Pre-Session Warm Up Exercises
For The Day Trader

Compiled from:
The Discipline Trader by Mark Douglas
© 2003 al_gorithm

“As a trader it is more important to know that you will always follow your
rules than it is to make money, because whatever money you make, you
will inevitably lose back to the market if you can’t follow your rules.”

Rule #1 – Stay Focused

1) Stay focused on mastering the steps to achieving your goal… (PP 204)
2) All experiences are valid and have meaning, and as such, mistakes don’t exist… (PP 205)
3) Missed opportunities don’t exist. If you could have, you would have… (PP 205)

Rule #2 – Dealing With Losses

1) Predefine the loss for every setup and every trade… (PP 206)
2) Understand that losses are inevitable… (PP 206-207)
3) Make the execution of a losing trade an automatic function… (PP 207)

Rule #3 – Become An Expert At Just One Market Behavior (Setup) At A Time

1) More is not better; it just creates confusion and overload… (PP 208)

Rule #4 – Execution

1) Execute trades immediately upon perception of an opportunity… (PP 207)
2) Do not try to outguess the setup… (PP 211)
3) Employ mental discipline to make flawless execution a habit… (213-214)

Rule #5 – Think in Terms of Probability

1) Continually assess the probabilities – non-stop scanning/analyzing… (216-219)

Rule #6 – Be Objective

1) Make “Uncommitted Assessments” of the probabilities… (PP 219-221)
2) To stay objective, anticipate as many possibilities as possible… (PP 219-221)

Rule #7 – Monitor Yourself

1) Pay attention to what you are thinking and are focused on in all circumstances… (PP 221)
2) When you are in a trade, keep asking yourself “what has to happen,” and… (PP 222)
3) What is the potential for the market to move in any given direction… (PP 222)
4) Keep your focus on the structure of the market, not money… (PP 222)

Addendum to this Compilation
for young traders

Trading is a business, and as such, the business requires a business plan. The trader’s
business plan is simpler to construct than most, but harder to implement.

It will only contain two sections. Section one will be a compilation of all the technical
components, the tools start-up trader intents to use to extract money from the markets.

Section two will detail how one is going to deal with all the demons that will appear
before you and make your life hell the instant you begin placing hard earned capital at

All aspiring traders recognize that a certain amount of material capital is necessary to
trade with. But few are those who even have an inkling of the amount of psychological
capital needed. Yet trading is 90% psychological discipline, 10% technical.

Trading is unlike any other business I am aware of. You are totally responsible for your
success or failure. There is no one to carry you. No one to cover for you. The markets
will mercilessly humble you for even the slightest transgression of “the rules.”

In my personal opinion, the above compilation is the essence of the psychological
disciplines necessary to achieve success as a trader. The hell fires of the market have tried
all successful traders. Those very few who survive these fires have one thing in common.
They all have developed these essential disciplines and discipline is the Holy Grail of
trading success.

For most traders, the cost of accomplishment is expensive. Some paid a large part of their
fortune, for others, their health. Still others lost their families. Your cost can be reduced
to the time and effort it takes you to make these disciplines habitual.

Discipline does not come naturally. It needs to be nurtured. These seven rules are what
needs to be made habitual if you intend to survive. You will learn how to acquire these
disciplines in Mark Douglas’s book, The Disciplined Trader.

I am totally at peace when I am trading, because I am totally in control, thanks to

Pacem relinquo vobis, pacem meam do vobis.
-- finis --

© 2003 al_gorithm