Learning phases of trading
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How long will it take for me to be successful in my trading? This is a question that novice traders often ask themselves when they want to learn to trade. At the beginning, it is quite normal to lose, you are in the learning phase. That's why we always recommend starting with a demo account. It saves you from losing your money, which is, not to forget, your working tool in trading. Before you can expect to earn money in trading (in the long term, not on a stroke of luck with the use of high leverage, etc.), you have to go through several phases.
A trading strategy is a set of rules that a trader must follow to open a position. These rules include the technical part (your bullish/bearish signals, choice of trading time unit, choice of trading products, etc.), money management (managing your risk and adapting it to your investor profile), and rules that are specific to your experience on the financial markets (for example, not taking a position during a news event, staying away from a currency pair for a while, etc.).
The hardest part isn’t learning the technical part, it’s getting to know yourself and adapting your trading strategy to your investor profile. The psychological factor is essential to be successful at trading in the long term. This should not be overlooked, it is often a cause of heavy losses for novices and even for the most experienced traders.
How long your trading strategy apprenticeship lasts depends on 4 criteria:
- The time available: Obviously, the more time you have to devote to trading, the faster you learn.
- Your psychology: Withtrading you have to be patient, disciplined, know how to accept failure, manage stress, etc. If you are the opposite of this description, your training will inevitably be longer and more complicated. Hence the importance of working on oneself.
- Your ability to learn: It's a fact, some people learn faster than others. You only need to look at schools. It's the same with trading, some people are more suited than others for this activity, but everyone can do it!
- Shortcut to experience: You know my opinion on paid trading training courses, I don't recommend them. A trader must learn by himself, make mistakes to progress in his trading. This does not mean that you shouldn’t take advantage of the advice of more experienced traders. Feel free to ask questions on CentralCharts’ trading forum.
Once you have found a clear trading strategy, you must learn to trust it. This is a phase that novice traders often do not understand. They tell themselves that they have worked so hard to find a trading strategy that they now deserve to reap the rewards of their hard work. They then think only of the potential to make money. Their expectations are high with regard to their trading strategy.
The problem is that all trading strategies have loss phases. You can't avoid them, but a good trading strategy helps you to overcome them. A trading strategy is judged over the long term, not over a day or a week. What matters is whether or not it generates income over a long period of time.
Novice traders often have different degrees of acceptance in loss phases. Some don’t tolerate losing two consecutive trades, others absolutely want to finish the day or week with a positive balance and have a high ratio of winning trades. Each trader is different on this, but you must understand that it is the long term that counts, not the short term! Even with a good trading strategy, you go through dark days where all your trades lose. This is when you have to trust your trading strategy.
To have confidence in your trading strategy means not questioning it during loss phases. For that, there is only one solution, it is to have tested it on a demo account or in real life (on a small account) for a significant length of time. Over time, you may develop it based on your experiences, but you should not change it completely at each loss phase.
Once you have gained confidence in your trading strategy, you should then be capable of applying it and following your trading plan to the letter. It sounds simple to say it like that but it's easy to let yourself be tempted by trades that are not related to your strategy. This usually happens when your trading strategy doesn’t give you many signals for a period of time. The number of trades between each day, week or month can be very variable depending on market conditions. You have to be capable of being patient.
On the other hand, too many trading signals can wear you down mentally and physically. If there are too many signals, it is sometimes difficult to manage all trades at the same time, especially when you start trading or trade over short time units. Not everyone is made for short-term trading. Hence the importance of finding the unit of time that best suits your investor profile.
Following a trading strategy to the letter also means sticking to your money management rules. Under no circumstances should you increase your risk to make up for a loss, for example, or move a stop loss to avoid it being triggered. Trading is an ongoing struggle against oneself.
Finding a trading strategy is not the hardest or longest part of trading. It's all about trust, and to get to this point, you need to test your trading strategy at length over several weeks (at least, or even over several months). You are then able to overcome loss phases (inevitable in trading) and know if you are able to apply your strategy over the long term. Then a long psychological test begins. But once you have accomplished all this, you realize that trading is an activity like any other, it's repetitive! Over time, your emotions gradually fade and give way to automated trading applied manually.
