - the difference between predicting something will happen in the market (thinking of all the $ you could have made) and the reality of actually getting into the trade.
• This makes trading one of the most difficult endeavors & one of the most mysterious to master

​

• Can trading be mastered? YES! The goal of this book is to give you the insight needed about yourself and the nature of trading so that making a trade becomes as easy, simple & stress-free as watching the market

​

• Anyone that puts on a trade can be called “A Trader.” The characteristics of most traders and the consistent winners are as different as night & day
• The journey is extremely difficult & only a handful of people make it

​

• Those that have learned how to be consistent, or have broken through what I call the “threshold of consistency” the money is not only within grasp; they can virtually take it at will.”
• If not evolved into this group, the word “seemingly” means exactly what it implies; consistency is “at hand” but it slips away time & time again
• Emotional pain is the only thing consistent with this group - there are moments of elation but they ae an exaggeration to fear, anger, frustration, anxiety, disappointment, etc
• Inconsistent traders are doctors, lawyers, wealthy people, CEOs, entrepreneurs

​

​

​

​

• If intelligence is not separating consistent traders from inconsistent traders - what is???
• The Best traders THINK differently from the rest
• This may not sound profound, but has profound implications
• The market exposes us to some of the most sustained, adverse psychological conditions
• Winners have attained a mind set - a unique set of attitudes that allows them to remain disciplined, focused, and above all confident in spite of adverse conditions
• They are no longer susceptible to the common fears & errors that plague most traders
• Very few people learn the attitudes necessary to become consistent

​

• Traders that make it “beyond the threshold of consistency” usually experience a great deal of pain (emotional and financial) before they acquire the proper attitude for consistency
• Most people are not fortunate enough to begin trading with proper guidance
• Trading is filled with constant paradoxes…it is counterintuitive in many ways to normal mindset and behavior we have adapted in our lives
• Many perspectives, attitudes, & principles in normal life DO NOT WORK in trading

​

​

​

• Risk
• Do most traders really consider and believe they are taking a risk when they put on a trade?
• Have they REALLY accepted the trade has a non-guaranteed outcome?
• Have they accepted the probable consequences?
• The BEST traders ACCEPT & EMBRACE the risk (highlighted as really key for me)
• There is a HUGE psychological gap between assuming you are a risk taker by trading and FULLY ACCEPTING the risks inherent in trading
• WHEN WE FULLY ACCEPT THE RISK - IT WILL HAVE PROFOUND IMPLICATIONS on your bottom line performance
• The best traders - put on a trade without hesitation & can as freely admit it is not working & exit. They do not experience emotional discomfort if they take a loss.
• If you cannot trade without the slightest bit of emotional discomfort (specifically fear) then you are not accepting the risk that is inherent in trading.
• Whatever degree you havent accepted the risk is the same degree you will avoid it
• Trying to AVOID the unavoidable risk in trading will be disastrous
• Trading makes us confront 2 of our largest fears - losing money & being wrong.
• This is the natural tendency that makes trading - which looks so easy SO HARD

​

​

​

• Constant Uncertainity
• How do we remain disciplined in the face of constant uncertainty?
• We must learn to redefine our trading activities in a way that allows us to completely accept risk - this is the KEY to thinking like a SUCCESSFUL TRADER
• This is the MOST IMPORTANT TRADING SKILL we will learn
• Sadly many developing traders expend little energy to learn this…

​

• Risk acceptance
• The market is simply generating info; it is no longer causing you emotional distress
• If it cannot cause you pain; there is nothing to avoid
• It’s just info revealing possibilities - an objective perspective - not skewed or distorted by what you are afraid is going to happen
• Getting out too soon from winners, moving stop losses which turn into bigger losses, not taking profits and then trade turns into a loser, etc
• None of these are market generated errors - we are generating these errors - the market is NEUTRAL - it is just providing info we interpret and decide to act upon
• The above errors and many others are the result of faulty attitudes that foster FEAR instead of TRUST & CONFIDENCE
• Put simply - THE BEST TRADERS AREN’T AFRAID
• They have developed attitudes that give them the greatest degree of mental flexibility to FLOW in & out of trades
• They have attitudes that prevent them from being RECKLESS
• Everyone else is afraid and when they aren't afraid they have a tendency to become reckless creating experiences in trading that will cause them to be afraid from that point on

​

​

​

• 95% of trading errors causing $ to evaporate stem from attitudes of being wrong, losing money, missing out and leaving money on the table - The 4 primary fears
• Your fears will act against you causing the thing you do not want to happen to occur
• Like the law of attraction - what we think about we bring about…
• Fear is immobilizing, it takes over. Physically we will freeze or run. Mentally we narrow our focus of attention to the object we fear. Other thoughts become BLOCKED. You will not think of all the other possibilities and will find yourself saying after “I knew that.”
• It is difficult to perceive that our attitude is the source of the problem
• Thinking patterns are SO deeply ingrained (usually from how we were brought up to see & engage in the world); it doesnt occur to us that our issues are derived from our state of mind. It is more natural to see the issue as external - the market is causing us pain.
• Understanding the relationship between beliefs, attitudes, and perception is as fundamental to trading as shooting in basketball
• Understanding & controlling your perception of market information is important only to the extent you want to achieve consistent results
• If we do not understand how our beliefs & attitudes affect our perception of the market information, it will seem as if it is the markets behavior that is causing the lack of consistency
• This leads us to believe to attain consistency; we must understand more about the markets
• There will never be enough info you can learn about the market to anticipate every possible outcome
• Put another way - you will not be able to be confident in the face of constant uncertainty - you cannot be afraid of losing money or being wrong
• Unless you learn to completely accept the possibility of an uncertain outcome, you will try to consciously or unconsciously avoid whatever you define as painful

​

​

​

• Confidence & Fear are contradictory states of mind that both stem from beliefs & attitudes
• You must be able to trust yourself completely in order to be confident functioning in an environment you can easily lose more than you intended. You cannot achieve that level of trust until you have fully trained your mind to act in the counterproductive ways of a consistently profitable trader. Learning to analyze the market is just simply not the only trading we need.
• We MUST learn to redefine our trading activities in such a way that we are truly accepting risk. As this is achieved; we will not interpret market info in painful ways. If we are not defining the market info in painful ways; we eliminate the tendency to rationalize, hesitate, jump the gun, hope the market will give us money or hope the market will save us from our inability to cut losses.
• If we cannot trust ourselves to be objective and act in our best interest; consistency is close to impossible
• Once we have a traders mindset; trading will become as easy as it looked in the beginning
• The answer: We have to adjust our attitudes & beliefs about trading in such a way that we can trade without the slightest bit of fear, but at the same time keep a framework that does not allow us to become reckless. That is what this book is designed to teach us.

​

• The successful trader you aspire to become is a future version of you that you must grow into…Growth requires EXPANSION, LEARNING, & CREATING a new way to express yourself in direct conflict with ideas & beliefs you currently hold about trading. Your mind will argue to “keep things as they are” even if they are causing you pain. The internal arguments are natural. Just be OPEN & WILLING to consider other possibilities exist - possibilities you may not be aware or have given enough consideration…Being OPEN will make this learning process easier and you will be able to take more out of it

​

​

​