This posting was recently brought to my attention. It originates from an international trading site and is repeated here verbatim. Trader John lists in point form the 38 steps it has taken him to become a successful and profitable trader. I think this is a very pertinent article as it outlines in a simple yet powerful document the journey that is familiar to all of us as we seek to become unconsciously competent in our trading and active investing activities.
Reading through Trader John’s points you will no doubt recognise that you have experienced some, if not all of his events and feelings in your own trading journey. It may also provide you with an opportunity to reflect on where you are on your journey and the many milestones you have reached and passed.
What is also very important to most of us is the realisation that ALL those who set out on this journey experience very similar feelings, emotions and actions at some stage. So, next time you are feeling stuck, have a series of losing trades, or are just feeling frustrated with the markets and your own perceived lack of progress, have another read through these 38 points. Identify which point you are at and make the decision to overcome and rise above the situation and keep progressing forward. After all, trading and investing, like all things in life, is a journey, not a destination. Our resolve and skill will continue to be tested – each test is an opportunity to grow and improve.
1. We accumulate information – buying books, going to seminars and researching.
2. We begin to trade with our ‘new’ knowledge.
3. We consistently ‘donate’ and then realise we may need more knowledge or information.
4. We accumulate more information.
5. We switch the commodities we are currently following.
6. We go back into the market and trade with our ‘updated’ knowledge.
7. We get ‘beat up’ again and begin to lose some of our confidence. Fear starts setting in.
8. We start to listen to ‘outside news’ and to other traders.
9. We go back into the market and continue to ‘donate’.
10. We switch commodities again.
11. We search for more information.
12. We go back into the market and start to see a little progress.
13. We get ‘over-confident’ and the market humbles us.
14. We start to understand that trading successfully is going to take more time and more knowledge than we anticipated. MOST PEOPLE WILL GIVE UP AT THIS POINT, AS THEY REALISE WORK IS INVOLVED.
15. We get serious and start concentrating on learning a ‘real’ methodology.
16. We trade our methodology with some success, but realise that something is missing.
17. We begin to understand the need for having rules to apply our methodology.
18. We take a sabbatical from trading to develop and research our trading rules.
19. We start trading again, this time with rules and find some success, but over all we still hesitate when it comes time to execute.
20. We add, subtract and modify rules as we see a need to be more proficient with our rules.
21. We feel we are very close to crossing that threshold of successful trading.
22. We start to take responsibility for our trading results as we understand that our success is in us, not the methodology.
23. We continue to trade and become more proficient with our methodology and our rules.
24. As we trade we still have a tendency to violate our rules and our results are still erratic.
25. We know we are close.
26. We go back and research our rules.
27. We build the confidence in our rules and go back into the market and trade.
28. Our trading results are getting better, but we are still hesitating in executing our rules.
29. We now see the importance of following our rules as we see the results of our trades when we don’t follow the rules.
30. We begin to see that our lack of success is within us (a lack of discipline in following the rules because of some kind of fear) and we begin to work on knowing ourselves better.
31. We continue to trade and the market teaches us more and more about ourselves.
32. We master our methodology and our trading rules.
33. We begin to consistently make money.
34. We get a little over-confident and the market humbles us.
35. We continue to learn our lessons.
36. We stop thinking and allow our rules to trade for us (trading becomes boring, but successful) and our trading account continues to grow as we increase our contract size.
37. We are making more money than we ever dreamed possible.
38. We go on with our lives and accomplish many of the goals we had always dreamed of.
As an advocate of using a mechanical approach to trading and investing, it is point 36 that I find the most important. It is at this point that we finally realise that this whole caper is not about us, our ego and our need to be right and to control. It is about overcoming fears through empathy and trust which are manifested through surrendering to the rules of a systematic process with a researched and proven ‘edge’ over the market. Accept and achieve this and points 37 and 38 will follow, almost magically.
As always, I wish you consistent and objective trading.