Traders develop in three stages: initiation, development, and mastery.  Many novice day traders, as they embark upon their education in the market, attempt to bypass the first two stages and focus on turning immediate profit – the most critical mistake one can make.    The market possesses an extremely steep learning curve, and only through slow, methodical improvement of one’s skills through the three stages of ability can a trader ever hope to master it.

The complexity of the market requires an immense amount of motivation from any person wishing to become a professional trader, and maintaining motivation without a moderate level of success is impossible for most people.  Cultivating the proper motivation for long-term success in the market requires a set of specific, realistic goals through which the trader can both observe and be motivated by his progress.

Goals are integral in progressing through the three stages of ability, though their nature will change through each.  In the initiation stage of development, the novice trader simply explores his new field and enjoys the process of discovery.  He pursues trading at this point because it is fun.  Early success, should he be so lucky, further contributes to his motivation.

Traders in the initiation stage should not focus on making a profit - it is not a realistic goal.  A novice trader thinking it possible to make an immediate profit, when pitted against the multitude of seasoned professionals on the open market, smacks of pure hubris.  His goal should instead be to learn and expand his abilities as a trader.  By instead learning to manage risk, observing patterns on the market, and developing an intuitive feel for its movement, the positive impact on his future trading is enormous.  By viewing his trades as practice trades, instead of attempts to make profit, he places himself in the correct mindset from which he can successfully move to the development stage.

The hard work of mastering the markets lies in the development stage.  During this stage, the trader works hard to develop specific trading skills and a basic sense of competence.  This phase weeds out those lacking sufficient motivation to become professional traders.  While a trader in the initiation phase focuses on enjoying himself and learning the basics of the market, the development phase is the stage in which the trader concentrates on learning different strategies and tries them out in a variety of situations.  During this phase the trader immensely expands his knowledge base and skill set. 

Though he now possesses some competence as a trader, a trader in the development phase should still focus on growth-related goals.  Profits may happen naturally in this phase however they should not be even a secondary focus of the trader.  All attention must still be focused on gaining experience. 

The trader attempts to reach his full potential in the mastery stage, and this stage is where profit is finally realized.  By this point, reaching the highest possible level of performance is the primary motivation of the trader – intense focus defines his attitude and trading consumes the bulk of his time.  Having already developed the basic skills required to trade, working diligently to achieve specific financial goals, such as a certain percentage return on his money, becomes the main focus of the trader.  While his process of learning is never complete, once in the mastery stage of ability, the trader can safely refer to himself as a professional.  He has reached his first major landmark.

Though the trader has achieved mastery, the use goals to motivate and continue to grow should never be neglected.  Whatever a trader’s stage of development, goal setting remains the most vital aspect to the learning process.

CptNemo
MarketKeyTraders.com
“No decisions based on FEAR”

All winning day traders possess a certain degree of patience.  They wait for ideal opportunities in the same way a sniper waits to take a perfect shot.  Without a high probability of success and a pre-planned avenue of escape should he miss or were something else to go against him, the trader, like the sniper, will have a mighty short career.  The successful trader sits and patiently waits.  He watches the movement of his indicators.  He tempers his impatient urges to make entries into the market with reckless abandon.  When the moment arrives, he is there, waiting: one shot, one kill.  He has achieved his objective and exposed himself to the least possible amount of risk.  

A trader may find it difficult to become more patient.  It requires, first and foremost, that the trader admits his own impatience, something not an easy feat for many people.  Once the trader has come to terms with his own impatience, he must determine the way in which his impatience affects him negatively as a trader, and actively to correct the imbalance.  The trader should examine himself from the third-person perspective, as if watching a TV show, to try to determine how impatience impedes his ability to trade successfully.  Is his impatience exacerbated by fatigue, hunger, risk, or all three?  By determining which specific variable or set of variables causes him to act rashly and with emotion, he can drastically improve his standing in the market. 

Impatience frequently signals the trader’s lack of confidence in his actions.  When faced with the fear of a potential loss, the trader may lack the impulse control and patience to hold onto a strong stock that has momentarily turned against him, but the trader must have the patience to truly examine the situation in which he finds himself.  By doing so, and still determining that he wishes to close his position out at a loss, he has exercised patience and done the correct thing.  Many a time, however, the trader will find that, despite his temporary loss, he still desires to be open in the position.  In this scenario patience, not raw emotion, has won out, and his trading will be much stronger in the long run because of it. 

Exercising patience ultimately comes down to self-control and the ability to put off short-term wants and needs for long-term gains.  The now-or-never mentality is a the worst nightmare for anyone wishing to be a successful trader.  Akin to a poker player going on tilt, the trader who tries to will his way to success in the market inevitably ends in failure. 

In the end, the slow and the steady win the race.  Having a one-hundred percent win ratio on five trades is infinitely superior to a sixty-percent rate on thirty.  Time is always on the trader’s side.  Sooner or later, just as in Texas Hold’em, the trader will pull a high pocket pair – the perfect trade.  He will see his entry and through his patience and thought he will understand precisely the reason for its perfection.  This experience will gradually teach him to better identify these trades until one day they jump off the screen at him.  He will start to see the value of an ace-king off-suit and so on down the line until one day he has a deep understanding of how to win even with rags.  On the path to this point he must never give in to the temptation to act upon impulse.  He must always remember that day trading takes time.  Profits will come, but only eventually.  Only by remaining calm and patience can there be any long term success. 

CptNemo
MarketKeyTraders.com
“No decisions based on FEAR”