It's been said, that a trader goes through four phases.
1. Being unconsciously incompetent. That's when you don't know anything about the markets. Unfortunately most people get in the markets, on the last wave of a bull market. The only thing required is to be in the markets. Everything is going up.
2.Consciously incompetent. That's when you've realised that making money in the markets has nothing to do with buying low and sell it higher. So you start learning technical analysis. But you still loose money.
3. Consciously competent. If you haven't given up by now. You have started to gain experience. You can read the markets and feel the pulse. You're discovering that there are more advanced things that you can use;Indicators. But unfortunately you still lose money.
4. Unconsciously competent. That's the zone guys. That's where you've managed to put all the pieces together. You've been through it all. You've learned to master yourself, and you've done such a great job, that you're trading without forcing yourself to do it. You're relaxed, and all the pieces, are there. Think of the way you guys drive your cars. You don't think of it, you just do it!
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...and Money Management Allows You To Progress Through The Stages
Thanks for your post. It's a good representation of the stages a trader must go through to achieve success trading.
It's through effective money management from Day 1 of trading that allows a trader to survive and arrive at Phase 4 "Unconsciously Competent". Unless the trader survives financially through Phases 1-3 they will never "arrive" and enjoy the wonderful sense of achievement, freedom and prosperity that trading can provide.
Once at Phase 4 you then use money management to leverage the fundamentally sound trading you do to achieve your financial objectives.
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I have just entered phase three.And base of my experience, phase two is the hardest because i really felt it, and it is dangerous. it is where all decision of whether you are going to be successful or not are made.
phase three is all about discipline and practice.
i hope i said right.
The following user says Thank You to smusa700 for this post: