This is an article that is very down-to-earth, depicting the growth stages of a new trader in the market vividly and thoroughly. You can look through it to see if there is any reflection of yourself in it.
The profession of a trader is a highly specialized job. It is said that only 1% of people can go through the five stages of a professional trader. Which stage are you at?
Phase One: Unaware of the Impossibility
This is the first phase when you start trading. Having heard about the rags-to-riches stories of many millionaires, you know that "trading" is a business that can make a lot of money. Unfortunately, it's like when you are ready to learn how to drive, "How easy it is!" But once you start, you realize how difficult it is. Prices go up or down, what's behind this?"Let me crack it!"
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Unfortunately, much like when you first sit behind the steering wheel, you quickly realize that you have no idea where to start. You begin trading incessantly, taking on numerous risks. Sometimes as soon as you enter the market, it moves in the opposite direction, so you switch positions. "Damn! How did it go the other way again?", you switch again... and again... and again...
Perhaps you started off doing well, but that's even worse—because it tells your brain: "trading is too easy," and then you start to "do as you please."
When you incur losses, you try to double down, just like betting two dollars the next time if you lost one. Sometimes, you may get lucky and win back, but most of the time, you end up with more losses. At this point, you've completely forgotten that you're still a novice at "trading."
This stage usually lasts one to two weeks, and time flies by quickly, soon you'll enter the second stage.Phase Two: Knowing It's Not Possible
In this stage, you realize that there is still work to be done to trade and make money more effectively, "Hmm, I need to do more homework." You become aware that you are still an unqualified trader.
"I still lack the skills that can truly make a profit."
So you start setting up various "trading systems" in the charts, read a bunch of e-books, and browse the web everywhere - from websites in the United States to Ukraine, you have seen them all. At this point, you begin to explore your own "ultimate technique" (holy grail).
You become a "system trading fanatic" - trying this method and that method day after day, week after week, but you never spend enough time to test whether the system is truly feasible. Every time you get a new indicator, you are ecstatic, "This indicator is completely different!"You've tested all the automatic trading systems in Trader, and you've started playing with "moving averages," "Fibonacci lines," "support and resistance lines," MACD, KDJ... You've experimented with hundreds of indicators, dreaming that your "magic system" will be born today.
You've become a "master" at "bottom-fishing and top-catching," using your indicators to find the precise points of market reversals. Even though you find that you're still losing money, you persist in "searching, searching, searching," because you firmly believe that your approach is correct.
You start going to chat rooms and forums, and you see that some traders can make money. You really want to know, "Why can't that be me?" You ask a lot of questions, some of which you think are a bit silly in retrospect.
You quickly become a skeptic, "Those guys who call out trades are all scammers." They can't make that much money because you've also "learned," but you can't do it. "Well, they are scammers, they are shills." However, they are there every day, and their accounts are growing, while you are still experiencing failure.
Like an ignorant teenager, those traders who can make money will give you advice for free, but you stubbornly believe that what you know is the best. You completely disregard others' opinions and start over-trading, even though others say you are crazy.You start to consider following others' "shouting orders", but the results are very bad. Therefore, you are preparing to buy some "trading signals" from some websites and masters, but they still don't work for you.
You may also find a "big shot" on the forum to follow his operations. This big shot "guarantees" to transform you into a real trader (of course, this kind of "guarantee" is usually charged). Regardless of whether this "big shot" is really good or fake good, you still can't make money, because the timing is not right, and you still think you know the best.
This stage may last for several years. In fact, in real-life conversations, it is found that this stage will last at least 1 year, and generally close to 3 years. After countless setbacks, you are usually the most likely to give up "trading" at this stage.
About 60% of beginners quit the game within the first 3 months - they give up, but it's not a bad thing - just think about it, if "trading" is an easy thing, we would all be millionaires.
The remaining 20% also surrender after a year of persistence, and it is natural to go bankrupt.You might be surprised to learn that the last 20% of people will persist for three years, thinking, "I have learned to swim by swimming." However, even after three years, only 5-10% of people can truly stick with it, and they begin to make money consistently.
By the way, these are real data, not something I've conjured up out of thin air. So, even if you've really played this game for three years, don't really think you can walk on thin ice.
Many people have argued with me about these "windows of time" - interestingly, none of them have traded for more than three years - if you don't believe it, you can ask anyone on the forum who has been trading for more than five years how long it took them to become 100% proficient. I guess there must be someone who surpasses this "window of time", but I have really never seen it.
Finally, you are ready to graduate from this stage. At this point, you may have spent more time and money than you imagined, blown up 2 to 3 positions, and thought about giving up 3-4 times. However, at this point, "trading" has deeply penetrated your blood.
