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Thread: Learning curve

  1. #1
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    Learning curve

    Before starting making bunch of money trading Forex, it's very useful to honestly recognize your place on learning curve.

    Let me explain.

    It's very easy to think that "now you are ready to make it" after series of profits.

    But consistency is what makes professional trader (I mean, who made trading his occupation). How to recognize - are you ready or not?

    I would divide development of a trader on several phases (well, don't get offended if you recognized yourself :) )
    The more honest you are with yourself, the faster you can go through all that phases.


    1. Beginner.


    You have come to the market and try making your first trades. Something works, something doesn't, but you enjoy the process, and after getting good profit you blow up your account. You never suspect that risk you have taken was enormous. You think that your "method" what inperfect.

    This traumatic experience leads you to a level of "advanced beginner".


    2. Advanced beginner


    Now you understand that you don't have a method and start "learning".

    Well, many people are stuck in this level, because there are lots of books and websites out there, huh.

    You face tons of conflicting information, you try to structure it reading more. You begin absorbing information, the more you dive into that sea the more you lack understanding - how to trade to make money?

    Most novices search for a "solution" - they believe that solution exists "somewhere", that somebody has "foolproof trading method", this is really time of trial and error.

    When you finally understand that market itself has uncertainty and ambiguity in it's nature, you understand that analysis and trading theory is not as important as risk management and good trading habits.
    You recognize limitations of all theories.

    Once you've recognize it, you go to the next level - I call it "struggling trader"


    3. Struggling trader


    Struggling trader no longer searches for a holy grail, but he (she) drifts between one trading style to another.
    He doesn't know what to stop on, but he already keeps his losses short, he understands importance of capital management and no longer falls into deep drawdown.

    Lack of consistency leads to chaotic drift of equity - he earns money, than gives it back to the market, than again makes up his mind and finds good trades and earns money again.

    I would say, trader CAN already earn money in this phase, but he can't keep it. All that market understanding that he gained through the years, pushes him to overtrade.

    Struggling trader recognises that he lacks discipline.



    4. Average good trader.


    What average good trader really does - he knows how to learn trading and that makes him who he is.

    He accepted 100% responsibility for his trading and there is fundamental difference between struggling trader and average good trader. While struggling trader relies on the market, he follows the market, but he rarely thinks of his actions, attention of average good trader focuses more on his actions.

    He already knows limitation of all theories, he knows importance on money management, he recongnizes importance of consistency.

    He keeps a journal, re-evaluates - what he does well, what not, what to work on, what to keep as it is, real work starts in this point.

    Also, average good trader works on his psychology and self awareness that makes him more disciplined.
    He studies the market, collaborate with traders but already knows that his action and opinion is what matters.

    Right focus of this phase eliminates a lot of mistakes, bad trades and finally allows trader to earn and keep money.

    I would say, this is a transformational phase. A lot of work to do, but it's like planting a tree - in needs time to grow.
    This is sort of personal growth. When we choose our reaction, when we refocus our attention and take responsibility for our actions, we grow personally and professionally, especially in trading.


    5. Master trader


    I would say, there are not so many traders that reach this point.

    At this point, trader knows himself and the market. He executes trades intuitively and as he knows his strengths and weaknesses, he can be more aggressive with what he does well, and defensive in other situations. Of course, it ends up with increased profitabilty and equity curve of a master trader can contain many winning streaks.

    Master trader focuses his attention right, thanks to the work done on the previous phase.

    I would say, "the tree had grown".



    Bottom line:


    It's important to recognize your place on the learning curve. Some people can't take responsibilty for their actions and accept that trading is a hard work, that's why they never come to the "average good trader" point.

    So, decide for yourself - where are you on this curve?

    The more honest you are, the closer you get to the destination. Yes, it takes time to develop and can't be done overnight. Do that work or quit!

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    Last edited by Value trader; 08-08-2013 at 09:03 PM.

  2. #11
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    Quote Originally Posted by martyn View Post
    I now have reached the stage of the third curve, ie traders fight, because I currently have a strategy remains just that I am still struggling to develop a strategy to provide highly accurate signals. indeed many temptations are greater, as the pressures I experienced, curious about the strategies of others, want to find a bigger profit, and also I became less focused because of the many activities that I do but learn forex
    Many traders are struggling in this phase.

