Hey traders,
In this educational article, we will discuss 3 stages of the evolution of a trader.
Stage 1 - Unprofitable trader š
The unprofitable trader has very typical characteristics:
-total absence of trading skills
Most of the time, people open a live account simply after completing some beginners course like on babypips website.
Being sure that the obtained knowledge are completely enough to start trading, they quickly face the tough reality.
-no trading plan
Having just basic knowledge, of course, they do not have a trading plan. Why the hell to have it if everything is so simple?!
All their actions on the market is just gambling. They open the positions randomly most of the time, simply relying on intuition.
-poor risk management
In 99% percent of the time, the unprofitable trader does not even think about risk management. The position sizing, stop placement and target selection are completely neglected.
Trading performance of the unprofitable traders is characterized by small wins and substantial losses and negatively trending equity.
Stage 2 - Boom and bust trader š¶
Usually, traders reach boom and bust stage after 1-2 years of unprofitable trading. At some moment, winning trades start to compensate losing trades, brining non-trending equity.
Such traders have very common traits:
-not polished trading plan
Being unprofitable for so long, traders start to realize the significance of a trading plan.
Sticking to the set of rules, they notice positive changes in their trading performance.
However, trading plan requires to be polished and modified. It takes many years for a trader to identify all its drawbacks before it starts bringing net profits.
-lack of confidence
When one starts following a trading system, confidence plays a substantial role.
The fact is that even the best trading strategy in the world occasionally produces negative results. In order to not give up and keep following such a system, one needs to build trust in that.
The confidence that after a series of losing trades, the strategy will manage to recover.
Such a trust can be built after many years of trading that strategy.
Stage 3 - Profitable trader āŗļø
That is the final destination.
After many years of a struggling trading, one finally sees positively-trending equity. Winning trades start to outperform losing ones, leading to consistent account growth.
Profitable trader is characterized by iron discipline, confidence and consistency.
He knows what he is trading, when and why. His trading plan is polished, he fully controls his emotions.
He never stops learning and constantly develops his strategy.
Knowing the 3 stages of the evolution of a trader, one can easily identify at what stage he currently is. That will help to identify the things to be focused on to move to the next stage.
At what stages are you at the moment?
