There are very predictable stages in any traders trading cycle.They are as under :
1) Total beginner stage : We all started with this stage,we make some money on stocks or Options bought on tips and recommendations of someone and feel that this is a good way of earning some extra income,quick and easy money but soon we get disillusioned as some tips fail and we are left with holding some worthless stock and most of Options expires worthless ,then we decide that we must make our own study and make our own decisions.
2) Holy Grail Indicator/method stage :Then comes a stage in which we desperately go after books,new indicators,Metastock,Amibroker,RSI,ROC,MACD etc .We are fully convinced that out there there is some secret formula,some magical indicator or some key to trading riches and if we manage to find out that we will make it in trading this search continues for long time and we finally realize that there is no holy grail or a super indicator which will never fail.This is a stage where one believes that to be successful you need to have contacts with operators,inside information,market movers etc
3) Making Money but not consistently : Then comes the stage where you are making money but eventually losing it all in next few trades.We take trades on some trading strategy it sometimes makes money,sometimes looses money whenever it makes money,we grab it because we have a baggage of earlier losses and we dont want to let these small profits go and invariably some loosing trades we overstay in loosing trades as we cannot afford to take losses this also continues for a long time.
4)Consistent Small Profits Stage : Then we come to consistently small profits stage and here we trade small lots,we are quick to cut our losses and also quick to take profits we don’t make big profits but we remain net positive and hand to mouth traders just barely meet our expenses.
5 ) Professional Consistently Profitable Stage : : Next stage is consistently profitable trader stage who trades for living he has by now understood that there is no “Holy Grail” ,the key is not the entry but money management,position sizing and trade management having a control over our emotions while winning or loosing but he still has not figured out how to go in the large multi contracts trading stage his trading capital increases at steady 40 to 80 % per annum still hungry for achieving next stage.
6) Master Trader Stage : Here traders are very happy and at rest in their minds large quantities,large profits but all achieved not through taking large initial risks but taking controlled risks ,adds,holding positions till the trend at hand is in force and quickly reversing when the trend changes their mind is quiet no turbulence this is where they make multi fold return on their trading capital per year.
Every trader has to undergo these stages there are no shortcuts you may reduce the time spent in each stage depending on your effort this is a road with stones and thorns and we have to walk this road barefoot ourselves nobody can do it for us, its always good to get a mentor who can guide in twist and turns and if we make it, at the end of the road there is a beautiful life awaiting you,life of self confidence knowing that you can make a very decent living with your head held up,you are not dependent on anything or any one no bossing,no office politics,no payment defaults and you will not exchange this with anything else.
Best wishes for every one to graduate to master trader stage