The stages of the trading profession

Most new traders never go through the learning curve, and those who earn and are successful very early, after a short time realize that they just had the luck of a beginner and did not have the skills they thought they had. Traders go through many stages in their development and it seems that they can not miss a step, but will have to understand their mistakes and weaknesses in a difficult way.


Stage 1: The rookie who has no idea

The new trader has zero knowledge of how markets work and how to make money. In the early stages, most rookies believe that profitable traders can predict price movements and are right about any trade. One beginner believes that traders make a constant return daily and weekly and has a Holy Grail for trading that makes money in every market. They believe that traders create regular “wages” for themselves with little loss and no absorption of capital. At this point, a new trader knows nothing and is unaware of his own ignorance.


Stage 2: The new one who pays for his knowledge

< br> There are two directions at this stage. The serious rookie will start self-learning with books, studying graphics, buying online courses and learning to develop systems and backtesting. There are also an endless number of free online resources on how to learn the basics of trading – these traders are on the right track.

In the other direction are traders who choose to embark directly on real trading. Every trader pays for his current knowledge with time, effort and losses. It is best to learn as much as you can about trading and risk management before embarking on real money trading. It is ignorant to think that you can start trading without a plan and system. You decide how expensive you want your trading lessons to be.


Stage 3: The stage for verification with reality.

At this point, the merchant has researched enough to ask the right questions or has blown his entire first account and is now ready to learn and trade seriously. Once the new trader realizes that trading is not “easy money”, this will be the crossroads of whether he will stay in business or not.


Stage 4: Oversaturation with information

At this stage the trader begins to read and study any information on how to start trading in the markets, but he has no idea how conflicting this information overload will become in the future.

Momentum trader says to buy in case of breakout, while swing trader recommends to be short in case of resistance. The day trader thinks that the overnight risk is too dangerous and the trend trader says that holding positions for the night and for days or weeks hides big profits. Some systems are built on a high percentage of profitable trades, while others focus on large profits and managing small losses …. When the new trader understands price action, reactive trading analysis and risk / profit ratios – then he will begin to select and chooses which is the right method for him – on what time frame, what will be his target and when he should leave the market.

Stage 5: Developing your own strategy

At this stage, the new trader decides to become a real trader and begins to filter all the acquired knowledge that will make him aim to create its own trading system.

Often new traders try to find the Holy Grail and the method that will work “always and in spite of everything”. However, this can be a trap, because that’s how people spend a lot of time realizing that it doesn’t exist, and only then do they decide to stop looking for the perfect trading system and just decide to develop their own. It must be based on a person’s individual perception of risk, the time he can afford to spend through the monitor, the goals of his return, his personality and his beliefs. Setups should also be selected that usually work well over time and help reduce losses by allowing winners to grow.


Stage 6: Finally profitable trading

The winning trader has created a trading system with a positive expected return on time. He trades armed with discipline and consistency. He is not intrigued emotionally by losses, as they are simply part of any winning system, not ostentatiously that something is wrong.

The good deal is the one executed according to the system and with discipline, and the bad deal is the one executed not according to the criteria for trade. The trader becomes the owner of the price action and trades on his own signals. He is careful how he manages his small profits, small losses, break even or big profits. Big losses are removed from the possible results of his trades, and the money becomes a side effect of

good trade. Ultimately, the trader becomes a manager who manages his own system, just like a business, and allows his work to pay off in the long run. The difference is that he already believes in his criteria and their implementation, because of his strict risk management and rules.