A Trader's Progress

[PristineTrading 10]

There is a common sequence of events that most traders go through during their development. This begins when many of the strategies that the trader is learning begin to come together and the trader begins to see the light. This can happen slowly with a cautious trader who has been paper trading or playing with a small share size. This can happen for aggressive traders as they start to have some big numbers in profit on some of their better days. However, while the trader begins to feel good, there usually are some lingering problems. While the light seems to be coming on, the account is not growing. It seems that every time some progress is being made, something happens that stops this progress and the account does not grow. It is 'one step forward, and two steps back'. If this is something that you can relate to, you are not alone.

 

Spending time in this area to understand this process is very important to your development as a trader. If you review your records you will likely find several good trades throughout the week, and then a bad trade. One so bad it really sticks out. So bad, it erases all the hard work of the prior gains that you were so proud of. It may show up as several profitable days and then one day that erases all the prior gains. If this is the problem you are having, there is good news and bad.

 

The good news is that you are now doing well with the 'technical part' of trading, and now have to deal with the psychological part. The bad news is that you are now doing well with the 'technical part' of trading, and now have to deal with the psychological part! Psychology is not an easy thing to deal with. The answer? First, it's self awareness. It's identifying the issues at hand as being psychological. Once we've admitted we have the problem, we must build and change our Psychology so that it is conducive to making money in the markets consistently and without fail.

We teach many procedures that traders can take to help their progress at this point. Use a trading plan, keep detailed records, and track the strategies you use. Print charts of your trades to analyze your discipline, trading plan, and strategies. Make a plan to eliminate recurring problems. Use money management that prevents catastrophic trades or days.

 

Once the trader eliminates their 'demons', they will likely see an improvement in their trading. Unfortunately, that is not the end of the psychological issues. Sometimes a trader uses all of the above tactics to make great improvements and even become successful, then gets 'over confident' with their new success and abandons everything that got them where they are. The road will always be full of new challenges, the traders that thrive have on ongoing plan and a commitment to patience and discipline.

 

Jared Wesley

Contributing Editor

Interactive Trading Room Moderator

Gap, Intra-Day and Swing Trading Specialist

Instructor and Traders Coach

[steve46 12]

While the purpose of the original post is obvious, one of the final comments caught my attention

 

"Once the trader eliminates their demons".....

 

I think we all would like to believe that we can permanently vanquish our problematic behaviors, but experience suggests otherwise.....the reason this is so....is that our "demons" consist of our innate human emotional responses, among them our fears and our greed. What I have found over time is that these basic emotions can be managed by those who take the time to really understand the impact their emotions have on their professional (and personal) success. THIS is why when I start a class, instead of just taking anyone with a checkbook, I actually interview prospective students to find out how they view this world, and what their concerns are....without this step, its like having a tailor take a coat off a rack, regardless of the size, and asking you to try it on, "I'm sure it will fit".....and then (when it doesn't fit), telling you "that's the style they are wearing these days" or "it looks good on you".....lol

 

The question(s) for me (and I assume for others) are......does this particular business, have what I need to improve, and move closer to my goal (does this coat really fit me)...and (in both cases) is it worth the cost?

Edited April 14, 2013 by steve46