All stable and profitable traders have gone through these three stages. Which stage are you in?
Everyone moving towards stability has experienced these three stages.
After encountering a large number of traders, I found a clear pattern: almost everyone who moves towards stability has gone through three distinct stages. Most people incur losses because they remain trapped in one of these stages for a long time.
The first stage is trading by instinct. When entering the market, all one sees are opportunities, listening to news, relying on gut feelings, frequently taking large positions, wanting to earn more when they profit, and stubbornly holding on when they incur losses, or continuously adding money to try to recover their losses. The result is quick gains but even quicker losses. The core lesson of this stage is: before learning to make money, one must first learn not to lose large sums.
In the second stage, many things are learned but not well applied. After suffering losses, they start to learn desperately, researching various technical indicators and theories, knowing they should set stop losses and manage positions, but when it comes to real trading, they become confused; there are too many methods, conflicting signals, and they always miss opportunities to gain while incurring losses instead. The confusion at this stage is: they understand many principles but still cannot trade well.
In the third stage, defeated by their own mindset, they finally establish a clear set of trading rules. Yet, issues always arise during execution; they hesitate when they should cut losses, cannot hold positions when they should, and occasionally violate the system with heavy trades, often losing to their own emotions and impulses despite having the right methods.
The bottleneck at this stage is the unity of knowledge and action, which is the hardest step to cross in trading. The tuition at each stage is very expensive; however, some people remain stuck at the first stage, constantly changing their capital and repeating the same mistakes; some are stuck in the second stage, endlessly searching for the perfect method but never truly committing to one; others struggle repeatedly in the third stage, knowing what to do but unable to control themselves.
Traders who truly make it out eventually understand three things:
1. The market always carries risks; your task is not to predict but to respond.
2. There is no perfect system, only a probabilistic advantage of complete execution.
3. Stable profit equals simple rules plus repeated execution plus emotional management.
If you feel lost in trading, it might be helpful to ask yourself a question: Am I unaware of the method or do I know it but cannot execute it? This answer is often the beginning of a breakthrough.