Among the traders that I’ve communicated with over the years, the ones that struggle the most tend to be intermediate-level traders.
You see, although they are well-acquainted with the trading basics, their account typically hovers between a small loss and break even.
In private, they often admit that they feel like stuck and unable to progress.
If you fit this description, this post is for you.
Stages of Profit
Now the first thing you should understand is this:
This chart describes the approximate path of profit for most retail traders.
As beginners (starting from the left of the chart), people tend to be ignorant about the risks involved with trading.
Regardless, beginner traders have very little understanding of what it takes to succeed, and often take trades that are too large for their account.
Thus, they tend to experience large profits or large losses (often both).
Assuming they don’t quit trading at this stage, these traders will move on to gain more experience in the market. Eventually, they come to realize that their trading results have up until this point, been largely based on luck.
They discover that they’ve been gambling, and quickly wise up to the real dangers of the market. This tends to also be the point where they realize how little they know about what it takes to succeed in trading.
Thus, they decide to cut down on risk by reducing their trading lot size.
They think, “once I find a trading method that works, I’ll increase my lot size and start making some real money”.
This is actually the smart thing to do. By cutting down their trading lot size, these traders continue to gain valuable market experience without risking a lot of money in the process.
The problem with this stage though, is that it’s by far the longest.
It’s actually something more like this:
This is the stage of the process I call The Grind.
What’s The Grind?
The Grind is the metaphorical brick wall that separates the wannabes from the committed.
It’s also the period when the trader begins to realize that conventional trading wisdom doesn’t work.
He slowly unlearns what he had been taught about trading, and starts seeing the market with new eyes. For the first time, he starts thinking for himself.
Instead of following the generic advice he reads about online, he goes through an arduous process of discovery and carves out a niche for himself in the market.
But, unfortunately, not everyone comes to this realization. For many intermediate-level traders, the feeling of being stuck leads them to think they are at a dead end.
This is why many will quit at this stage. These traders equate progress with the amount of money they’re making (i.e. very little), so they talk themselves into believing that successful trading is eithe