Dangers of overstepping

Not being aware of what stage of the trading life cycle one is in, or purposely ignoring that knowledge, leads to becoming self style graduated to the next level. And this can prove fatal to your trading career and to your "Business of trading".

Also the converse is true. Knowing that one is past the "Start-up stage" but fearing to enter and act decisively as in the "Execution stage" can lead to meager performance and unnecessary delays in getting to the defined large scale goals.

Hence it becomes imperative that one needs to be aware of each stage that you will have to go through before your Business of trading prospers and flourishes. Also it becomes imperative to measure the progress of your trading with the correct yardstick periodically.

Here are some pitfalls that you would need to overcome.

• In the planning stage, you must avoid actual trading with actual money. In this stage your primary aim is to find out a platform, indicator, tool of analysis, etc that you will be using further in your paper trades. Until that one combination is found and tested, you must not trade with actual money.
• In the start up stage, your primary aim is not to earn profit, but to ensure that whatever you finalized in the planning stage can actually perform the way you want it. Here you will trade in smallest possible quantities, and aim at coming out with the minimum number of consecutive successes in that trade setup.
• When you are confident of having the minimum number of consecutive successes, you should try to do more of actual trades with actual money. However, your aim is not to trade large, but trade more with an aim to make a longer winning streak. For example, if your minimum consecutive successes was 6 trades per week in the start up stage, in the executive stage your aim should be to have minimum 3 such consecutive weeks.

As seen above, trying for larger profits, without the evidence of consecutive successes can lead to a wrong belief getting strengthened and this can lead to a failure of your system and make you either quit trading or go to the planning stage yet again to find a new trading setup.

However, once you grasp the concept of "Stages in a trader's life cycle", the journey would be easy, as you would be developing your own milestones, and would be striving to conquer these milestones one at a time.

This would also ensure, that you have stuck with a trading system for long enough to automatically develop faith in that system and with that your confidence in approaching the markets would enhance largely.

So be aware of the "Stages" and the "Stage" that you are in, develop small goals and milestones and work towards achieving those.

Happy Trading !!!