The Five Stages of Trading

26 Feb 2023

Stage One: Fear of Entering the Market

Beginners often hesitate and feel uneasy when entering the market for the first time. Once they finally make the decision to enter, they become anxious as they watch their account balance fluctuate. They cannot maintain a calm mindset and constantly monitor the market. They quickly exit the market after making a small profit.

Stage Two: Frequent Trading

After a few successful trades, confidence increases and traders want to earn even more. They focus most of their time and energy on trading. However, as time goes on, their accuracy decreases.

Stage Three: Unable to Accept Losing Trades

As the number of trades increase, it is inevitable that some will result in losses. However, some traders cannot accept this and refuse to exit the market, even in a one-sided market. They choose to increase their position or hold onto it for a long time. As the market continues to move in the opposite direction, their account funds decrease, resulting in large losses or even margin calls.

Stage Four: Refusal to Exit the Market

After experiencing several failures, traders finally realize that they should not trade frequently and should use strict stop-losses. They wait for a clear trend, enter the market, and earn a good profit. However, they want to make up for their previous losses and choose to hold onto their position. As the market reverses, their profits begin to decrease. They become even more reluctant to exit the market, resulting in losses.

Stage Five: Fear of Entering the Market

After going through the market in a full circle, traders return to their initial state of mind. They have lost their confidence and are hesitant to enter the market, even if their directional judgment is accurate. They miss out on many opportunities and become lost in their trades.

Which stage are you currently in? Most people have experienced these stages. I was also confused many years ago, but eventually, I realized that trading is a game with the market. The market constantly exploits human weaknesses such as fear and greed, and tests your bottom line.

The best approach is to overcome your fear and greed, standardize your trades, and strictly follow your plan. To achieve this requires a lot of time and practice. I can share my experience with you to help you avoid detours and achieve success.I have a deep understanding of cryptocurrencies, gold, crude oil, foreign exchange, and US stocks. I also update my operations and strategies for friends to reference. If you have any questions during trading, please leave a message, and I will give you the most reliable advice. Your support and likes are my motivation to continue updating. Welcome to communicate with me, thank you.

28 Feb 2023

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