We’ve added this section to give those traders at the very beginning of their journey a general idea of what kinds of hurdles can be expected along the way. Those traders who have been at this for a while but who are still struggling to become profitable are most likely stuck in one of these phases, and it’s likely the Exploration Phase. This is where most of us get stuck – also known as the hamster wheel or strategy-hopping stage – until we’ve learned enough and gained enough confidence in our own abilities to gravitate to the systems and strategies that fit our personalities and lifestyles and build profitable approaches out of them. Unfortunately, some people never emerge from this phase. We’ve heard the agony and profound frustration in the voices of traders stuck in this phase and felt it ourselves. We hope this web site will help those traders unstick and then launch themselves into a profitable trading career.
The journey toward profitability can really be broken down into the following seven phases:
The Foundation Phase
This is the starting point where you’re learning all about the industry, probably watching a lot of CNBC and Bloomberg, reading as many books, listening to as many podcasts and watching as many videos as you can. You’re joining trading communities, chat rooms, YouTube channels, signing up for courses and buying as many strategies as you can. This is where you’re building your foundation as a trader. This phase takes longer for some than for others. It also continues to some degree through the rest of the phases because you’re always learning new things in this industry.
The Exploration Phase
This phase often directly overlaps with the previous phase, so it’s really more of an extension of the Foundation Phase. The difference is that you’re spending more of your time testing and simulating strategies, maybe even trading them live. There’s more practical work being done in this phase because you’ve gone from flooding yourself with information from books, podcasts, videos, etc., to the initial stages of applying what you’ve learned. This is where many traders hit the end of the line because they get stuck searching for the “Golden Goose” or “Holy Grail” which is a strategy that works all the time in every market environment. Unfortunately, this strategy doesn’t exist so the frustration and sense of futility that arises in this stage tends to be too much for many aspiring traders. Be wary of this phase and do everything you can to push yourself into the next one.
The Gravitation Phase
This is a very important phase because it can pull you out of the dangerous Exploration Phase. This is where you start to realize that there are trading styles and strategies that appeal to you more than others. These styles and strategies make sense to you so are more easily and quickly learned and applied, and they might even be showing promise in testing or live trading. Advancing through this phase demands a high degree of patience and attention, as well as faith in your instincts, so there is still an element of danger lurking here. If you give in to the frustration that comes from not immediately achieving the results you desire (unrealistic expectations) you could find yourself feeling like the whole thing is futile no matter what you do. But realizing that you naturally gravitate toward one type of trading over another and deciding to trust that path is a HUGE development. It will be extremely important for you to start spending more time on the things that appeal to you and show success and less time on the things that don’t. This is easier said than done but if achieved it can be the turning point and entry into the next phase.
The Streamline Phase
This is where you’re really starting to spend more of your time and efforts on the trading styles and strategies that appeal to you and are showing promise and less time on the ones that don’t appeal to you as much and may even be costing you money. So you are streamlining your efforts by really structuring your time. We highly recommend spending 80% of your time on getting better at the styles and strategies that fit your personality and lifestyle and only 20% on those things that don’t appeal to you as much or aren’t showing as much promise but which you are still somewhat interested in. The goal is to emerge from this phase with a core set of strategies, or core approach, that you will continue to build on and get better at. This is the next step in learning who YOU are as a trader.
The Muscle Phase
This is the point where you take that core set of strategies, or core approach, that you’ve developed and get even stronger at it. You’re now building your trading muscles by spending most of your time getting better at your strengths. The learning process is really accelerating for you in this phase and you’re starting to understand what it feels like to be a focused and disciplined trader. And this is also where WHO YOU ARE as a trader becomes much clearer because you’re taking the strategies you’ve learned and making them your own. This personalization process is a springboard into how you’re going to make consistent money in the markets on a long-term basis.
The Transformation Phase
This is where you start to transform from hobbyist/amateur into something closer to a professional trader. At this point you’ve begun conducting yourself in a more organized and worker-like way because you’ve been through much of the process and understand who you are in the markets and what you need to succeed. You start seeing the value in setting annual goals and getting even better at your strengths. You start focusing on the process and not the results because you realize that if you do this the money will come. So your goals start to become more about the process of getting better at your craft. In other words, you stop setting general goals of making $50,000 this year and start setting more specific goals like being more patient with your trade execution and putting more risk capital in your best opportunities when you see them.
The Pro Phase
This is where you really start taking trading much more seriously and treating it like a career. Ultimately, this is what you need to do to be successful on a long-term basis and to go from being a profitable trader to a highly profitable trader. This is where the big boys and big girls live and you want to move into this neighborhood. You just get better and better from here and the sky is the limit because this is also where you have all kinds of options as a consistently profitable trader: proprietary trading, investment advising, money management, building your personal reserve, selling your strategies and systems, providing a trading service, and coaching and mentoring other traders among many other things. There’s no question you can build a career in trading and this is the phase where that becomes very clear and a real option for you.