Reblog: The 6 Stages Of A Trader’s Development Part 2
This is the second part of the article. The first part can be accessed here.
Stage Four: The Determined Trader
- This is the stage in which you learn to specialize in certain markets and trading methods.
- Without realizing it, you have finally found your style of trading after hours of hard work and research. You stick to your method and you improve it
- You realize that you need an edge whether its tape reading or being a Fibonacci expert. The important thing is you are slowly transforming yourself into a specialized trader
- You test your methods and they seem to work. You gain tremendous market knowledge.
- You reflect back on yourself and you can’t help but laugh at your foolishness.
- Although you have not made enough money to call yourself successful you are proud of your journey and accomplishments
- You realize that the Holy Grail is not about technical indicators or price patterns
- You calculate risk before profits and place strict money management on all your trades.
- You cut losses short and learn to scale out on your winners.
- You start accept losing as a natural part of the game
- You take high probability trades that you have tested and feel confident about your setups because you understand that trading is a game of probabilities
- Your psychological makeup has changed from an amateur mindset to a professional one.
Stage Five: The Consistent Trader
- You rely on your trading method and start taking trades systematically. You try to aim for consistency and are meeting your daily goals often.
- You are fully aware of your strengths and weaknesses as a trader.
- At times you feel euphoric and at times you feel pain. But you are able to understand your own psychological makeup to control your emotional swings.
- You begin to incorporate the “scientific method” into his efforts in order to develop a trading plan, including risk management and trade management. He learns the value of curiosity, of detached interest, of persistence and perseverance, of taking bits and pieces from here and there in order to fashion a trading plan and strategy that are uniquely his, one in which he has complete confidence because he has tested it thoroughly and knows from his own experience that it is consistently profitable.
- You are now able to trade for a living
- You have reached the conscious competence stage
Stage Six: The Expert Trader
- In this final stage, you completely understand the markets you are trading. Being involved in it every day you are aware of every key price level
- You understand the market concept and are able to predict the direction of the markets a fairly good amount of time.
- You pat yourself on your back and take profits as soon as you feel euphoric. You do this because you understand euphoria is the same as emotional trading.
- You talk to other traders and realize the development stage they are in
- People start asking you for trading advice, you publish a book, and you have a specific trading methodology that represents you!
- Taking trades come naturally and you are able to get in and out at the precise price levels based on tape
- Instead of having the markets take your stop out, you exit when you know you are wrong.
- You keep your head high but remain humble on the inside. You have now officially graduated the school of the hard knocks
- You Do not have to know what the market will do next because he knows how he will react to anything the market does and is confident in his ability to react correctly.
- You have reached the unconscious competence stage.
The original post is authored by Mastermind, Brahmesh Bhandari and is available here.