Subnostr

Stage Two: The Hot Pot Stage

You scan the markets every day. After a while (sometimes a good long while), you notice a particular phenomenon that appears regularly and seems to "work" pretty well.

You focus on this pattern. You begin to find more and more instances of it, and all of them work! Your confidence in the pattern grows, and you decide to take it the next time it appears. You take it, and almost immediately your stop is hit, and you're underwater for the total amount of your stop-loss.

So, you back off and study this pattern further. The very next time it appears, it works. And again. And yet again. So you decide to try again, and you take the full hit on your stop-loss.

Practically everyone goes through this, but few understand this is all part of the win-lose cycle.

They do not yet understand that loss is an inevitable part of any system, strategy, method, or other approach; there is no such thing as a 100% win approach.

When they gauge the success of a particular pattern or setup, they get caught up in the win cycle. They don't wait for the "lose" cycle to see how long it lasts or what the win/lose pattern is.

Instead, they keep touching the pot and getting burned, never understanding that it's not the pot (pattern/setup) that's the problem but their failure to understand that it's the heat from the stove (the market) that they're paying no attention to whatsoever.

So, instead of trying to understand the nature of thermal transfer (the market), they avoid the pot (the pattern), moving on to another pattern/setup without bothering to find out whether or not the stove is on.

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Mr. Anderson 1y ago

Stage Three: The Cynical Skepticism Stage

You've studied so hard and put so much effort into your trading and this universal failure in the patterns only when you take them causes you to feel betrayed by the market, the books and materials and gurus you tried to learn from.

Everybody claims their ideas lead to profitability, but every time you take a trade, it's a loser, even though the setups all worked perfectly before you played them.

And since one of the most painful experiences is to fail when success looks easy, this embarrassment is transformed into anger: anger at the gurus, anger at the vendors, anger at the writers, the seminars, the courses, the brokers, the market makers, the specialists, the "manipulators".

What's the point in trying to analyze and improve your trading when so many dark forces are out to get you?

This excuse-driven blame game is a dead-end viewpoint, explaining many of the things you find on message boards. Those who can't pull themselves out of it will quit.

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Replying to

Mr. Anderson

"6 Stages Of A Trader"

If we are to become great traders, we will experience some variation of all six of these stages.

Being aware of these stages can help you identify where you are now and where you need to eventually be.

(Which stage are you currently at?)

Stage One: The Mystification Stage

This is where the neophyte trader begins.

He has little or no understanding of market structure. He has no concept of the interrelationship among markets, much less between markets and the economy.

Price charts are a meaningless mish-mash of colored lines and squiggles that look more like a painting from the MOMA than anything that contains information.

Anyone who can make even a guess about price direction based on this tangle must be using black magic, or voodoo.

However, as one begins to observe, read, and study, the mess may begin to resolve itself into something that may make sense. Sort of... 😉