There is a natural six-phase learning process many traders go through on the road to trading mastery. Not everyone completes the process, however, but knowing the developmental roadmap might help you stay the course during darker times.
In the first phase, aspiring traders tend to think trading is easy, and for them it sometimes is. We call it “beginner’s luck.” Psychologically, it’s a valid phenomenon based on the fact that when one isn’t afraid, one tends to trade better. Nonetheless, this first phase is Naïve Simplicity and tends to be short-lived.
The second phase is Exploration, during which we actively collect information and tools that we suddenly realize we need. Depending on the type of learning style we have, this phase can last a few months or a few years.
The third phase is Complexification. This is the time when we attempt to implement the collected information and tools but without a clear plan. This trial and error period is exciting, but it also tends to be expensive.
The fourth phase is the Tangled Web. This is where Complexification becomes toxic. We feel on the verge of clarity, but objectively we are more like a fly struggling to free itself from a spider web. Most traders quit during this period, because the unrelenting stress grinds them down.
Those who survive the Tangled Web phase have the opportunity to actually integrate and simplify what they have learned, and they forge a trading method that truly fits their personality. This is when the mature and hard-won form of simplicity finally becomes possible.
In this stage, trading once again becomes fairly easy, like the days of beginner’s luck, but it’s now informed by a great deal of practical experience. We have learned much more about the market, as well as more about ourselves.
In the sixth stage, Mature Simplicity, we also know that we don’t know as much as we think we know, which helps keep us humble and flexible. We respect the market itself as a worthy opponent and we take what is offered without regret or complaint.
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