EVOLUTION OF A FOREX TRADER
You have seen posts about forex traders making millions and living large. A part of you is excited and desires to get into this thing called forex trading, you want to get the bag. You sign up for a demo account and decide you are going to make it. Welcome to the stages you will have to go through if you want to make it as a forex trader. Do note I am sharing from experience the actual stages you will endure, yes endure before you taste success.
STAGE 1; THE IGNORANT TRADER.
For the sake of this post lets us assume the trader’s name is Joe. He is excited about forex trading, he consumes e-books and videos on forex trading hurriedly. A demo account is opened and Joe is making trades here and there. Some are in profit some are running losses but Joe is determined to continue. After a while, Joe figures he is getting better at it, a few profitable trades have convinced him he is good to go. He even wonders, why is it so hard for others. I don’t see what the fuss is about. You are right Joe, you don’t see. You are in darkness, a world full of ignorance. The false confidence triggers some decisions, Joe decides to open and fund his first live account.
Beginners Luck
For all he knows, he has begun his journey of making money, unaware his journey is about to evolve. A few trades into it and he has made X dollars in profit. Damn, Joe, you are on fire. Additional trades are made, with the possibility of more profits, Joe is excited. At this point, Joe is unaware that he only possesses about 5 % knowledge, which leaves a whole 95% of ignorance that is about to slap him in the face. The markets do what they always do, transfer wealth from the impatient and incompetent to the competent and patient. He blows his first account and possibly cannot function properly (I remember my first blown account). The transition from demo to live trading tricks you into believing you just replicate the same set of decisions and voila, you’ve made it. You forget that this is a live environment with the possibility of loss or gain; odds, and right now, odds are not in your favor. Beginner’s luck has played a cruel trick on many forex traders. At this stage, trader psychology, risk management, and discipline make up the 95% that Joe wasn’t aware of.
Humbled and hurt by this experience, Joe is not deterred. He buys and enrolls in a course. He seeks to understand what happened.
STAGE 2; THE STUDENT.
Hi first loss is still haunting him and Joe aggressively consumes a lot of forex content, in fact, he consumes everything forex from anyone. Joe, driven by passion and possibly heartbreak jumps from strategy to strategy, indicator to indicator searching for the Holy Grail. Trading strategies and styles are largely dependent on trader psychology currently undeveloped in Joe. Luckily Joe meets a mentor, let us call him Mark. Tapping into his experience, Mark untangles the world of forex and illuminates Joe’s path. Mark shares his experience to encourage Joe. Gradually, Joe’s ignorance levels subside as his confidence and competence increase. After spending time mentoring his student, Mark eventually sends his apprentice into the world.
STAGE THREE; A TRADER REINVENTED
Joe has increased levels of awareness, competence, and confidence. He knows what to do and when to do it but his discipline is somewhat inconsistent. He hasn’t fully matured, therefore he makes mistakes willingly, driven by fear and greed. Unfortunately, Joe blows another account, only this time, he knows why. Joe accepts the responsibility and now understands that his success is dependent on his ability to remain disciplined and reinforce his trading psychology. Joe is ready to transition.
STAGE FOUR; COMPETENT TRADER
It has been two years since his first loss. Joe has learned that less is more in forex and that slow is fast. He has developed his unique risk management and trading strategy. Joe is patient in his approach and it shows in his consistent profitability. Fellow traders recognize his progress, the general public is interested in his success.
STAGE FIVE; MASTER TRADER
Experience has compounded Joe’s skill in that he is able to analyze the market and see potential setups and pitfalls. Joe trades lesser than before but makes more per trade. He has evolved to desire higher-quality challenges. At this stage, traders receive independent contract offers from established funds and prop firms because they have a track record of consistency and profitability. They are mature masters. Even if they stumble, they know how to get back up. Unbeknownst to Joe, he isn’t getting the bag as he thought he would, he is making bank consistently. He is financially free and fulfilled.
Such is the evolution of forex trading. It takes approximately two to three years to get to stages 4 and 5. The majority give up in stage one and you will hear them calling forex a scam, a manipulated industry. Knowledge is power, right knowledge is freedom. Prospective traders, submit yourselves to time, you will eventually mature. Prioritize mentorship in your quest to learn forex trading, it is worth it.
As I write this, I am transitioning into stage 4, keyword transitioning. I still make silly mistakes that hurt my consistency. I intend to walk with you in this journey, I purpose to give you forex content raw and unfiltered.
Captivating and insightful article.