To be a successful trader isn’t something that happens overnight, and most traders go through these 5 stages before becoming successful.
Stage 1: Incompetence
Fresh and inexperienced, new traders all enter the markets at this stage. Their minds are giddy and full of overconfidence about how they can amass great wealth overnight. The new trader has a mixture of successful and unsuccessful trades, and gets disappointed that he always gets in a wrong trade. Frustrated, he doubles up on every trade, and starts to trade beyond his limit. This is the point of time that will test a trader’s limits and may completely wipe out a trader.
Stage 2: Education
After being burnt by the market and understanding how things work better, the trader now sets out to educate himself better. He reads widely, attends courses and seminars, and tries out different trading packages. He looks at advice and entry signals from other traders online and around him, and wonder what he’s doing differently.
Stage 3: Realisation
Finally the trader realises its never been the system that’s the problem – the issue lies with himself. A simple system based on simple indicators can make money if he can control his emotions and practice good money management. At this point, the trader cares less about what others say, and about which system is better. He finds a system that he’s comfortable with, and sticks to it. Every trading opportunity is executed with discipline and without emotions as he knows that individual losses don’t matter at all, since he knows that his system is profitable over the long run.
Stage 4: Competence
At this stage, the trader now automatically makes trades whenever his system tells him to, and fully understands and accepts the risks of each trade. Losses are cut short very quickly, and the trader makes trades with confidence as he has a plan to follow.
Stage 5: Mastery
Finally, the trader is at a point where he is so used to trading that it becomes second nature to him. Big trades can be executed, and he is not only able to take losses, but is also able to let his winning trades run to their full potential. Emotions are now never a part of his trading, and he is able to become consistently profitable.
The above shows you the typical route that people take to be a successful trader. Some people give up at some point, and it’s hard to fault them, because the losses that they bear are so huge. However, it’s important to honestly evaluate yourself and know what you need to do to get to the next stage.
All the best!