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Ladder Of Trading And Investing

Wouldn't it be nice to know the ladder of trading and investing before heading to the financial markets?  I believe so.  I hope this article will help both beginners and advanced market players know where to start, and their current level but also see how far they can go on that ladder.

I am writing this article because when I look back, I realise that years ago, I just jumped into trading and investing without having any idea about the trading and investing ladder

First Step On Trading And Investing Ladder

The first step in my opinion is scalping and day trading on the lower times frame.

One is just enjoying oneself like a child on a Disneyland roller-coaster.  One day, one is scalping and day trading like God; and the next day, one is giving everything back.  At that level, one has no goal in the financial markets so one is not a serious market player.

For some like me, the first step was to invest in penny stocks for growth purposes only without any consideration to the risk-reward ratio or whether the company is paying dividends or not. 

Like myself, many market players that were taking positions in the financial markets before the advent of the online trading platforms were not day or scalping traders. 

However, after the advent of the online trading platforms for all financial instruments, it is fair to say that the first step on the ladder of trading and investing is scalping and day trading.

If one is scalping or day trading without aim in the financial markets, one is still on the first step.  Please do not be discouraged if you are on that step because when you are ready, you will find your way to the second step.

Second Step On Ladder Of Trading And Investing

The second step is swing trading as a way to stop losing as a scalping or day trader.
All traders on the first step will come to a point where they will begin to wonder if they are born for day trading or swing trading. 

From that point, market players begin to look for trading methods, strategies or systems that will help them settled after the exploration stage on that first step. 

Most swing traders and those that are tired of financial markets' roller coaster of the first step are on the second step.  They have the need or urge to move to the second step and they will do what it takes.

Third Step On Trading And Investing Ladder

At the third level, a market player now feels like he is born to be either a scalper, day trader, swing trader or investor.  At that level one can say with certainty that one is a day or swing trader, scalper or investor.

Usually at both level one is still trying to find out what works, and who one is as a market player.  By the time one reaches the third step, there is no more doubt about who one truly is.

Note that some market players like myself can ascertain that they are day and swing traders and investors. In my case,  I can day trade, swing trade and invest like a pro.  A market player can be a multi talented player.  

Really it is a matter of ability and choice.  First, one will realise that one is able to day trade, swing trade, scalping trade or invest then one will make the choice to be one or many of those abilities.

4th Step On Trading And Investing Ladder

The fourth step on the trading and investing ladder is specialising as either a Forex trader, stock trader, commodity trader or investor.  Note that it is not sufficient to say that I am at level four because I am a Forex or commodity trader or investor.  One must reach the steps one to three before becoming a specialist trader or investor.  

One has passed the first step of exploration or enjoying oneself as a market player.  Also one has transited through the second level of refuge from 1st level losses to the third level where one now knows who one is.  To put it to you in another way, I will say that there is no fourth step before the first three steps.

Step Five On Trading And Investing Ladder

At that level, one knows that one can get better.  It is no more about finding who one is or what field best fitted one's skills.  Those are already covered.  This time, all that is one's priority is to get better at what one is good at.  One just wants to do it like a pro.  


What I have noticed is that market players at the fifth step are diligently asking to be coached.  I have come across many of them who were asking me if I provide a sort of one to one coaching or training.  


This is normal because the fifth step market player means business.  He or she is literally trying to break through (doing better) to reach the sixth step. I would like to mention that at that level, it is normal that a market player who did not find a coach or is not doing better as he or she is expecting it, may take a pause or break from trading and investing.

Traders and investors do stay away completely from the financial market on the fifth step of the trading and investing ladder.  


It happened to me and to many market players.  I find that break really therapeutic.  It is similar to a plane landing at an airport for a transit because the journey is more than fourteen hours.  One is regrouping oneself so to speak.  It is also similar to an eagle that is removing all its feathers, and waiting until brand new feathers are in place.  It is a kind of regeneration. 

Note that though a market player may break away at that level, he or she is not completely detached from the financial markets.  His mind and attention are still on the markets, but he or she is no more placing any trade.  He or she can trade and invest, but he or she does not want to lose like it was in the past.  


Strangely, it also common that some of those market players will never go back to the markets after that break.  Most of them that return are more likely to become profitable market players or investors.  One can argue that they have found the key to successful trading or investing.

Sixth Step On Trading And Investing Ladder

Those on that step can make money in the financial markets.  One may say that they have crossed the bridge.  Only few do cross that bridge.  I mean they have gotten all it takes to make money in the financial markets.  Their only challenge is the risk management and 5% money management.

I mean one wants to stay disciplined at all times otherwise one will lose.  That is it, really.  Most successful market player do stop at the step six without even bothering to tap into the step seven.  I mean the true God's territory where God can open your eye to see and see through things whether in a daylight or darkness without night goggles.  Many fundamental and technical traders who are making money in the financial markets do stop at the step six of the ladder of trading and investing.  

Honestly, it is not a bad achievement, but why not finish the race with flying colours at step seven.  I wonder why.  In my opinion, this is just a lack of knowledge and willingness.

Either one does not know that step seven exists; and it is reachable, or one knows that it exists, but one is not willing to take one more giant step to reach it.  The sixth step is not the last stop, but the one before the last.

Seventh Step On Trading And Investing Ladder

A Sophisticated market player is a market player that has reached the seven step.  Some are billionaire hedge fund managers, individual investors, few professionals that work for investment banks or just an ordinary market player who got in through the back door.  A true sophisticated market player combine both technical and fundamental analysis.  If not then one is not yet there. 

A Sophisticated market player understands and use the Elliott wave principle and Fibonacci.  If one is combining the fundamental and technical analysis but one has not yet mastered Elliott wave and Fibonacci then it is a bit too early to call oneself a sophisticated market player.  

I am not saying that one will not reach that step, but one has to push it a bit more. One wants to ground it to the point where one eyes' finally pops wide open. 

 So what am I going on about?  

For those of you that are technical traders, please take the next step to learn to use the fundamental analysis.  If one has not yet mastered Fibonacci and Elliott wave forecast, well begin to crack them too.  If one is an intelligent investor then it is about time to add the normal technical analysis, Fibonacci and Elliott wave forecast.

A true sophisticated market player can play the financial markets' game at every level, field and fluently communicate with any market player.  I mean if one gives to a sophisticated market player any financial asset, he or she should be able to trade it unless he or she does not want to.

Conclusion

Dear traders and friends, we have come to the end of this essential trading and investing article.  The take away is that, there are seven steps on the ladder of trading and investing.  Also that ladder will help market players know their current status.  They can now make a decision to climb the subsequent step until they finally reach the seventh step at the top.  

Really, the most important thing is to know which step one wants to reach; and work hard until one reaches it.  It does not matter how long it takes if one is willing to become a sophisticated market player.

Well that will do.  If you have any questions or comments, please post them under any video at 24stocktrader YouTube channel and I will get back to you. 

I wish you the very best.
Happy Investing To All

This article is written by
George Beaulieu
Founder Of Stochastic-macd.com