TW just shared with me a very interesting set of statements for traders. Like any other profession, becoming proficient in trading is a combination of hard work and perseverance. What is amazing is that almost all traders will go through the various stages as described by each of these questions. Personally, I could relate to many of them and I will explain my situation one by one. By the time you can relate to everything, you are indeed a true profitable trader. If you notice there is no personal descriptions to the statement, means I am not there yet as a trader!
Based upon an original by Mike McMahon Director of Education Online Trading Academy adapted by Steve Beaumont
1) We accumulate information. Attend seminars, expos and the like, buy books.
Initially, I read many books on personal finance and investment. I also attended a stock trading course.
All the resources you'll ever need as an investor
We've gone ahead and done the work. Compiled here are all the resources you'll need as an investor.
2) We feel we have researched and now it’s time to trade with our ‘new’ knowledge.
I feel so good that I know something that I previously did not. Felt that I have some “powers”.
3) We learn the way of consistently ‘donating’ and then it occurs to us we may need more knowledge.
Like everyone else, we make money when the market is good, and lose money when the market is bad.
4) We accumulate more information in the same way.
Yes. I always read books 🙂
5) We change instruments that we trade- stocks to indices, indices to options, currencies to futures etc
Yes again. I went for a forex trading course as I felt that I could trade it when stocks are not moving.
6) We go back to the market with updated better knowledge and trade.
I traded stocks and forex.
7) Again the beating starts and the donation continues. Confidence is ebbing, and fear is taking hold
Yes. More knowledge, but still lose in the markets.
8) We start listening to other traders, outside news, tips.
Not particularly so, but I do research on the very elite traders and try to grasp how they become that good.
9) We go back and donate some more
Yes. I always have losses.
10) It is time to switch securities again
I tend to feel my trading system for stocks is better when I lose in forex and vice versa.
11) We need a community of successful traders to work with.
I start to see this as a need, but have not done anything yet.
12) Actively seeking new information that will fix it. Focus is on the problem. We seek education not information, guidance not advice, support not critique.
I am trying to find out about myself. What is my psychology behind all the trades, especially the losing ones.
13) We get education. Now we understand the market, what constitutes a plan, and how financial risk works.
A bit of understanding I would say, but not to the extent that I can implement something useful.
14) Back into the market we see some progress, at last we are getting it
Made some money.
15) As we get over confident the market provides some humility and takes some money back
continue from 14.. but also lose some. Consistency is an issue.
16) Now we truly understand. Trading successfully is going to take more time and more knowledge than we first thought. It is serious determination that will see us through.
Definitely true. I realise if you want to trade, you have to do it with your heart and soul. Spend alot of time on it. Have alot of passion for it. Treat it as a profession, not a money generating activity.
This is the point at which most will give up. Beyond this point is where truly successful traders are made.
17) Now we get serious and start concentrating on a viable realistic method. We reflect back on our education and use it to find the method.
Trying to do it.
18) The method is working with limited success. It is a foundation and now we must improve upon it.
I realised I need to work on my psychology and also understand some fundamentals.
19) We now understand some rules are required, these will make the application of the method stronger.
I realised I need to tailor some rules for myself.
20) It is at this point we need a reliable mentor, continued education. Someone who understands what it takes and can show us method and rules in action.
I attend mentor session regularly, but not to the extent that I review my results with them.
21) We stop trading for a bit, and develop and research our rules.
I have minimised my trading, took a step back and reviewing.
22) We use our mentors guidance to hone our rules. We see our mentors rules in action.
23) We start trading again and with the rules find some success. There is still hesitation in our execution.
24) We review our rules on a regular basis, hold them up to scrutiny modify when necessary. We learn to be proficient with our rules.
25) Now we feel that the threshold to be a successful trader is in sight, we are about to cross over
26) We now take full ownership of our trading result, and it is then we understand our success is in us, not the method
27) Trading continues, we become proficient with our method and rules
28) Education continues giving us an understanding of the effects of our rules and method. Seeing other rules and method in action. Now the books are starting to make sense!
29) The tendency to break the rules still exists and causes our results to be a little erratic
30) Time to go back and research the rules
31) We know we are close, we can taste the success
32) Now we have confidence in our rules and take that to market, obeying our rules for our success
33) The results are getting better, much better infact. Though we still hesitate in executing the rules
34) The results start to consistently show that only violating the rules stops our success
35) We can now see the lack of success is in us. Any tendency not to follow the rules because of fear causes the problem. We now begin to work on ourselves and understand how we work.
36) We continue to trade and the market teaches us more and more about ourselves.
37) We master ourselves, our method and our rules
38) We consistently make money
39) We get a little over confident and the market humbles us
40) We continue to learn our lessons, and embrace them when they come along
41) Now we stop thinking and just follow the rules. Trading has become boring but successful, our account continues to grow and our positions size is increasing
42) We are making more money than we dreamed possible
43) We now have the freedom we first sought and our dreams are a reality. We are earning more than ever seemed possible.
44) We know our rules will need review. We know our method will need review. We know we will need review.
45) We use our community of successful traders to keep our path true.
46) We now know what it takes to be a successful trader.