- Pretrader. Everything is new at this stage, and everything is difficult. This is the point where the trader is learning the very basics of charting and of market structure and is also just starting to explore the marketplace.
- Novice trader. At this stage, traders are not trading to make money; they are trading for experience and to begin to deal with the emotional challenges of trading. One of the main signs of progress in this stage is that the trader will start lose money more slowly than before—still losing, but losing less often and less consistently.
- Early competent trader. The first step toward making money is to stop losing money. A trader whose wins and losses balance out (before commissions) has taken the first steps to competence. (At this stage, the trader is still losing money due to transaction costs and other fees.)
- Competent trader. The first stage of real competence is achieved when the trader is able to cover transaction costs with trading profits. Reaching this stage may take a year and a half to two years, or more. Consider this carefully—two years into the journey a realistic expectation is to finally have accomplished the goal of being able to pay for your transaction costs. This may not seem like much, but very few individual traders ever survive to this stage.
- Proficient trader. Here the trader starts making money. Errors and mistakes are far less frequent, but, when they do happen, they are corrected and reviewed, and the lessons are quickly assimilated. The trader has been exposed to the stressors of trading so many times that they have now lost most of their emotional charge and is able to approach the markets in an open, receptive state. As competence grows, the trader can look to manage more money; developing the skills of trading larger size and risk becomes a focus.
- Experienced trader. It is difficult to imagine a trader becoming a true veteran without living through a complete bull/bear market cycle—about a decade in most cases. This trader has finally seen it all and has also become cognizant of the unknown and unknowable risks that accompany all market activity. It is possible for developing traders to gain much of this veteran trader’s knowledge through study at earlier stages of development, but there is no substitute for experience and seeing events unfold in the market in real time.
Archives of “emotional charge” tag
rss3 Points – Trading Psychology
Don’t Dwell on Mistakes, Focus on Opportunities
- Holding onto the baggage of the past, the mistakes of yesterday, is nonproductive. If robs you of your energy and mental and emotional focus on new opportunities. You must see what opportunities exist now and take advantage of them… Focus your time, energy, and money on making money — on new trading opportunities.
- Yes you need to learn from your mistakes, but don’t dwell on them. Use them as positive learning experiences; as a springboard to becoming a better trader.
Don’t Blame the Market or Others
- When pain surfaces, if you are honest and in touch with yourself, you will own the upset and seize the opportunity to release that internal reality — to forgive! Pain functions to inform us of our errors.
- False forgiveness is based on the belief that others are responsible for what we feel, and therefore it tends to reinforce that error. To forgive others, in this manner, for what happens in your mind leaves your pain intact and the opportunity to heal is lost.
- Making use of every opportunity to heal is an important decision you can make and that decision will immeasurably accelerate your process.
Accept Negative Emotions to Neutralize the Negative Charge
- Whenever we avoid processing a negative emotion, then attach an emotional charge to it, and shorten our breath and tighten our diaphragm, our blood pressure often shoots up so that we lock that memory of that emotional charge into our system.
- When you go to sleep, the current in you literally reverses and you lock your daily emotional charges into your organ systems, body processes, and memory. It’s a very negative thing to do.
- Processing the situation correctly short-circuits the negative cycle. So, before I go to sleep at night, I forgive others whom I think have wronged me and give thanks personally for all things. I want to stay free, healthy, and unencumbered.
- Remember, emotions are a choice. The realm of unconscious bad habits is where the demons live in all of us. We need to exorcise them.