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It’s a Humbling Business………….Edit this entry

Top stock tips from elite, quantitative and analytical traders

Posted on December 9, 2010 by  JORDANA BALSAM
  1. Greed
  2. Fear
  3. Anger
  4. Depression
  5. Achievement
  6. Greed

The six steps of a trader.

New traders believe they are so special and only see money signs.  They experience a strong sense of GREED and assume trading brings easy money.

This is the first step of a novice trader.

Then, after some time actually trading the market, the trader experiences FEAR. The realization of how difficult it is to actually succeed as a trader hits them. This stage brings poor decision making and a blocked head.

Next comes ANGER.  It’s now that the trader begins to recognize set ups and potential profits but does not – CAN not- execute properly. They see the trade, they know what to do. They simply don’t do it. Their head is a mess. Which ultimately leads to……..

 DEPRESSION. This is the lowest point where the trader’s ego is sufficiently crushed and they realize that this business is not personal and the market doesn’t care who the trader is. The market is all knowing and is always right no matter what the beliefs, feelings, emotions or desires of the trader. This is the most important stage because it is only now that the trader is ready to hit rock bottom. Only when he experiences a low can he climb to a high.

It is now that the trader can strive to climb to ACHIEVEMENT. It is at this point when finally things come together and the lessons of the lowest point are learned and eventually turn into profitability.

But tread lightly!……Along with success comes GREED. Right back to where the trader started only this step is even more powerful because it comes with a bigger ego.  After prolonged periods of success the trader may get sloppy due to cockiness and belief that he is superior to the market.

Which leads to step two, FEAR and ultimately the vicious cycle begins all over again.

For many this is a lifelong process which is why so many traders don’t succeed and leave the profession or remark that “There’s no money in trading”.

The real professionals, the truly successful  traders don’t allow emotions to interfere with their decision making. The professional traders never get too low or too high and always keep their emotions in check.  

Lesson learned: there is plenty of opportunity in the market for the even keeled experienced trader. Like anything in life, a clear head has more probability to succeed than one that is congested with negative emotions.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.