Trading in the Zone: Mark Douglas

So i've started using Audible and started to listen to recommended books by Triforce Trader/lx21. Small Exerpt on something that hits close to home.
* Skip down to the important stuff to bypass this wall of text*

... when he finally did lose, he was in a probably in a state of mind where he least expected it. Instead of assuming that the cause of pain was his erroneous expectation of what the market was supposed to do or not do. He blamed the market and resolved that by gaining market knowledge, he can prevent such experiences from occuring. In other words, he made a dramatic shift in his perspective from being carefree to preventing pain and losses. The problem is that preventing pain by avoiding losses can't be done. The market generates behavior patterns and the patterns repeat themselves... but not every single time. So again, there is no possible way to avoid losing or being wrong. Our trader won't sense these trading realities because he is being driven forward by two compelling forces. One he desperately wants that winning feeling back. Two, He is extremely enthusiastic about all the market knowledge he is acquiring. What he doesn't realize is that despite all his enthusiasm, when he went from a carefree state of mind to a prevent and avoid mode of thinking. He shifted from a positive to a negative attitude. He's no longer focused on just winning but rather on how he can avoid pain by preventing the market from hurting him again...
... Learning more and more about the markets only to avoid pain will compound his problems because the more he learns the more he naturally expects from the market making it the more painful when the markets don't do their part. He had unwittingly created a vicious cycle in where the more he learns, the more debilitated he becomes. The more debilitated he becomes, the more he feels compelled to learn. The cycle will continue until he either quits trading in disgust or recognizes that the root cause of his trading problems is his perspective, not his lack of market knowledge. Winners, losers, boomers and busters.. It takes some time before most traders either throw in the towel or find  out the true source of their success....
... They haven't yet learned how to counteract the negative effects of euphoria or how to compensate for the potential for self-sabotage. Euphoria and self-sabotage are two powerful psychological forces that will have an extremely negative effect on your bottom line. But they are not forces where you have to concern yourself with until you start winning or start winning on a consistent basis and that's a big problem. When you are winning, you are less likely to concern yourself with anything that might be a potential problem. Especially something that feels as good as euphoria....... It's when you're winning that you're most susceptible to making a mistake. Overtrading, putting on too large of a position, violating your rules, or generally operating as if no prudent boundaries on your behavior is necessary, you might even go into the extreme of thinking that you are the market. However, the market rarely agrees and when it disagrees, you'll get hurt...
... Huge losses resulting from either euphoria or self-sabotage. Everyone seems to have a different threshold for when overconfidence or euphoria starts to take hold of the thinking process. However, the moment euphoria takes hold, the trader is in deep trouble. In a state of overconfidence or euphoria, you can't perceive any risk because euphoria makes you believe that absolutely nothing can go wrong. If nothing can go wrong, there is no need for rules or boundaries on your behavior. So putting on a larger than usual position is not only appealing.. it's compelling. However, as soon as you put on the larger than usual position, you are in danger. The larger the position, the greater the financial impact small fluctuations on price will have on your equity. Combined the larger than normal impact of a move against your position with the resolute belief that the market will do exactly what you expect and you will have a situation in which one tick in the market opposite of your trade can cause you to be in a state of mind-freeze and become immobilized. When you finally do pull yourself out of it, you will be dazed, disillusioned, and betrayed. And you'll wonder how something like that could have happened. In fact, you were betrayed by your own emotions. However, if you are not aware of or don't understand the underlying dynamics just described you'll have no other choice but to blame the market. If you believe the market did this to you, you'll be compelled to learn more about the market in order to protect yourself. The more you learn, the more confident you naturally become in your ability to win. As your confidence grows, the more likely that at some point you will cross the threshold into euphoria and start the cycle all over again. Losses that result from self-sabotage can be just as damaging but they're usually more subtle in nature. Making errors like a sell for a buy, or vice versa. Or indulging yourself in some distracting activity at the most inappropriate time are typical examples of how traders make sure they don't win. Why wouldn't someone want to win? It's really not a question of what someone wants because i believe all traders want to win. Yet there are often conflicts about winning. Sometimes these conflicts are so powerful that we find our behavior is in direct conflict in what we want. These conflicts can stem from religious upbringing, work ethic or certain types of childhood trauma. If these conflicts exists, it means that your mental environment is not completely aligned with your goals...