One day, at a certain moment, you suddenly enter the third stage.Phase Three: Enlightenment
In the later part of the second phase, you begin to realize that it is not the "trading system" that leads to different outcomes. You come to understand that a simple moving average line could actually make money, as long as your mindset and money management are correct. You start reading books on trading psychology, identifying with the characters depicted in the books. Then, "enlightenment" occurs.
"Enlightenment" seems to connect two strands in your mind. You suddenly realize that not only you, but everyone else cannot accurately predict how the market will move in the next 10 seconds, let alone the next 20 minutes.
Because of this new discovery, you stop paying attention to what others are thinking—how "main forces" will act after this data release, what changes that event will cause... You become an "independent person" who trades according to your own trading method.You start working according to your own trading style and method, and now you are happy trading, with risks under your control.
You begin to operate with your "sharp knife," seizing every good opportunity to make a profit. When your position turns bad, you are no longer angry, and you even think, "It's not my fault, I can't predict the market." When you feel your position is not good, you simply close it. "The next time, the time after that, or the time after that will have an increasingly higher chance of success," because you know your trading system works.
You stop looking at the results of trading from the perspective of a single trade, and you start looking at the trading report from a weekly perspective, "Hmm, a bad trade is not caused by a poor trading system."
You finally realize that the "trading game" is about doing one thing: continuously using your "sharp knife," adhering to your own trading discipline, regardless of your preferences.
You have learned the correct money management and the use of leverage, and now they have become one with you. You recall when someone suggested this to you before, a smile appears on your face, "I was still young then, now I understand.""Epiphany" occurs in the moment when you truly accept that you cannot predict the market.
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The Fourth Stage: Knowing What Can Be Done
Your trading system tells you what to do, and you do it. You accept losses just as you accept profits. Now you will let your profitable trades fly.
Accepting "losses" and knowing that your trading system will bring more profits than losses, when a losing trade occurs, you close it casually, "This is just a slight pang for my account."Most of the time, you are in a tug-of-war state of break-even, winning today and losing tomorrow. Sometimes you win 100 points this week, then lose 100 points the next week. Generally, you are in a break-even state without losing a lot of money.
At this point, you know that you should be considered a "good trader" overall, and you begin to gain respect from others in the forum. You are still continuously researching and thinking about your trading, but in this process, your profits have been consistently more than your losses.
On this day, you started by winning 20 points, but later lost 35 points. However, you have no feeling about this reversal, because you know they will come back. You begin to make a profit consistently every week, earning 25 points this week, and 50 points next week...
This stage will last for 6 months.Phase Five: Stopping at the Ultimate Good
You've "nailed it"—just like driving a car, every day you sit in your seat and trade—reaching a level of "effortless mastery," as if you were sitting in a car on autopilot. You start to make real "big deals," making a profit of 200 points in a day, yet not more excited than making a profit of just 1 point.
When you see newcomers on the forum shouting "Money coming! Money coming!" as if they were riding a good horse to win a grand slam, you seem to see yourself, but this is already yourself from a few years ago.
At this point, you have entered the "utopia" of trading. You can control your emotions, and you are a true "trader"—a trader who makes a fortune every day.
You have become the star of forums and chat rooms, and everyone wants to hear what you have to say. You see yourself from two years ago in their questions. You give your advice, but you know it's useless to talk, "they are still children"—but some of them will become yours, some will be faster, some slower—of course, we know that most of them will not enter the second phase, but there will definitely be some."Trading" has now become less exciting, in fact, you even find it a bit dull. Just like everything else in the world, even if you do it well, you have to keep doing it, "it's starting to get a bit dull, but this is working for yourself. Really, that's it."
In the end, you found a few like-minded people from the chat room to discuss the market, but at this point, it has become a purely technical discussion, and no one will influence each other anymore.
You have honed your trading system, which has brought you the greatest profits without increasing the risk. Your trading method has not changed - it has just become better, and now you have a capability that beauties often say: "intuition"!
You can now say loudly, "I am a trader!!" However, you, being modest, feel that there is no need to tell anyone, "this is just a job."
PostscriptI hope you enjoy this article, I hope you read it with the heart of a trader, and I especially hope that you can gain something from this article.
Please remember, only 1% of people can truly reach the fifth stage, but the reason is not a problem of "ability," but of "persistence," and the ability to change one's past experiences when new things emerge.
Losers are those who want to "get rich overnight." There is nothing wrong with having such thoughts, but they enter the market for only six months and put on a pair of colored glasses, so they cannot see the essence of things. Their mantra is "This is what I see, that is the rule I have found." They refuse to absorb new things and refuse to change their ignorance.
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