The 4 Stages of Trading Advancement, Which Level Are You On?
There is an old saying in the trading circle: Seeing a mountain is a mountain, not seeing a mountain is not a mountain, seeing a mountain is still a mountain. This seemingly convoluted philosophy captures the 4 stages of transformation for traders.
1. Blind Buying and Selling Phase: Entering the Market Based on Feelings
Beginners in the market often engage in these activities: chasing news, buying high and selling low, fully investing based on market fluctuations, holding on tightly to losses, and running away when they make a profit. There is no system or discipline, akin to driving blindfolded—occasionally making money by luck, only to have the market take it all back in an instant. The core issue of this stage: treating trading like gambling, relying entirely on instinct.
2. Crazy Learning Phase: Understanding Techniques but Not Making Money
After realizing the issue of losing money, one begins to voraciously study technical indicators, learn candlestick patterns, and even draw trend lines. But execution always falls short: clearly setting stop-losses yet thinking “just wait a bit longer” during losses; finally capturing a trend but fearing a profit reversal and exiting prematurely. This stage is like having a map but getting lost—knowing the methods but unable to control actions, repeatedly bouncing between “anxiety-hope.”
3. System Development Phase: Able to Make Stable Profits but Still Stumbling
Finally, a suitable trading system is discovered: knowing when to buy and when to sell, the account begins to grow steadily. But new problems arise: after consecutive profits, one can't help but increase position sizes, and one mistake can wipe out all profits. This stage is like a newly licensed driver: able to drive smoothly, but still panicking in unexpected situations, needing continual review and adjustment of the system.
4. Integration of Knowledge and Action: Trading Becomes an Instinctive Response
A truly mature trader instinctively judges whether to act upon seeing the market: exiting before a trend ends, decisively reversing during false breakouts; all operations are as natural as breathing. This is not based on technical analysis, but rather market experience ingrained in their bones—like a seasoned driver who doesn’t need to think about steering, instinctively avoiding pitfalls.
Key Breakthroughs at Each Stage
• From Blind Buying to Learning: Let go of the illusion of “making money by luck,” systematically learn the basics (like trend theory), and record the reasons for profit and loss in each trade;
• From Learning to System: Don’t be greedy for everything, select one method (like trend following) to refine, and enforce rules to execute.
