Open trading account 
The object of this exercise is to convince yourself that trading is just a simple game of probabilities (numbers), not much different from pulling the handle of a slot machine. At the micro level, the outcomes to individual edges are independent occurrences and random in relationship to one another. At the macro level, the outcomes over a series of trades will produce consistent results. From a probabilities perspective, this means that instead of being the person playing the slot machine, as a trader, you can be the casino, if:
1. you have an edge that genuinely puts the odds of success in your favor;
2. you can think about trading in the appropriate manner (the five fundamental truths); and
3. you can do everything you need to do over a series of trades. Then, like the casinos, you will own the
game and be a consistent winner.
SETTING UP THE EXERCISE
Pick a market.
Choose one actively traded stock or futures contract to trade. It doesn't matter what it is, as long as it's liquid and you can afford the margin requirements for trading at least three hundred shares or three futures contracts per trade.
Choose a set of market variables that define an edge. This can be any trading system you want. The trading system or methodology you choose can be mathematical, mechanical, or visual (based on patterns in price charts). It doesn't matter whether you personally design the system or purchase it from someone else, nor do you need to take a long time or be too picky trying to find or develop the best or right system. This exercise is not about system development and it is not a test of your analytical abilities. In fact, the variables you choose can even be considered mediocre by most traders' standards, because what you are going to learn from doing this exercise is not dependent upon whether you actually make money.
If you consider this exercise an educational expense, it will cut down on the amount of time and effort you might otherwise expend trying to find the most profitable edges. For those of you who might be wondering, I'm not going to make any specific recommendations about what system or variables you should use, because I assume that most of the people reading this book are already well schooled in technical analysis. If you need additional assistance, there are hundreds of books available on the topic, as well as system vendors who are more than willing to sell you their ideas. . Whatever system you choose to use has to fit within the following specifications.
Source:"Trading in the zone" by Mark Douglas1. you have an edge that genuinely puts the odds of success in your favor;
2. you can think about trading in the appropriate manner (the five fundamental truths); and
3. you can do everything you need to do over a series of trades. Then, like the casinos, you will own the
game and be a consistent winner.
SETTING UP THE EXERCISE
Pick a market.
Choose one actively traded stock or futures contract to trade. It doesn't matter what it is, as long as it's liquid and you can afford the margin requirements for trading at least three hundred shares or three futures contracts per trade.
Choose a set of market variables that define an edge. This can be any trading system you want. The trading system or methodology you choose can be mathematical, mechanical, or visual (based on patterns in price charts). It doesn't matter whether you personally design the system or purchase it from someone else, nor do you need to take a long time or be too picky trying to find or develop the best or right system. This exercise is not about system development and it is not a test of your analytical abilities. In fact, the variables you choose can even be considered mediocre by most traders' standards, because what you are going to learn from doing this exercise is not dependent upon whether you actually make money.
If you consider this exercise an educational expense, it will cut down on the amount of time and effort you might otherwise expend trying to find the most profitable edges. For those of you who might be wondering, I'm not going to make any specific recommendations about what system or variables you should use, because I assume that most of the people reading this book are already well schooled in technical analysis. If you need additional assistance, there are hundreds of books available on the topic, as well as system vendors who are more than willing to sell you their ideas. . Whatever system you choose to use has to fit within the following specifications.
Trade well.
E.
