5 Steps to Being a Successful Trader
LEVEL 1: UNCONSCIOUS INCOMPETENCE
The first step, starts when you open a trading account. You become a trader because you hear that a trader 's income can beat the income of a large company director. After all, when simulating with virtual trading, you managed to get 3 times profit, then what's the trouble?
You might be able to profit with amazing results of up to several tens of percent per day, but that's all just hockey. You may initially only rely on one indicator, or even just by instinct, but you can profit. But unfortunately, the market will beat you. There are no successful traders with only the LUCK factor. Losses for loss come to you. You try to survive until the capital runs out.
You don't realize that you can't trade at all. You still think you can trade even though all the facts say otherwise. You still think that you are a special person, someone who will be able to get the key to wealth from trading. And you don't realize that 90% of failed traders also have that feeling. You do not have a complete system, controlled by your emotions, and always averaging the position if loss is due to anger (ANGER) in the market. You always take profit in small amounts or let profits turn into loss because you are controlled by greed (GREED). You are always afraid to take a position (FEAR). You allow yourself to be controlled by emotions so that capital gets eroded.
90% of people who fail to become traders only reach this level. They usually give up, stop trading and think this is all just a bad dream. Some of the morals plummet, they keep entering funds and trading like crazy. Within a month or two, the margin runs out. 80% Traders are at this level, and only 20% are aware and move to level 2.
LEVEL 2: CONCIOUS INCOMPETENCE
At this level you realize that you cannot trade, you don't have the ability to trade profitably consistently. And you know the solution, you realize that during level 1 your mind is obscured by your emotions so you can't think clearly. At this level you will look for the holy grail (the perfect system, a 100% profit system, a system that never loses), you start buying a system on the internet, you read all the websites about trading starting from the UK, USA, Australia , Europa to Russia. You read all the available ebooks, you practice all the systems that you get. You are thirsty for knowledge like a wanderer in a desert thirsty for drinking water.
At this level you will read all the details about the indicator, you may even create your own indicators. You will play with moving averages, fibonnacci lines, pivot points, camarilla pivot, deMark, Fractals, Divergence, DMI. ADX, Bollinger Bands, and hundreds of other indicators. You know that the market is too complicated to predict with just one indicator. You know the ideal combination of each indicator. You know the exact advantages of the indicator and its weaknesses.
You will try to guess the lowest point and top of the market with the indicktor. You will join a trader chat room and ask stupid questions for senior traders. But this isn't over yet, it's still a long way to become a successful trader. Of the 20% of traders at this level, only about 10% managed to move to level 3.
LEVEL 3: THE EUREKA MOMENT
At the end of level 2, you finally realize the subject is not in the system. You realize that you can get profit even if you only use a simple system such as a moving average without any other indicators, if you can use your head and the correct money management. You start reading books about trading psychology, and identify with the characters described in the book. Finally came the Level of Enlightenment.
This level of enlightenment makes your brain aware of one important thing. In this world there is no one who can accurately predict what will happen to the market, even for 30 seconds later. You begin to master a trading system and modify it to suit your character, and be able to provide more profit than the original system. You start trading if you know the probability for profit is greater than for loss, you only trade if there is a signal from your system. You always use stop loss, because you know stoploss is a business risk that exists in the world of trading. When your stop hit, you are not emotional because you know no one can predict it, and that is not your fault.
You immediately realize that in the world of trading there is only one important thing, namely consistency in trading systems, trading psychology and money management. And discipline to do the system whatever happens. You learn more about money management, 2% risk, and other things. This reminds you 1 year ago when someone gave the same advice and you chose to ignore it. At that time you were not ready yet but now.
At the level of enlightenment, your brain will accept that you cannot predict market movements, because no one can. Of the 10% traders, finally only about 7% moved to the next level.
LEVEL 4: CONSCIOUS COMPETENCE
Okay, now you only trade if and only if your system signals. You cut loss as easily as take profit. because you know your system will provide more profit than loss, and the cut loss you do is business risk that is a maximum of 2% of your account.
At this level you start a target with a small profit, and after you are able to do it consistently for several weeks, you increase the target. And you can finally do it. You still have to work hard to get it, improve your system, master your emotions, and carry out money management. Of the 7% traders only around 5% are able to advance to the next level.
LEVEL 5: UNCONSCIOUS COMPETENCE
Now you get to level 5. This is the level that is expected by all traders in this world. At this level you can trade naturally, you have mastered everything. You can Dancing with the Market, wherever the market goes, you have opened in the right position, so you just have to see your profit move from 2 digits to 3 digits.
This is the peak level of a trader, this is the level of utopia, you have mastered your emotions and now you are trading with an account that continues to grow every day from the cumulative profit you earn. You will be a star in trading chat rooms, and people will listen to what you say, you know their questions, because you were in their position a few years ago. You will give advice to them, but you know that most of them will not listen because they are still level 1 traders.
You will no longer have financial problems, you can buy all available items for sale. You can buy islands and trade there as long as there is an internet network, you can move to a 5-star hotel, and become a resident there. You have income like a superstar, you can make your own books, you can trade with unlimited margins, and your account will multiply from the initial value.