Know how good you are in Forex Trading?

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Forex trading is a long and bumpy road. We all use different strategies, systems, risk management, but one thing is the same for all. We all go over the same road on the path of either success or failure.

 

There are 5 phases in the Forex Trader mindset:

 

 

1. Unconscious ignorance

New trader even doesn’t know he has no idea how to trade properly
– Have the most basic information about Forex, that money can be earned there.
– Buy when the market goes up, sell when it goes down, how hard it can be?
– Burn the account during the first month, then think Forex is a scam

2. Conscious ignorance

Amateur trader realises he doesn’t have needed knowledge and skill to be successful, and that he still needs to learn a lot
– Begin to realize that problem is in his lack of knowledge
– Trying all sorts of strategies, systems and indicators (and usually burning another account in the process)
– Trading too often
– Overestimate his knowledge
– Phase in which the trader loses most accounts from the entire process

3. Enlightenment

Novice trader becomes aware of all his mistakes, bad risk management, emotional trading, etc., and decide of the whole new approach. This phase is very short but most important.
– Realization of the importance of Risk Management
– Realization that there is no “get rich overnight” system
– Realization that indicators are not key to success

4. Conscious knowledge

The retail trader is fully aware of his abilities and has acquired the necessary skills for profitable trading. Results are starting to show and the only thing left for him is to get sustained long term profit.
– Emotions are under control, since the trader is using risk management
– Learn that drawdowns are part of the trading and don’t try to escape from it
– Trader is no longer inpatient and doesn’t trade if there is no excellent opportunity
– Account is profitable but cannot sustain it in longterm

5. Unconscious knowledge

A Profesional trader is trading automatically, based on not only knowledge, but instinct and experience. He mostly doesn’t use any indicator, but pure price action. This is the final goal of any trader.
– Total control of emotions (there is no euphoria on wins, or bad emotions during drawdowns)
– Profitable in longterm
– Understanding of market behavior and structure
– Big gains and large losses don’t upset him, he is aware it is only a phase during a long road.
– At this level, usually a mentor and financial adviser, fund manager, and institutional trader

 

How to get to phase 5?

 

All these phases are equal for each trader and you all must go over them if you want to go to the final phase. There are no shortcuts. I am usually asked, how much time it needs to get to the fifth level. That is very individual, not that much based on your intelligence, but mostly on your hard work, your stubbornness during all the failings, and most of all, your desire and passion to do this for the rest of your life.
If you will never give up, I promise you, you will reach my level.
It is really the best job in the world, and I will never do anything else. All the sleepless nights, all failures and all spent time, will one day come back on you and reward you in a way that will surpass your wildest dreams!

Mislav Nikolic
Bull Capital

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