I would like to thank the late William McRae for instilling this understanding in me early in my career. I enjoyed putting this together and hope it helps traders (at any level) better understand what it takes to make it.
Trading Development Phases: The Long Haul To Becoming A Successful Trader
In order to become a successful trader, one has to make it through each of the following trading development phases. It’s a tough profession with many hurdles to overcome within each phase.
The Novice Trader:
- Accumulates information: reading books, watching financial media, and researching.
- Is equipped with new knowledge and begins to trade a specific market.
- Consistently “donates” capital to other market participants, realizing the need for additional knowledge.
- Accumulates more knowledge.
- Armed with additional knowledge, begins to trade again in a different market.
- Consistently donates capital to other market participants; begins to feel despair.
- Trading decisions begin to be influenced by news headlines and other trader’s actions.
- Consistently donates capital to other market participants.
- Begins trading a different market.
- Searches for additional knowledge.
- Begins to have a minor amount of success.
- Gets overconfident and Mr. Market quickly humbles him/her.
- Starts to understand that trading successfully requires more time and knowledge than anticipated.
- Most novice traders give up at this point as they realize actual work is involved.
The Intermediate Trader:
- Begins learning a real methodology.
- Trades methodology with limited success but realizes “something” is missing.
- Understands the need for having rules to apply to methodology.
- Takes an extended leave of absence from trading to research and develop trading rules.
- Begins trading methodology again, armed with new trading rules.
- Finds limited success, but hesitates when executing trades.
- Adds, subtracts, and modifies trading rules in pursuit of trading proficiency.
- Feels very close to crossing threshold of successful trading.
- Starts to take responsibility for own trading results; begins to learn that success is within self-discipline, less-so the methodology.
- Continues to violate trading rules and hesitate when executing trades.
- Knows success is near; validates trading rules again and begins to rebuild confidence in them.
- Understands the importance of following trading rules, as reflected in trading results.
- Understands trading success is within self-discipline; understands importance of introspection.
The Master Trader:
- Continues to trade methodology, increasing discipline to follow trading rules.
- Continues process of introspection, as trading continues through multiple market environments.
- Masters trading methodology.
- Adheres to trading rules with no exceptions.
- Consistently profitable trading results.
- Gets overconfident, lose discipline in following trading rules, and Mr. Market quickly humbles.
- Allows methodology / rules to trade for him; trading becomes boring, but very successful.
Thanks for reading.
Twitter: @Techs_Global
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
