The trader's journey in 60 steps

(From birth to heaven through the graveyard)

The road to success for the novice trader can be one that brings his tenacity to breaking point, takes him to complete surrender, and then allows him to become successful.

When the wannabe trader starts out on the journey, he starts by asking questions about how to become a successful trader.

And the answer, from everyone but those selling trading software, is always: "Go out and learn as much as you can"

  1. The trader goes out and gather information. He reads books, ask questions, attend seminars, watch countless videos, all in an effort to find out how to trade profitably.
  2. And then, before he has found the truth, because the truth is only found through trials and tribulations, he opens a demo account.
  3. The demo account trades either profitably or unprofitably, which makes no difference to his next step.
  4. If he wins on the demo account, he becomes confident and starts to trade a live account. If he loses on the demo account, he attributes it to the fact that he trades no real money, so he starts to trade a live account.
  5. Trading the live account see-saws between wins and losses. Eventually he gives more to the market than the market gives him. He realises he needs more information.
  6. He does not realise that information is not knowledge.
  7. So, he accumulates more information. He reads more books, ask more questions, attend more seminars and watch more videos.
  8. The trader changes the strategy he has been trading. He either chooses one of the trading strategies he found in his quest for information, or he makes a mix of the strategies that makes sense to him.
  9. The trader loses more money.
  10. The trader switches the stocks, commodities or fx pairs he currently trades. because if its not the strategy, it must be the instrument.
  11. He loses more money.
  12. As he loses more money, he starts losing confidence. He suspects he will never be a trader.
  13. The pain of losing money becomes real.
  14. The trader selects his advisers better, listens with a critical mind, observes what works for other traders.
  15. The trader gets back into the market and continues to lose money.
  16. The trader revisits everything he has heard, read, watched and learnt so far.
  17. The trader changes his style and strategy.
  18. The trader searches for new information. and find something he overlooked or had not seen before.
  19. The trader goes back into the market and trades with new-found enthusiasm.
  20. The trader sees a little progress.
  21. The progress makes him positive and confident.
  22. In a single trade he is over-confident and put on a big position, because it is obvious what the market is going to do, but the market takes his money.
  23. The trader starts to understand that being a successful trader is going to take longer and requires more knowledge than he anticipated. [At this stage, most traders realize how much work and energy is involved and that trading is not easy money]
  24. The trader takes his investment in all the fail-proof systems he bought, and writes it off against the account "Experience".
  25. The trader gets serious and start learning a "real" methodology.
  26. The trader trades his methodology and experience success, but realises that something is missing.
  27. The trader realizes that his methodology needs rules.
  28. The trader takes time off and research and develop his trading rules.
  29. The trader returns to the market with his methodology and new rules.
  30. The memory of the pain associated with losing lets the trader experience hesitation when executing trades.
  31. The trader sees a need to be more proficient with his own rules, so he adapts them as he gains experience.
  32. The trader feels close to crossing the threshold to successful trading.
  33. The trader starts taking responsibility for his trading results as he comes to understand that his success is based on his ability to diligently execute his methodology.
  34. The trader trades and become more proficient with his methodology and rules.
  35. The trader experiences erratic results because he has difficulty in fighting the urge to violate his rules as his emotions take over.
  36. Despite that, he feels closer to success.
  37. The trader goes back and researches his rules and his emotions.
  38. The trader trades.
  39. The trader has more success but still hesitates when executing his trading rules.
  40. The trader realises the importance of his rules as he loses money when he does not follow them.
  41. The trader gains the insight that his lack of success is internally based on a lack of discipline because of some internal fear.
  42. He focuses on getting to know himself better.
  43. The trader continues to trade responsibly, keeping risk at a minimum and the market teaches him more and more about himself.
  44. The trader becomes a master of his own methodology and trading rules, so he executes clinically and without emotional attachment to his trades.
  45. The trader starts to make money consistently.
  46. He becomes over-confident and the market humbles him.
  47. The trader continues to learn.
  48. The trader learns smaller positions lower the intensity of his emotions, so he trades smaller, which is a major step in becoming more disciplined.
  49. The trader realises that risk management is the most important aspect of trading, so he trades small and consistent position sizes.
  50. He stops thinking.
  51. The trader allows his rules to trade for him.
  52. Trading becomes boring, but successful.
  53. His position size increases in step with his account size.
  54. The trader makes more money than he anticipated.
  55. The trader goes on with his life and keep on trading, secure in the knowledge that money is his tool for reaching the independence he dreamed of.
  56. The trader knows that information becomes knowledge only when it is applied with insight and experience.
  57. The trader still listens to successful traders, but now he tests it against his own successful methodology.
  58. The trader never enters a trade without first evaluating his emotional state.
  59. Because success is now his first aim and profit is a secondary consideration, the trader makes increasingly more money.
  60. The trader realises that his actions are motivated by one of two emotions: greed or fear.

Advice for beginner traders

(The basis for this post has been on the Internet as a list here and here)