Interpretations that would result in a more satisfying experience

always] 
The best traders don't try to hide 
from these unknown variables by pretending they don't exist, nor do they try to intellectualize or 
rationalize them away through market analysis. Quite the contrary, the best traders take these variables 
into account, factoring them into every component of their trading regimes. For the typical trader, just 
the opposite is true. He trades from the perspective that what he can't see, hear, or feel must not exist. 
What other explanation could account for his behavior? If he really believed in the existence of all the 
hidden variables that have the potential to act on prices in any given moment, then he would also have 
to believe that every trade has an uncertain outcome. And if every trade truly has an uncertain outcome, 
then how could he ever justify or talk himself into not predefining his risk, cutting his losses, or having 
some systematic way to take profits? Given the circumstances, not adhering to these three fundamental 
principles is the equivalent of committing financial and emotional suicide. Since most traders don't 
adhere to these principles, are we to assume that their true underlying motivation for trading is to 
destroy themselves? It's certainly possible, but I think the percentage of traders who either consciously 
or subconsciously want to rid themselves of their money or hurt themselves in some way is extremely 
small. So, if financial suicide is not the predominant reason, then what could keep someone from doing 
something that would otherwise make absolute, perfect sense? The answer is quite simple: The typical 
trader doesn't predefine his risk, cut his losses, or systematically take profits because the typical trader 
doesn't believe it's necessary. The only reason why he would believe it isn't necessary is that he 
believes he already knows what's going to happen next, based on what he perceives is happening in any 
given "now moment." 
If he already knows, then there's really no reason to adhere to these principles. Believing, assuming, or 
thinking that "he knows" will be the cause of virtually eveiy trading error he has the potential to make 
(with the exception of those errors that are the result of not believing that he deserves the money). Our 
beliefs about what is true and real are very powerful inner forces.
They control every aspect of how we interact with the markets, from our perceptions, interpretations, 
decisions, actions, and expectations, to our feelings about the results. It's extremely difficult to act in a 
way that contradicts what we believe to be true. In some cases, depending on the strength of the belief, 
it can be next to impossible to do anything that violates the integrity of a belief. What the typical trader 
doesn't realize is that he needs an inner mechanism, in the form of some powerful beliefs, that virtually 
compels him to perceive the market from a perspective that is always expanding with greater and 
greater degrees of clarity, and also compels him always act appropriately, given the psychological 
conditions and the nature of price movement. The most effective and functional trading belief that he 
can acquire is "anything can happen." Aside from the fact that it is the truth, it will act as a solid 

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foundation for building every other belief and attitude that he needs to be a successful trader. Without 
that belief, his mind will automatically, and usually without his conscious awareness, cause him to 
avoid, block, or rationalize away any information that indicates the market may do something he hasn't 
accepted as possible.
If he believes that anything is possible, then there's nothing for his mind to avoid. Because 
anything 
includes everything, this belief will act as an expansive force on his perception of the market that will 
allow him to perceive information that might otherwise have been invisible to him. In essence, he will 
be making himself available (opening his mind) to perceive more of the possibilities that exist from the 
markets perspective. Most important, by establishing a belief that anything can happen, he will be 
training his mind to think in probabilities. This is by far the most essential as well as the most difficult 
principle for people to grasp and to effectively integrate into their mental systems. 
CHAPTER 7