Stage #1
This is the beginning stage where you might have been told that trading is easy and all you really need to know is prior highs and lows. You might start out with a small account after sim trading you soon realize that real money trading is completely different than sim trading because you actually have to acknowledge the loss.
The result:
Your emotions consume you and you close the account with a negative outcome. You acknowledge at this point that trading is not as easy as trading obvious highs and lows especially on a small time frame chart. What you thought was easy, turned out to be a different story and although you might have learned a few things you are still at the very start of your trading career if you continue forward.
Stage #2
Before you try to trade again you search for something to give you a trading edge but since you are still very new in the process you are searching for the wrong things. You might be searching for a magical indicator that will tell you when to buy and sell but you will most likely fall into the trap of someone hyping the markets because you are still new. It is easy for a newer trader to fall into the hype of someone selling the dream of trading and not the true education that is needed. You are still new so you are not ready to commit to buying something that seems expensive for your trading education.
It is not really your fault at this stage to fall for the hype because like I said you do not know the right questions to even ask yourself with your trading so some things will look to complex for this stage so you will most likely go for the easy looking methods.
Because of losing money is stage #1 you want a method that has very tight stops because you will most likely have a smaller account in stage #2 because you have already lost money. The methods that most people learn in stage #2 will not be something that you will use further along in your trading career but for stage #2 they will seem really good and advanced.
In having a small stop you are still in the gambling stage and having small stops means your profit rewards are also very small. Overall you will still have a very narrow view on the markets and you will still have very low confidence because the methods only work 20% of the time and that is if you take every trade but since you have already lost you are hesitant to take the trades so you will cherry pick the methods and ultimately revert back to stage #1 thinking.
The result:
You have learned more but you are still at the start of your career and you are learning more what does not work instead of learning what actually does work. Even though you are at stage #2 your mindset is still looking for something easy but you are starting to realize that there is more to trading that “easy scalping methods”. You might feel as though you wasted money on the system you bought but in reality it is not a waste because you learn quickly to not use those methods and in the long run that will actually save you money.
Stage #3
You start to feel like no one can make money in the markets and it is impossible and anyone that says they have a way to help you make money is lying. It is important to know that everyone’s trading journey is different and just because you do something does not mean that everyone has bought what you have bought and not everyone has the same mindset. While I agree there is a lot of BS out there with trading it is important to not lump everyone into the same category because in reality you are only doing yourself an injustice in thinking this way if you want to be a real trader.
With trading you are your own worst enemy and it is easy to join the negative thinking camp and throw a pity party but who does that really benefit? No one.
No one forces you to make the decisions you make or to even trade. Trading is like no other career in the fact you do not have employees to blame or push responsibilities onto others. To really understand the markets you must be honest with yourself and know that it takes time to really learn how to read the charts and understand you own emotions. Some people do not want to take the time to really learn and rather trade too soon and blame others but at the end of the day it only hurts you not anyone else.
The result:
No one can trade and everyone is a liar and since your trading journey has been what it has been everyone’s has been just like it. Maybe you go on some forums and join the negative thinking and you are in the “prove it” mindset.
It is important to know that everyone struggles with the markets when they are trying to find themselves and how they fit into the markets but we hope that you can get out of this stage and continue on with a positive mindset because if you stick with it you can benefit. Yes, maybe it will not be instant and maybe it will take hard work and more time than you want to put in but you can make it pass this stage.
Final Note for now:
All traders have to go through their own trading journey and learning how to trade is something unlike anything else you will do. The things you learn in these stages you will most likely never use in the later stages they are more to see if you can stay in the game long enough to get to the point to understand what you need to learn. Each stage is valuable in the process but it is you pushing forward to get to the next stage.
While it is easy to fall for the hype of the markets the hype will not make you money. With anything in life it is the education that builds the knowledge but if you are not at a stage to accept the education it will not be of value. Like anything in life if you do not want to learn how to do something why bother trying to learn it? You cannot trade half-ass in hopes to hit it big on luck. While luck might help you on a few trades you cannot build the confidence needed with luck.
Before you can learn the answers to your questions you need to know the right questions. To know the right questions you have to go through the stages like anything in life.
We will continue this in a later post.
Happy Trading,
www.eMiniSchool.com
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