The Evolution of the trader
” How long does it take to be consistent or successful as a trader”? I get asked this question all to often. I think most ask this question because they find the road to trading success can seem long and they are looking for a certain number to gauge their success by. Of course for each trader this time frame is different because our interpretation of success between each one of us is different. For some only a million dollar annual income is success while for others 35k a year and quitting their crappy job is their definition of success. Success is in the eyes of the beholder and it has more to do with self fulfillment and living vicariously through yourself.
Having taught so many traders in my career and actually living through my own evolution as a trader I do think we all have to go through a series of steps before we can actually look ourselves in the mirror and believe we are truly going to make it and we have come full circle. Keep in mind these steps are not necessarily the road you will or must travel to be great but after 14 years of trading and teaching these are the steps I see most in the trader evolution process.
Newbie baby- In the beginning it seems we cant get enough of the stock market. Our thirst for knowledge leads us to read every book, watch every DVD and every financial TV show. Our novelty level is so high we cant help ourselves from telling everyone we know about the unlimited potential and wealth the stock market offers and how, one day, through our diligent work ethic we will be one of the greats. Our minds are clear and free from psychological baggage and it is during this time that we must develop the right habits and processes, otherwise we may inherit behaviors that will haunt us forever and ultimately put a ceiling on our abilities.
Headbanger– This is the beginning of the realization faze that what you learned in books, DVD’s and seminars, although very helpful and useful, is not the secret sauce and does not guarantee your success. You soon realize there are no magic indicators, holy grails or shortcuts. This is where you understand that the market can be cruel and unforgiving and will destroy the unprepared and untrained. During this phase it is more about survival than profiting. It is important during this phase we learn how not to butcher our accounts while going through difficult stretches of performance.
Account liquidation– First let me not frighten you with this step because out of all steps this is the EASIEST to avoid. I say easiest because this has more to do with pride and ego than anything else. However, I see it way too much and that is sad. I know first hand how this works because within my first year of trading I melted down over -162,000 of my account and went bankrupt. 90% of this could have been avoided if I would have just slowed down and took my time. By nature we are proud and revengeful creatures. When we lose we want our money back now! When we are wronged we want revenge! This leads us to “doubling down” on positions and taking ” revenge” trades. As most of you know these trades hardly ever work out.
The I Quit phase -You have had enough. You are so frustrated, you are so tired of trying countless systems and failing. You can not seem to buy a win and you can not bare to lose another dime and humiliate yourself any further so you walk away. Lets be clear that there is a big difference in quitting and taking some time off. Stepping away does not make you a failure, you will only fail if you give up entirely. If you are struggling and have been struggling for quite sometime I don’t think this is such a bad idea. For me this really was the turning point as once I had the chance to step away and let my emotions settle I was able to see and think rationally. Im not saying if you are struggling that you should take time off but sometimes we need a break. As I tell all of my students the stock market will always be here and it will still be here when you come back.
Come back– Time heals all wounds. When the initial sting of dinging our pride wears off we begin to think less of the bad and more of the good. We remember more of the good things that we did do and we think about all the work we put in and and how close we were to achieving our goals. After 14 years in this business I’ve never meet someone who quit and DID NOT come back. Just as Al Pachino said in The Godfather 3 “Just when I thought I was out…they pull me back in: The stock market has that power
Learn- This is where, finally, after all those lessons, study sessions and real world training you are putting things together. The market has slowed down, you can forecast moves easier and your consistency and profits are more prevalent. At this point you truly believe you are going to be successful and Im not talking about reading those quotes and “trying” to believe I mean you feel it from within and there is not a shred of doubt in any bone in your body. You know this is a done deal
Find peace- You have now achieved the success you longed for and you know your place within the market. You know your strategies and have found peace with your past transgressions. You have been there and done that. You are chiseled robotic trading machine. Once we reach this phase it is not uncommon to feel the need to “payback” our good fortunes by helping others achieve stock market success and help them avoid some of the pitfalls that you have experienced.
As mentioned the time frame for our success and the road we travel will depend on our commitment to learning the trading game . Also, just because I listed the common evolution does not mean you have to or you will walk this path in this order to be successful. I do believe your evolution and long term development will always be enhanced by joining a great trading community where you can see in real time how a professional trader navigates through the ever-changing market place. I sure wish in my early years that the resources you have now were available to us back then. I would have avoided wasting so much time and money. I even detailed the importance of trade rooms in this post here “5 reasons to join a chat room” . Take a moment to view our live trade room for free and see if our format has the tools to help you shorten the evolution process. Click here for details.
You might enjoy these other posts