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What Does It Mean to Trade In the Zone?

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While we know that trading psychology is an important part of a traders toolbox, do we really understand what makes an effective trading psychology? When we develop this understanding, we open up the opportunity to tradein the zone. But what exactly does it mean to trade in the zone? How does our trading psychology affect our performance? Keep reading this expert industry guide to find out all you need to know.

What is Trading Psychology?

Trading Psychology Basics

Trading psychology is defined as the emotional and mental factors that affect a trader’s ability to trade profitably. It also refers to his or her emotional state, attitudes and general mindset towards trading.

The ideal trader has a winning mix of both mental and trading skills. A person can learn the necessary skills to become a successful trader, but he must also work on improving his attitude and mindset. Successful traders understand that they need help in improving their mental game. They understand that there are many mental obstacles to overcome in order to become a successful trader.

Poor Trading Psychology

A trader who has a negative attitude about money or doesn’t believe that they can beat the market because of past failures may have poor trading psychology. A trader may also have poor trading psychology if they are overconfident about their ability to predict the market or become too emotionally attached to winning or losing. Without proper education and mindset training, it can be difficult for a trader to maintain their success. 

There are two common types of psychological trading problems: winning traders who have poor mental habits and losing traders who have poor mental habits. Everyone has bad trading days or weeks, but there is a vast difference between someone who can rally back after a string of losses and someone who blows up an account and quits after a few bad trades.

A trader with poor trading psychology is more likely to give up and quit than someone who has good mental habits. He will fail to follow his rules, take too many risks or let emotions get in the way of making objective trading decisions. This may lead him into trouble when dealing with different types of market conditions.

Related Video: Trading Psychology Mind and Markets

What Does It Mean to Trade In the Zone? 

‘The zone’ is a mental state. The idea originated in Trading In the Zone, an industry bestseller by Mark Douglas. For anyone wanting to really deepen their understanding of the zone and how to utilise it in trading, we recommend reading the full book. In the book, Douglas focuses on the psychological challenges that traders face. He also explains exactly what the zone is. 

The zone entails a kind of immersion in one’s task, an intuitive form of control that all but excludes conscious analysis and doubt. In the zone you have access to your entire being – your unconscious mind, your body, and your spirit. In this state, you are able to express the absolute best of who you are. You are free to take the next right action.

In essence, your performance becomes effortless. It simply happens the way it’s supposed to happen, on its own accord. Trading in this state represents a high point of mastery and excellence. To trade while operating in the zone is what most traders aspire to do every time they place a trade.

To trade in the zone is to be able to fully engage the entire trading experience – your inner dialogue, your feelings, your intuition, and your execution skills all working together perfectly to produce results. This takes practice. But it’s not only about practicing the mechanics of trading. It’s also about mastering yourself, your life, and whatever role trading plays in your life. Mastering yourself is about living with integrity at all times; it’s about getting out of your own way so that the best you can be shows up each day. It’s not easy to do this, but it’s definitely worth it.

Discover More of The Best Forex Trading Books For Beginners

How to Trade In the Zone: 5 Key Lessons

1. Focus on How You Think & Make Decisions

“Ninety-five percent of the trading errors you are likely to make—causing the money to just evaporate before your eyes—will stem from your attitudes about being wrong, losing money, missing out, and leaving money on the table. What I call the four primary trading fears.”

2. Go Into the Trading Day With the Right Mindset

“If you perceive the endless stream of opportunities to enter and exit trades without self-criticism and regret, then you will be in the best frame of mind to act in your own best interest and learn from your experiences.”

3. Understand That You Always Have More To Learn

“People see what they’ve learned to see, and everything else is invisible until they learn how to counteract the energy that blocks their awareness of whatever is unlearned and waiting to be discovered.”

4. Create (and Stick To) Trading Behaviour Rules and Guidelines

“To operate effectively in the trading environment, we need rules and boundaries to guide our behavior. It is a simple fact of trading that the potential exists to do enormous damage to ourselves, damage that can be way out of proportion to what we may think is possible.”

5. Have a Firm Understanding of Probability in Trading

“There is a random distribution between wins and losses for any given set of variables that define an edge. In other words, based on the past performance of your edge, you may know that out of the next 20 trades, 12 will be winners and 8 will be losers. What you don’t know is the sequence of wins and losses or how much money the market is going to make available on the winning trades. This truth makes trading a probability or numbers game. When you really believe that trading is simply a probability game, concepts like ‘right’ and ‘wrong’ or ‘win’ and ‘lose’ no longer have the same significance.”

The Importance of Trading In the Zone 

The idea of trading in the zone is one where a trader becomes so familiar with their trading plan that they are able to execute longer streaks of profitable trades without losing money. It allows traders to invest more into each trade, knowing that if they follow their plan it will help them reach their goals, manage their risks and minimise their losses.

When you first start trading it can be nerve-wracking to place a trade, but if you have taken the time to plan it out ahead of time, followed our key lessons above and know what you are looking for, the long term benefits will outweigh any short term anxiety.

Start Trading In the Zone

At Alphachain Academy, we believe that anyone can cultivate a great trading psychology and successful trading career with the help of our expert funded trading programmes and services. Just last year we funded over 500 traders across 67 countries, issuing over $4.7million in funded trading accounts! Why not join them today?

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