5 STAGES TO BECOME A TRADER
STEP 1: "INNOCENT NAIVETE"
This is the first step when you enter trading. You know trading is a good way to
make money, because you've heard a lot about it and about millionaires... Unfortunately, just like
when you first started driving, you thought it was easy - after all, you realized how difficult it was... The market goes up and down... what's the secret in it – let's explore!
Unfortunately, just like the first time you sat behind the wheel, you quickly understood
that you don't have the slightest skill to do this. You trade a lot and risk too much. When you open a position and it goes against you, you jump out and open another position in the opposite direction, and it goes against your position again... and so on, again and again...
You can achieve some initial success, in fact this is quite bad because it tells
tell your subconscious “oh, winning trades is easy” and you start risking more.
You want to get back what you lost and start “doubling” each trade. Sometimes you win,
but often you get bruised and hurt, suffer serious losses. You forget that you have no trading skills.
This stage usually lasts a few weeks, and the market usually changes quickly and you get
get caught up in stage 2.
STEP 2: CONSCIOUSNESS OF YOUR INABILITY
At this stage you realize that there are many things to do to trade, need
to learn and you need to learn some things… You know that you actually don't have the skills
skills in trading, not enough knowledge to make a profit.
You start buying systems and a series of e-books, reading trading websites and start looking for the “holy grail”.
During this stage you are a system tester, every day every week you change from
one method after another and never stick around long enough to see if they really work. Every time you get an indicator, you imagine that it will make a difference.
You test systems, you use moving averages, Fibonacci lines, support, resistance, Pivot, RSI, DMI, ADX and hundreds of other things hoping that your “magic” system will work immediately today. You catch the peaks, catch the bottoms, try to pinpoint the reversal points with your indicators and you realize that you continue to lose, even lose more just because you are sure that your system is correct.
You see other traders making money, and you want to know why you're not - you ask a lot of questions, some of which are so silly that you find them funny in retrospect. You come to the conclusion that all the winning traders are just liars, they can't win because you've done everything you can and you can't, so how can they? You know as much as they do and they must be liars. But they are still there day after day, their account is increasing while yours is the opposite.
You're like a little boy, traders make money from your advice but you still
are stubborn and think you already know. You ignore the advice and continue to overtrade even if someone says you're crazy, you still think you know. You think about and buy signals from some people, but this doesn't help you any better. No matter how good the teacher is, you can't win because nothing can replace experience, but you still think you already know.
This stage can last very, very long – to my knowledge from chatting with other traders as well as from personal experience, this stage usually lasts from 1 year to almost 3 years. This is also the stage where you almost want to give up because you are discouraged.
About 60% of new traders drop out in the first 3 months - they give up and this is a good thing for them - think about it - if trading was easy we would all be millionaires!
About 20% pursue it for 1 year and then blow up their account, of course
that's it.
What will surprise you is that the remaining 20% continue the journey for about 3 years – and they
think they have survived – but even after 3 years only 5-10% can continue the journey and actually make stable money.
Also, these are real numbers, not numbers I made up - so
So even if you've been in the game for 3 years, don't think that the road you've traveled will be smooth from then on. Many people have argued with me about this 3 year period - it's funny that none of them have been trading for 3 years - if you think you know more than others, ask around if anyone has traded for 5 years and ask them how long it takes to make stable money. I understand that there are always exceptions - but I have never seen that exception.
Finally you finish this stage. Maybe you will commit to spending more time,
more effort and money than you ever thought, burned a few accounts, gave up three or four times, but now it's in your blood.
One day, in a moment, you enter the third stage...
STEP 3: EUREKA MOMENT
At the end of the second leg (stage 2) you realize that the difference is not due to
systems create. You realize that you can make money with just one moving average,
nothing else is needed if you have the right mindset and capital management. You start reading books about psychology in trading, empathizing with the characters depicted in these books and finally you come to the “Eureka” moment.
This “Eureka” moment creates a connection with what is already inside you. You suddenly realize
out that you, anyone can't accurately predict how the market will move in the next ten or 20 seconds, so don't worry about what it will be like in the next 20 minutes. Because of this discovery, you no longer care what others think – how this news will affect you, how this event will affect the market. You become an individual with your own method.
You start focusing on just one system and honing it in your own way, you start
feel happy and determine your risk threshold.
You start making trades when your system shows a high win rate. When
position goes against you, you are not angry because you are aware that you cannot predict, and you quickly close the order when the market goes against the direction. The next trade or the next trade or the trade after that will likely win because you know your system works.
You stop looking at the prospects of each trade and start looking at the numbers weekly, you know that a bad trade doesn't mean your system is bad. In a moment you realize that the trading game is tied to only one thing: sticking to the system and discipline set in each trade no matter what happens, because you know that in the end you will win.
You learn about capital management and leverage, such as how much to risk on your account, etc.,
etc… and now you really “get it”, and you smile remembering the people who advised you these things a year ago. You weren't ready then, but now you are. The “Ereka” moment comes when you truly accept that you cannot predict the market.
STEP 4: CONSCIOUS COMPETENCE
You trade when your system gives a signal. You take each trade equally easily, whether win or lose. You take the risk to let your winning trades have the opportunity to go all the way because you know your system earns more money than it loses, and you quickly close when it's a losing trade so it doesn't cause serious damage to your account.
Now you are at a point where most of your trades break even, days of profit and days of loss, some weeks you make a hundred pips and some weeks you lose a hundred pips – in general you break even and don't lose money. Now you realize you are progressing on your path. You still have to work and think about your trades, and as you continue to do this, you start earning more than you lose, consistently.
You start a day winning 20 pips, losing 35 pips but you don't think you've given back
what has been earned for the market because you know you will get it back. Now you make stable money week after week, 25 pips a week, 50 pips a week... and so on.
It lasts about 6 months.
STEP 5: UNCONSCIOUS COMPETENCE
Like you are cooking – or like driving a car, every day you sit
into the chair to trade - now you do everything unconsciously. You are in autopilot mode. You start making bigger trades and winning 200 pips a day doesn't excite you any more than 1 pip.
Like an impossible thing in trading - you have truly mastered your emotions, and
now you are a trader with very rapid account growth.
Newbie traders ask for your opinion, people listen to what you say. You recognize your image from about 2 years ago in their questions. You advise them, but you know that most of that advice will be blown away because they are immature children - some of them will reach a position like you now - some faster and others slower - actually a lot, a lot of people never get out of the second stage, except for a few.
Trading is no longer interesting - in fact, it's a bit boring
different – just like everything else in life, when you become proficient, or it's just a job – it becomes boring. It's just a job, that's it.
All the time now you focus on honing your method to achieve benefits
greatest profits from the market without increasing the risk ratio. Your trading method does not change – it only becomes more perfect – now you have what women call “intuition”.
Now you can hold your head high and say “I work in currency trading”, but
in fact, you don't even want to bother anyone by saying that - it's just a job
work like any other job.
Remember that only 5% are really successful – but the reason for failure is not ability
but in the ability to endure, the ability to change perceptions and the ability to change patterns when things change.
The loser is someone who wants to “get rich quickly”, approaches the market and attaches
blinders, so they don't see the obvious truth - a kind of “this is how I think about it and it must be so” point of view - refusing to “digest” things that change that perception.
I am very happy to say that the reason I got into trading was because I wanted to “get rich quickly”. Now
I think of it as a way to “get rich slowly”.
If you are thinking of giving up, I have some advice for you... Ask yourself
yourself a question “How many years would you spend in college once you knew that after graduation you would earn a salary of $1 million per year?”
Take care and good trading.
