Hey guys,
Below is guest post with guidelines followed.
Let’s face it, most of us start trading with the belief that we can create wealth and riches beyond our wildest dreams. The problem is we think all this can occur overnight.
It’s not our fault. The majority of people are sold these dreams almost daily. So how could it be any other way? But ask yourself, what are the real stages a trader goes through to get consistently profitable and generate a handsome living?
We all hear about successful traders and the money they make, but what about what it took to get there? Well, let’s dig into the stages in detail. While reading this, you can see where you are on the journey too.
Stage 1 – The Beginner Phase
Everything you do here is a learning experience. You think you can make millions after discovering what you believe to be the best technical indicator in the market. You make common trader errors including:
- Over-trading
- Trading too large
- No idea of risk control
- Unaware of how to use trading software properly
This is the most dangerous phase for any trader’s journey. Overcoming this can be quite tough mainly because we don’t know what to do or how to do it. Learning through trial and error means we are slowly (or quickly depending on your trading habits) eating away at our capital. You have no trading plan so there are no rules to follow.
Stage 2 – The Developing Phase
Well done if you’ve made it this far. You’ve ironed out the rookie mistakes we all make when starting out. You now know the basics of trading and have learned through your mistakes some things you shouldn’t be doing.
Your knowledge of the markets has improved. You understand things like how to place a trade, trading strategies, the importance of risk management and so on. During this phase, you understand what you shouldn’t be doing but can’t adhere to the required discipline to follow the rules of profitable trading.
This is generally when you start to dig into trading psychology and understand how it can affect your trading performance. You also become aware of the importance of a trading strategy and are now in deep search for what you believe to be the holy grail.
Stage 3- The Break-Even Phase
This is the most exciting phase so far. Through hard work and many trial and errors, you start to realize you don’t know everything about the markets and that there is no holy grail.
You’ve found a trading style that suits you and have started to implement it with discipline. As you are now a break-even trader, you’ve stopped losing money and it’s only a matter of fixing small mistakes before the profits start to roll in.
The importance of trading psychology becomes apparent so you focus on yourself more than the strategy itself and how you can improve you discipline in following it.
Stage 4 – The Profitable/Breakthrough Phase
This is the final stage and hopefully you remain here for the remainder of your trading journey. You realize what it takes to be a successful trader. Your mistakes and learning from them have brought you to this point and you now focus on improving your execution of the strategy.
You accept full responsibility for your results and begin to realize the markets aren’t out to get you. You have a solid trading plan and journal all your trades diligently. This can be a great time as you finally start to make money.
It’s important to not let this get to your head as the markets have a great way of humbling even the most experienced of traders at times. Now in this stage, you are completely focused, know yourself well and are always seeking new ways to improve.
Final Word
While going through the different stages can feel like a nightmare at the time, allow yourself to make mistakes. It’s normal to continually fail until you get it right over time. The time it takes to get to stage 4 varies from 1 trader to the next but it can be anywhere from 1 to 5 years on average to become consistently profitable.
Don’t be disheartened by setbacks, we all experience them in this industry. Obviously the first two stages are the hardest because we don’t see any money for all the work we put in. But once you can break through this, life becomes a lot easier and better.
Max Paul
Author bio
Max is an independent trader who has been trading for seven years having left a prop desk to trade independently. He is the owner of eHelpify, a trading and investing site.
