Learning to trade is a psychological process. Trading in Forex carries risks and the investor may lose their investment. So, to become a good trader one must need to work hard and hard. Obviously it's hard to find an exception in case of a Good trader but most of the trader experiences the 5 stages to become a Pro.
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1st Stage: Unconscious Incompetence:
Beginners usually starts trading because they have heard how much money can be earn by trading the finance market. Emotions already influence those new traders because they have passion making a great deal of money. This can lead to two outcomes.
With the 1st outcome, novice trader opens a trade only to watching. Trade goes against the trader immediately. However they do not know what to do. So they simply watch the loosing trade they click the trading account. Panic in over the loss. Trader may quickly close the trade and just open another trade in the opposite direction. Only to say that destroyed is starting again them as well.
The beginner has now understanding about trading and doesn’t know how to make the correct decision in different market environment. Trading like this is slowly empty the traders account. At that point, trader will be stop trading or may progress the second stage of learning.
2nd Outcome, on the other hand there is also the possibility the trade goes directly into the profit. The novice trader closes the trade and sees that the account is growing and they on lead in four sense of security and believes that trading is easy and becomes overconfident. Therefore take more and more risk but the trades start move against them soon or later the moments come when just the few trades deplete their account. They either stop trading all together or they may be realize they know little and would become consciously incompetence. When the trader realizes I don’t have enough knowledge about the markets they have reached the stage of Conscious Incompetence.
2nd Stage: Conscious Incompetence:
The trader want to start to seek much knowledge as possible because they believe it is the key to trading successfully. At this stage they believe the more knowledge they have the better they will do. They are prone to switching between systems without giving them enough time to prove themselves and trying improving results however they may not see a direct result about this knowledge’s put into practice and continue to experience poor trading results. They blame the external factors, trading system for their losses and at the same time congratulate them sticking to their strategy gives winning trades. At this stage the traders become point scam because I want to buy every system out of there just to make a profit trading.
Conscious Incompetence is the most dangerous stage for a beginning trader. To move on the next stage you should ask yourself...
Have I stuck to my system?
Am I using a trading journal?
Do I regularly look over previous trades?
Do I know beforehand when I will enter/exit a trade?
Do I take responsibility for my own trades and not blame someone else?
At some points traders experiences an Awakening moment.
3rd Stage: Awakening Moment:
This is the moment they start to realize the successful trading boils down to having the right mindset. Traders in the awakening moment begins understand that the markets are unpredictable and making money is based on a series of trades incorporating wins and losses. They would realize that they should stick to their system and let win is run. At this stage traders not taking and exiting trades when their system tells them to regardless their emotions and feelings. Trade correctly regardless of emotions.
4th Stage: Conscious Competence:
After that Awakening moment when they start trading according to their system they enter the Conscious Competence stage. A trader consciously competence when-
They takes trade whenever their system tells them to, despite of their emotions.
They deal with losing trades a lot easier because they know it is a part of business but their system works and makes money over time.
They know money management is the key trading element and they start building their account over time instead of trying to get rich overnight. Finally the trader moving to the last stage of Unconscious Competence.
5th Stage: Unconscious Competence
When I have so much practice that I trade in almost automatic mindset. At this stage the trader has a very discipline approach to trading and requires a very little effort to deal with emotions. This brings us to the end of the journey to become a good trader.