Lots of what i typed isn't on what i wanted to point out but oh wellz...

The important stuff   ***********************************

Switching to trading with my laptop, i do not have access to the post-it notes i have on my desktop's monitor to help me trade. I told myself 6weeks ago that i need to make a binder with all the appropriate checklists i have created for trading.. I KNEW that i shouldn't be trading with only 2 hours of sleep, and I KNEW I was not in a fully functional capacity to trade... But what we KNOW and what we DO are in complete opposite of each other in life sometimes and i went ahead and traded anyways. Utilizing checklists has prevented me from making mistakes like that in the past because either i forgot about certain rules/i have memory problems (#1 reason i have checklists) or the checklists gives me a Non-Me perspective reinforcing rules to me that i may be actively ignoring at that specific point in time i'm reading through the checklist.

If i really want to step this up even more, I have to make sure my actions reflect what it is that my mind wants... My behavior of being lazy/procastination caused me to not have the checklist i use to make sure my mental state is not compromised. Since i was mentally compromised by not having enough sleep, I analyzed my trade wrong. Since i went in a trade with the wrong analysis/hypothesis, i lost money. I need to really stop treating daytrading as a hobby and slowly transforming it into a business... because it really is a business....

NEOT: Largest loss to date

I'mma keep it short... Went to work with only 2hours of sleep.. Ran scans at 0800 EST, nothing good showing up.. might be a lame day.. ran another scan a few mins from opening.. NEOT, gapping from 1.08ish to 1.4ish.. Due to me being sleepy and not functioning well, miscategorized the play/wrong exit plan. This inital mistake snowballed into numerous other mistakes that couldn't have been prevented if I didn't trade in the first place.

Mistake of the year so far: Sleepy/Not in the appropriate mental state to trade.

On my desktop I have post-it notes attached to my monitor. The first visible one is a checklist i run through to make sure i'm in a mental/emotional/physical state to trade. Question #1 on there is-- Did I get enough sleep? if no, don't trade. Broken..

Since swapping to trading on my laptop and at work/no access to the post-it notes i have on my monitor. To remedy this, I will be making a binder and in it will be the checklists i will be running through prior to trading as well as having other checklists to maintain a consistent pre-market open process.

NEOT

Previous day's Lows:  0.77
Previous Close:           1.02
Today's open:              1.31
Pre-market's High:      1.45

This pre-market pattern was one i haven't played yet as my first profit target is usually the pre-market's high. In this case i aimed to buy it breaking out of the 1st minute's candle when it tested 1.45 as well as the pre-market high. The most important thing i totally did not heavily account for was the fact that it was waaay up on %gains from yesterday already..  30% from the previous day's close and almost 90% up. 90% up !!! Normally, i'd be very very very cautious about even entering a trade and if i do, the goal would be to just scalp it.. I went in thinking the stock had at least 10% of upside, I was already up 5% on my position and an easy 200$.. I actually thought about sizing down half my size but i held on not knowing this should have been a scalp play.. far worse was how far my ideal entry was from my actual entry.. Ideal entry was at 1.3, i entered at 1.47... 17cents off but my mental stop was at 9ema at 1.41ish.. horrible risk/reward ratio and resulted in my biggest loss to date. My entry was too far from my ideal entry/chased hard since i waited for a flag pattern to form. A gap+go strategy from DTW would've been ideal here.

On a positive note, I really liked how well i had my emotions kept in check while i was in the trade. I stuck to the plan I had even though it was a flawed plan to begin with.