The Typical Path That A New Trader Follows-Part2

Step 4:

Problem - At this stage, most traders are looking for a "better" trading strategy. There are so many strategies on the internet these days that it can be almost impossible to not be tempted to buy one of those "too good to be true" systems...and there are many of them. This is the stage where traders are really trying to find the "holy grail" and they end up spending money on trading systems or other products that they think will help them correct their previous mistakes.

Solution - This solution is quite simple; if it sounds too good to be true...it probably is. The forex industry is filled with trading systems, strategies, courses and books that make trading look easy. The truth is that trading is not easy, it's a battle against your own emotions that only you can overcome. Yes, the strategy you use is important, but it's not true that more expensive or more complicated and fancy trading systems work better than trading strategies that are simple to understand and implement along with good risk management.

Step 5:

Problem - This is the stage where traders feel they have found the "perfect" strategy and are "finally" ready to start making money in the markets. Typically, at this stage, a trader has developed either good or bad trading habits, and it's also the first stage where some traders have a real chance of making money on a regular basis. However, what happens to most of them is that they are not properly prepared with a trading plan, a trading journal, and a concrete trading routine. Instead, they are excited about their new system and they start trading without any sort of structure or organised plan. This typically leads to over-trading with excessive risk taking and heavy financial losses.

Solution - Don't ignore this step, many traders have a trading plan and journal, and they know what they're looking for in the markets. But, after losing a few trades, they seem to forget their plan and start improvising. It's really easy to stop being disciplined and lose control. In fact, it's much easier to trade "wildly" than staying disciplined and patient and developing good trading habits. The trick is that the longer you stay disciplined, organised and patient, the easier it will be for you to do it, and ultimately you will enjoy trading in the right way because you have forged these things into positive habits. You have to stick it out long enough and endure some "pain" to see the long-term benefits.

Step 6:

Problem - At this stage, you are either on the right track because you remain disciplined, organised and patient, or you blew through your account in step 5 because you were overly excited and emotional. After emptying 1 or 2 accounts, you really start to feel depressed about your trading, you think it's impossible to trade successfully. You fall into a downward spiral of losing money because you feel like you have lost so much that you no longer care about losing, so you start taking more risks and trading more frequently, in other words, now you're gambling on the forex.

Solution - It's time to get some rest. Stop trading real money, and maybe even stop demo trading and forget about the markets for 1 or 2 weeks. They will be there when you return. The best remedy for ending an emotional trading period is to simply pull yourself out of the markets for a while. If you feel that you have reached this stage, and that you really need help, then I just suggest that you stop trading for a while. You will come back later after some training on a demo account.

Conclusion

I hope today's article has helped open your eyes to the fact that you aren't the only trader who made emotional mistakes or blew through 1 or 2 trading accounts. It happens to everyone. Either you realise that what you were doing previously doesn't work and you try to fix it in a logical manner as we discussed here today, or you simply continue to "play" like you did before, possibly leading to the end of your trading career.