Trade Stages - The Trade Path

STARTS OFF “greed orientated.”

Loses because:
1 Market problems

• Not a zero sum game, a “very negative” sum game
• Market psychology – doing the wrong thing at the wrong time
• The majority is always wrong
• Market exists on chaos and confusion

2 Own problems

• Overtrading
• No knowledgec No discipline
• No protection against market psychology
• Random action through uncertainty, broker’s advice for example
• Market views.

RESULT: the “greed orientated” trader gets a good kicking and becomes “fear orientated.”

Loses because:
1 Market problems as above
2 Scared money never wins
3 Own problems

• Still overtrading – derivatives
• Fear brings on what it fears
• Tries to cut losses too tight creating more losses
• Still no real understanding of what it takes.

RESULT: Traders who persevere “travel through the tunnel” and becomes “risk orientated.”

This is when they start to make money because they:
1 Develop a methodology which give them an edge
2 Use an effective Money Management system
3 Develop the discipline to follow their methodology
4 Erase “harmful” personality traits