Phase 1: learning a trading strategy
A trading strategy is a set of rules that a trader must follow to open a position. These rules include the technical part (your bullish/bearish signals, choice of trading time unit, choice of trading products, etc.), money management (managing your risk and adapting it to your investor profile), and rules that are specific to your experience on the financial markets (for example, not taking a position during a news event, staying away from a currency pair for a while, etc.).
The hardest part isn’t learning the technical part, it’s getting to know yourself and adapting your trading strategy to your investor profile. The psychological factor is essential to be successful at trading in the long term. This should not be overlooked, it is often a cause of heavy losses for novices and even for the most experienced traders.
How long your trading strategy apprenticeship lasts depends on 4 criteria:
- The time available: Obviously, the more time you have to devote to trading, the faster you learn.
- Your psychology: Withtrading you have to be patient, disciplined, know how to accept failure, manage stress, etc. If you are the opposite of this description, your training will inevitably be longer and more complicated. Hence the importance of working on oneself.
- Your ability to learn: It's a fact, some people learn faster than others. You only need to look at schools. It's the same with trading, some people are more suited than others for this activity, but everyone can do it!
- Shortcut to experience: You know my opinion on paid trading training courses, I don't recommend them. A trader must learn by himself, make mistakes to progress in his trading. This does not mean that you shouldn’t take advantage of the advice of more experienced traders. Feel free to ask questions on CentralCharts’ trading forum.
Phase 2: Gain confidence in your trading strategy
Once you have found a clear trading strategy, you must learn to trust it. This is a phase that novice traders often do not understand. They tell themselves that they have worked so hard to find a trading strategy that they now deserve to reap the rewards of their hard work. They then think only of the potential to make money. Their expectations are high with regard to their trading strategy.
The problem is that all trading strategies have loss phases. You can't avoid them, but a good trading strategy helps you to overcome them. A trading strategy is judged over the long term, not over a day or a week. What matters is whether or not it generates income over a long period of time.
Novice traders often have different degrees of acceptance in loss phases. Some don’t tolerate losing two consecutive trades, others absolutely want to finish the day or week with a positive balance and have a high ratio of winning trades. Each trader is different on this, but you must understand that it is the long term that counts, not the short term! Even with a good trading strategy, you go through dark days where all your trades lose. This is when you have to trust your trading strategy.
To have confidence in your trading strategy means not questioning it during loss phases. For that, there is only one solution, it is to have tested it on a demo account or in real life (on a small account) for a significant length of time. Over time, you may develop it based on your experiences, but you should not change it completely at each loss phase.
Phase 3: Agree to follow your trading strategy over the long term
Once you have gained confidence in your trading strategy, you should then be capable of applying it and following your trading plan to the letter. It sounds simple to say it like that but it's easy to let yourself be tempted by trades that are not related to your strategy. This usually happens when your trading strategy doesn’t give you many signals for a period of time. The number of trades between each day, week or month can be very variable depending on market conditions. You have to be capable of being patient.
On the other hand, too many trading signals can wear you down mentally and physically. If there are too many signals, it is sometimes difficult to manage all trades at the same time, especially when you start trading or trade over short time units. Not everyone is made for short-term trading. Hence the importance of finding the unit of time that best suits your investor profile.
Following a trading strategy to the letter also means sticking to your money management rules. Under no circumstances should you increase your risk to make up for a loss, for example, or move a stop loss to avoid it being triggered. Trading is an ongoing struggle against oneself.
Conclusion
Finding a trading strategy is not the hardest or longest part of trading. It's all about trust, and to get to this point, you need to test your trading strategy at length over several weeks (at least, or even over several months). You are then able to overcome loss phases (inevitable in trading) and know if you are able to apply your strategy over the long term. Then a long psychological test begins. But once you have accomplished all this, you realize that trading is an activity like any other, it's repetitive! Over time, your emotions gradually fade and give way to automated trading applied manually.
