If you are a trader and struggle to be consistent, the first step is acknowledging and understanding which of the 4 phases you're in. Once you understand that everything falls into place:
Phase 1: Unprofitable Trader Phase
Characteristics
• Small wins, larger losses
• Negatively trending equity
Reasons:
• Poor trade identification
• Poor risk management
• Poor profit-taking strategy:
Characteristics
• Small wins, larger losses
• Negatively trending equity
Reasons:
• Poor trade identification
• Poor risk management
• Poor profit-taking strategy:
Traders in Phase 1 act randomly without a system, acting on tips and impulses. They lack any cohesive plan or trading rules concerning entries, exits, and risk management.
Traders in this phase may decide to leave trading behind them. If you recognize yourself as a
Phase 1 Trader, keep going! You can move past this phase and advance along your journey with discipline. It will take a lot of hard work, but it will be worth it.
Phase 1 Trader, keep going! You can move past this phase and advance along your journey with discipline. It will take a lot of hard work, but it will be worth it.
Phase 2: Boom-and-Bust Phase
Characteristics
• Roughly equal wins to losses
• Non-trending equity
Reasons:
• Better trade identification
• Poor risk management • Profit-taking too early • Over-trading
Characteristics
• Roughly equal wins to losses
• Non-trending equity
Reasons:
• Better trade identification
• Poor risk management • Profit-taking too early • Over-trading
In this Phase, traders have often gotten more serious about trading; however, they need help consistently implementing a system and often need proper risk management.
Phase 2 traders feel disheartened when attempting strategies they have read about and still can’t make it work.
With more effort, tighter risk management, and trade discipline, they can quickly turn the corner and enter.
Phase 3: The Consistency Phase.
With more effort, tighter risk management, and trade discipline, they can quickly turn the corner and enter.
Phase 3: The Consistency Phase.
Phase 3: Consistency Phase
Characteristics
• Larger wins, smaller losses
• Positively trending equity
Reasons:
• Good trade identification
• Good risk management
• Let profitable trades run
• Cuts losing trades quickly
• Knows when to be in cash
Characteristics
• Larger wins, smaller losses
• Positively trending equity
Reasons:
• Good trade identification
• Good risk management
• Let profitable trades run
• Cuts losing trades quickly
• Knows when to be in cash
In this phase, traders have fully committed and found a sound strategy that makes sense for them and their situation.
The transition from 2 to 3 occurs when traders limit noise and focus on mastering one strategy or just one setup.
The transition from 2 to 3 occurs when traders limit noise and focus on mastering one strategy or just one setup.
Phase 4: Performance Phase
Characteristics
• Achieved mastery of a system
• Looking for ways to improve edges
• Daily routines
• Confidence
Characteristics
• Achieved mastery of a system
• Looking for ways to improve edges
• Daily routines
• Confidence
Phase 4 may be the last, but it does not mean the learning or hard work is done.
Performance Phase traders have nailed down routines that keep them focused on the highest potential stocks for their system and aware of the current market conditions.
Performance Phase traders have nailed down routines that keep them focused on the highest potential stocks for their system and aware of the current market conditions.
Advancing phases start with a strong foundation. If you're a growth trader/investor, @TraderLion_ put together a free 115-page Trading Guide to help you do just that: traderlion.com
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