Timeless Wisdom From "Trading In The Zone": You Don't Need To Know What's Going To Happen Next
On this bloody Friday for metals & commodities, it's a good time to consume the timeless wisdom of Mark Douglas and "Trading In The Zone"
Mark Douglas published his epic trading tome Trading In The Zone 25 years ago. A lot has changed in markets since 2000, however, the wisdom contained within this book remains evergreen.
In Trading in the Zone, Douglas distills his philosophy into five fundamental truths (or principles) about trading psychology and market behavior — designed to help traders think in probabilities and detach emotionally from individual outcomes.
1. Anything can happen.
No matter how certain a setup appears, the market can move in any direction at any time. Every trade carries inherent uncertainty, and successful traders embrace this truth rather than fight it.
2. You don’t need to know what is going to happen next to make money.
Profitability doesn’t come from prediction — it comes from executing a well-defined edge repeatedly over time. Consistent execution matters more than being “right.”
3. There is a random distribution between wins and losses for any given set of variables that define an edge.
Even with a proven strategy, individual outcomes are random. The only thing predictable is that, over a large enough sample size, your edge will manifest statistically.
4. An edge is nothing more than an indication of a higher probability of one thing happening over another.
An edge doesn’t guarantee success — it just tilts the odds slightly in your favor. The trader’s job is to exploit that small advantage repeatedly and unemotionally.
5. Every moment in the market is unique.
No two market situations are ever identical — even if they look similar on a chart. Each moment is the result of countless unique variables and participant behaviors, meaning you must approach every trade with an open, flexible mindset.
Each one of the five principles is valuable in its own right. However, I know many struggling traders find it difficult to embrace some of these concepts—particularly principle #2. They believe they must predict what’s going to happen next in order to make money. In reality, as Douglas himself explains, the only thing he expects after placing a trade is that “something will happen.”
By detaching from the need to know what’s next—and from the need to be right—we open ourselves to infinite possibilities and everything the market has to offer. The market will always be there, doing its thing; it’s up to us to adapt to changing environments and adjust our strategy and execution to fit the market in front of us.
After all, we can only control what we do and how we think. We have no control over what the market is doing or what it will do.
The simplest example of principle #2 is the concept of trend following. I don’t need to know what each candlestick on a chart will look like—I just need to identify the controlling trend, position accordingly, and follow it.
CDE (Daily)
CDE is up ~100% since August. During its two-month ascent, CDE has experienced five separate 2-day pullbacks. I know there will be red days, just as there will be green days. I don’t need to guess each squiggle on the chart in order to profit from the trend.
Anything can happen. This concept is much more profound than it appears at first blush. Because truly—anything can happen in markets. Once we fully embrace this concept, we are no longer trying to fight extreme market volatility, outsized moves, or a falling share price just because we believe the opposite should be happening.
Just like today’s beatdown across metals & miners, anything can happen. Embrace the uncertainty and manage risk effectively. Volatility can be our friend if we are prepared for it.
DISCLAIMER: The work included in this article is based on current events, technical charts, company news releases, corporate presentations and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. This article is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read company profiles on www.SEDARplus.ca for important risk disclosures. It’s your money and your responsibility.