There are basically five stages on the way to consistent profitability. In which phase are you in now?

I. The first is the losing phase where traders tend to lose often and big. The trader is new to the market and knows nothing about what it takes to trade profitably even if the trader thinks he or she knows enough (the most dangerous to their trading accounts and emotional stability).

II. There is a second phase where traders have to learn to correct some of their most recurring mistakes but they still lose on average but not by much. It is still mostly a hit or miss approach but the downside is more contained now as the trader has been burnt a few times before and knows how the market might hurt him or her.

III. Then comes a phase where the trader knows a lot of technicals, stock tickers, read a few popular trading books and is likely familiar with the views of a few trading experts. The trader is now basically break even on its trades. 

“Not losing money is a legitimate and important step on the way to success. You may be struggling, but you’ve struggled further up the ladder to success than you might realize.”

—Adam H. Grimes, Chief Investment Officer at Waverly Advisors

IV. Suddenly after coming across some quality trading material that he is now ready for, the trader will begin to think independently, use his own data, and the trader will likely be able to become more selective in his or her trading. The trader is now profitable most of the time but will experience large drawdowns from time to time. The consistency is lacking.

V. The trader elevates himself to the consistently winning plateau by working on a strategy that fits him or her and by learning the mental skills of profitable trading. He or she trades effortlessly, does not care about other traders think or do, and may even laugh while listening to a market call on CNBC or Bloomberg. In this phase where only a tiny percentage of traders will arrive, he or she may be able to trade for a living or trade professionally for a firm. The trader has finally made it and knows it.