The Disciplined Trader (and his other book Trading in the Zone) are fantastic reads on the psychology of the market and the psychology of the individual trader or investor. He goes through all the different ways (in great detail BTW) people sabotage themselves and lose money in the markets. It is not an easy book to read, very high level and you'll probably have to re-read sections several times to understand what he's saying. However, once you get it, and actually transform your mind, you'll never trade or invest the same way again.
If I could sum up Douglas's entire philosophy it is this:
1) Find a pattern in the market that gives you an edge (an edge is nothing more than the probability of one thing happening over another)
2) Define your risk
3) Take the trade (or investment)
It's really that simple, but most people can't do it! Douglas basically spends 250 pages taking you through your psychology and describes why you aren't able to do this simple thing. Then he gives instructions and exercises to help you transform your psychology to help you get to this place where you can think in terms of probabilities, have no fear, and have a clear mind so that you can make the correct decisions. Most people think good traders or investors have very complex methodologies and secrets that allow them to be so successful. However, many employ very simple strategies. The difference is that they are not swayed by their emotions and default human psychology into making dumb decisions. This book is a fantastic intro into our mindset, and how to change it.