    I will quote:

    "I am still struggling to develop a strategy to provide highly accurate signals"

    I would suggest that you shoud pay more attention to exists than to entries. Think about your stops - are they reasonable?
    Do you know YOUR market, that benefits you?

    If you put yourself in the third phase, probably you've seen market in different phases - fast trending, stair-stepping, range-bound e t.c.
    What market benefits you?

    I would rephrase - what market conditions provide you more benefit?

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  3. #12
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    After read page 1,,, I think I'm among of the "Average Good Trader".

    Previously I thought I'm a Beginner or Struggling Trader,,, but some criterria are not fit for me, such as Struggling Trader can make profit but they can't keep it... well I can make profit too and I can keep it, I can also be discipline with my MM and OP rule... but I can not trade a lot, only once a week or once in 2 weeks.

    Bacause of my rare trading also often feel confused with market,,, it keeps me feel like a newbie...

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  4. #13
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    Quote Originally Posted by widhie75 View Post
    Bacause of my rare trading also often feel confused with market,,, it keeps me feel like a newbie...
    That means you've done well, you are not forced to make a trade when you are in a condition of confusion, so you are actually trading when you are confident with your decision, that's what makes you consistent in profits. Many trade not necessarily make you get more profit.

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  5. #14
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    Quote Originally Posted by rinaji View Post
    That means you've done well, you are not forced to make a trade when you are in a condition of confusion, so you are actually trading when you are confident with your decision, that's what makes you consistent in profits. Many trade not necessarily make you get more profit.
    Forex market is open 24 hours a day does not mean that we should also trade here for 4 hours daily. We should insist on taking trades only when it can offer us a risk to reward ratio of 1 :2. we should avoid trading when we are mentally unstable or sad. A sad mind is often a losing mind.

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  6. #15
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    Quote Originally Posted by rinaji View Post
    Aha, could anyone be offended by your explanation, but does not include me.
    I would ask you, can a newbie jump into phase 5? So he could shorten the process without significant barriers.

    I think a trader must pass through all these phases, can not jump one or two phases. Because that is the process that occurs on a career to become a professional trader.
    Exactly. No one has special credit to skip those phases

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  7. #16
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    Quote Originally Posted by sekiryutei View Post
    well, as for me i believe that risking one to get three is the best option. but that will be only possible if you want to trade the news and it will be hard to trade the data like that. if you want to trade the data then risk one in order to got one is the most logical way to trade.
    Risking one to one is also a great option. But to be successful with this ratio a trader has to make more profitable trading decisions. If a trader insist on entering a trade with risk reward ratio of 1 : 2, then he can become successful even if only his 50 % trading decisions turn correct.

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  8. #17
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    Quote Originally Posted by PROPENSITY100 View Post
    Risking one to one is also a great option. But to be successful with this ratio a trader has to make more profitable trading decisions. If a trader insist on entering a trade with risk reward ratio of 1 : 2, then he can become successful even if only his 50 % trading decisions turn correct.
    I am scalping in Forex. I find it difficult to keep my losses low when I get a wrong trade. This brings me huge loss in a single trade and I lose all the profits and even more. What ratio to adopt while scalping and how to keep the losses low.

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  9. #18
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    i am not want to make of trade with scalping again,because when i doing of trading with scalping so very hard for me for control my greed and my emotion,so after that i make of trade with swing trading and only make and close position on several days and it is make me able to control my greed and my emotion with easy.

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  10. #19
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    Quote Originally Posted by forexfighter007 View Post
    I am scalping in Forex. I find it difficult to keep my losses low when I get a wrong trade. This brings me huge loss in a single trade and I lose all the profits and even more. What ratio to adopt while scalping and how to keep the losses low.
    Well when you are scalping you are certainly not using any stop loss. Yes it surely help you more winning trades when you use no stop loss, but then a single losing trade can eat up most of your capital. So always use key levels to enter your stop loss so in case market suddenly move against you still not lose big. So as per me it is still fine to use a 50 pips stop loss while we trade for a target of 5-10 pips, but never wise trading without sl.

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  11. #20
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    Yes, 'Honest is the best policy'. It is a very important for any kind of job. In Forex trading must need give correct place. When i start Forex trading i don't know about learning curve. Learning curve is very important for trading. Beginner to master trader is some level of trading. one trader must need identify there level. Then he work to in a right way. In Forex trading work is very hard. Very few trader go to in Average good trader. Because there stay in straggle level and loss there money. But i decide i want to go at lest Average good trader in doing hard work and honestly.

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