Much has been discussed about the stages that a typical trader will encounter as they progress on their journey to profitability. In this article we will explore the some key phases that every trader goes through as they develop as a trader. At every stage along the way (until you reach final stage), there is a likelihood that your journey will end. If anyone sustains in these stages, their chances are bright to become one of few that can proudly state that they are a consistent, professional trader.
Stage 1 – Trading on hearsay:
This is where most traders/investors start, and end, their journeys. They are totally dependent on what they have heard and seek for advice from friends and people into the same field. These Traders have little or no understanding of the concepts of risk or money management. Sadly these tips cannot go on forever and the journeys of these traders will invariably end in 1 of 2 ways. Now, rest of the people who decided not to quit will move to second level.
Stage 2 – Information overload and the Holy Grail:
By enter into a wonderful and exciting stage 2, people will consume as much trading material as they possibly can. Here people focus more on getting some great trading systems which allow them to win the race.
They will purchase some trading systems to help them with solutions and suggestions. They will constantly search for the Holy Grail – that one system that delivers consistent profits. They will have number of success to feel great about. In fact there is no such thing as the Holy Grail, until you yourself do not know about the basic of trading. Many people who lose hope will now quit, as they think they have tried everything in their control in order to make money in the stock market.
Those that don’t quit will move to a different and even more challenging stage in their trading journey
Stage 3 – Profit and Loss (Large P/L and emotional swings):
One day thinking you have made it, the next thinking that you have not. If anyone can makes it this far than they have a great chance of achieving the success. They have learned some great lessons on the way to this stage like, do not completely follow what other people are saying, there is nothing called Holy Grail if you are not clear with your basics of trading.
At this stage people have started developing the mind of a knowledgeable trader. They have learned what kind of trader they are and there concept about themselves as technical or fundamental, trader or investor, short and longer term trader is clear. They will know what is important in trading. Few traders will actually give up at this point, many will continue to trade with a modicum of success.
Stage 4 – Consistency:
The early stages of being a consistent trader can be like sitting on a knife edge. There are periods when you suddenly believe you are back at Stage 3, a series of losses can still occur and you begin to doubt your ability and your system. This is not unusual, but most traders at Stage 4, will have begun to develop a traders mindset. This Stage can last for years. Understanding and dealing with emotion can take many years. Until such time as wins and losses do not affect your mindset you will remain at this stage.
Stage 5 – Professional:
Stage 5 traders are the rock stars of the Industry. They are sat in their home offices totally comfortable in their ability to make a living trading the financial markets. They have experienced periods of profitability and periods of loss and are agnostic to both. They accept that trading is simply about probability and being consistent in their approach of finding and trading edges. They will also likely have sizable trading accounts as they will be risking 1% or less on each position and looking to make 2-3% per trade.
Understanding the journey and the Stages in that journey will help us all to plot our paths to Stage 5.
Learn more about trading, stock management software or stock chart analysis from - http://www.vectorvest.com
Stage 1 – Trading on hearsay:
This is where most traders/investors start, and end, their journeys. They are totally dependent on what they have heard and seek for advice from friends and people into the same field. These Traders have little or no understanding of the concepts of risk or money management. Sadly these tips cannot go on forever and the journeys of these traders will invariably end in 1 of 2 ways. Now, rest of the people who decided not to quit will move to second level.
Stage 2 – Information overload and the Holy Grail:
By enter into a wonderful and exciting stage 2, people will consume as much trading material as they possibly can. Here people focus more on getting some great trading systems which allow them to win the race.
They will purchase some trading systems to help them with solutions and suggestions. They will constantly search for the Holy Grail – that one system that delivers consistent profits. They will have number of success to feel great about. In fact there is no such thing as the Holy Grail, until you yourself do not know about the basic of trading. Many people who lose hope will now quit, as they think they have tried everything in their control in order to make money in the stock market.
Those that don’t quit will move to a different and even more challenging stage in their trading journey
Stage 3 – Profit and Loss (Large P/L and emotional swings):
One day thinking you have made it, the next thinking that you have not. If anyone can makes it this far than they have a great chance of achieving the success. They have learned some great lessons on the way to this stage like, do not completely follow what other people are saying, there is nothing called Holy Grail if you are not clear with your basics of trading.
At this stage people have started developing the mind of a knowledgeable trader. They have learned what kind of trader they are and there concept about themselves as technical or fundamental, trader or investor, short and longer term trader is clear. They will know what is important in trading. Few traders will actually give up at this point, many will continue to trade with a modicum of success.
Stage 4 – Consistency:
The early stages of being a consistent trader can be like sitting on a knife edge. There are periods when you suddenly believe you are back at Stage 3, a series of losses can still occur and you begin to doubt your ability and your system. This is not unusual, but most traders at Stage 4, will have begun to develop a traders mindset. This Stage can last for years. Understanding and dealing with emotion can take many years. Until such time as wins and losses do not affect your mindset you will remain at this stage.
Stage 5 – Professional:
Stage 5 traders are the rock stars of the Industry. They are sat in their home offices totally comfortable in their ability to make a living trading the financial markets. They have experienced periods of profitability and periods of loss and are agnostic to both. They accept that trading is simply about probability and being consistent in their approach of finding and trading edges. They will also likely have sizable trading accounts as they will be risking 1% or less on each position and looking to make 2-3% per trade.
Understanding the journey and the Stages in that journey will help us all to plot our paths to Stage 5.
Learn more about trading, stock management software or stock chart analysis from - http://www.vectorvest.com
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