Trader Development Stage 3. Conscious Competence
After a lot of study, work, testing, and practice you finally have a solid trading plan, you’re well capitalized, you know how to manage your money and trades, you have verified and tested strategies, you are aware of personal tendencies and how to control them, you are no longer searching for a holy grail and instead just trust the method you have, you aren’t swayed by others opinions, don’t gamble, and don’t risk too much on each trade.
At this stage, you have learned your lessons and are now simply focusing on implementing your trading plan as best you can. You may have people who help, such as a trading mentor, but ultimately you realize that successful trading is up to you. It’s you who needs to remain aware of what the market is doing so you can implement your trading plan in real-time.
This is still a learning phase. You now know what you have to do, and you are learning to implement that knowledge in real-time, with real money, with very few deviations.
IF, you have gone through this process, created a trading plan and diligently follow it, simply by repetition you will reach stage 4. Following a plan isn’t as easy as it sounds though; it requires you handle your “personal demons” such as impatience, lack of discipline, as well as control your fear, hope, and greed. A study of trading psychology, or simply psychology in general, and personal reflection will play a significant role in this stage of trader development.
Trader Development Stage 4. Unconscious Competence
This is the mastery stage. You have incorporated all that you know (and discarded a lot of BS and false beliefs) into a trading plan, and can now execute that plan on “auto-pilot.” You no longer have to wrack your brain deciding on whether to take a trade or not, and you don’t need to refer to your trading plan for verification of anything. Like a professional golfer who has hit thousands upon thousands of golf balls to create muscle-memory, through loads of practice and making the same trades over and over again you too developed a type of trading muscle memory.
The path may not stop here though. You may choose to develop new strategies and test those, as well as experiment with new trading systems. For these new methods you will go through a learning process, usually starting at Stage 3 again, but that is only for that new strategy. You still retain all you have learned, and therefore have the ability to easily come up with new ideas and refine your processes.
Here is a test to see if you are step 4. If you feel stressed about your trading, while trading or when away from it, you haven’t reached stage 4. At stage 4 trading becomes almost completely stress-free. Although, your heart rate may still increase at times since you can’t know the outcome of each particular trade–that still remains a surprise. You know your systems well, and have been through enough ups and downs that you have a detached-humble-confidence that the profits will take care of themselves if you follow your plan. And you also have a detached-humble-confidence that you can execute that plan easily, since you have done it so many times before, in all types of market conditions.
At no point does a person get to relax and stop doing all the things that got them to stage 4 in the first place. You need to maintain and continue to implement all those traits and lessons you picked up along the way. Slack off, and your trading will still suffer.