Path To Forex Trading Mastery

Hello Forex Traders!!

In our articles on Friday we have discussed many topics, ranging from classical technical analysis elements to trading psychology and trading strategies.

Please take a look at this article which sums it all up in a neat summary and reference links. 

Now we are going to focus on the stages of a developing trader and what kind of characteristics and pitfalls each stage encounters. Every trader goes through similar steps and phases of development. All Forex traders are equal in that. Yet logically, there are differences in learning and development speed.


With this information I hope that you will be able to:

a)      Know the characteristics of each stage

b)      Recognize in which stage you are

c)       Avoid the common mistakes of other traders in that stage

d)      Make a road map how to get to the next stage

We are going to walk through all of the stages of a developing trader and recognize the most common attributes. We think this will be a grand guide of becoming a better Forex trader. Of course, not all Forex traders will make all of those mistakes. The summary is a generalization. Some of you might have 1 of those attributes, others more.

It is your task to analyze yourself critically with the use of this check list and article and see where your strengths, weakness, opportunities and threats are hidden. Good Luck! Please share your process of how you develop as a trader down below!


First some theory about what development stages entail… A previous article at Winners Edge Trading referred to the stages as “the 3 stages of trading”. 

Another common way of looking at development is Abraham Maslow’s four stages of learning. This methodology uses 4 levels of learning to describe how far a person in the development of a particlar skill set. That skill set could Forex trading like in this article, but refers as well to other skills such as learnig to play a music instrument, to play sports game, to learn a craft, to learn to drive, etc.

The matrix is build by combining two components of unconsciousness versus consciousness, and competence versus incompetence.

Level 1, the basic level, is unconscious incompetence. This means that a person is not aware of the existence of a particular skill.

Level 2 is conscious incompetence. This means that a person is aware of the fact that they are not competent in a skill.

Level 3 is conscious competence. This means that a person is competent in a skill, but that the skill demands a (high) level of focus.

Level 4 is unconscious competence. This means that a person is competent in a skill, without a (severe) increase in attention or focus (automatic).

The last level 5, which I am adding myself and is not part of the Maslow theory (as far as I know) is the level of mastery. This means that a person has fully mastered the skill set from all angles.

To give a practical, non-trading example of the 5 levels above: driving a car.

Level 1 would mean that a person, for example a child perhaps or a non-driver, is unaware of the difficulties driving could entail.

Level 2 means that a person is aware of how difficult driving is.

Level 3 means that a person is able to drive themselves with caution and heightened level of focus.

Level 4 means that a person is able to drive without thinking and automatically.

Level 5 means that a person has mastered the skill set to the finest details (i.e. a professional racer).


We will show for each stage the typical observed behavior and then the desired behavior.


Observed behavior:

1.)    Taking high levels of risk in trades

2.)    Taking high levels of risk % of trading capital

3.)    Taking all trading opportunities immediately without planning

4.)    Very impulsive in reactions to the market

5.)    No realization that trading psychology is important

6.)    No eye for money management

7.)    No eye for trade management

8.)    Greedy for very high levels of profit

9.)    Unrealistic goals and expectations regarding profit potential, time factor to become profitable, ease of learning and earning, frequency of trade setups, etc

10.) Sometimes start out with a lucky winning streak and thinks that Forex trading is a piece of cake, until the streak runs out

11.) Very optimistic, excited, confident

12.) Revenge trading

13.) Has no understanding of market environment

14.) Is not aware of news and data announcements

Desired behavior:

a.)    Take the time to learn technical analysis, chart patterns, core Forex trading concepts, learning from more experienced traders

b.)    Looking for and choosing a mentor  

c.)     Looking for and choosing a live trading room.  (join our room here)

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d.)    Take time to observe movement on the charts with the sole purpose of learning HOW the market moves with no intention of trading or earning. Looking at market movements and oberserving how it moves will be the foundation of your own market memory and recognition

e.)    Demo trade. If trading live, start extremely small

f.)     Recognize and realize the mistakes of other traders

g.)    Treat trading as a business

h.)    Setup educational learning plan


Observed behavior:

1.)    Encounters set backs in many areas and realizes that profitable trading is not as easy as it seemed at the beginning

2.)    Has lost (substantial) part of trading capital

3.)    Might have risk and money management goals, yet still violates own rules

4.)    Searches for solutions such as a „Holy Grail“, an answer to everything, a perfect strategy, perfect indicators, etc

5.)    Switches from indicator to another and keeps searching for the better one

6.)     (Very) nervous while trading and confidence at low point

7.)    Has gained (some) understanding of stop losses, risk management, etc

8.)    Is still very excited by market movements

9.)    In some cases, is still trading spontanously without planning and is carried away by excitment

10.) In other cases, fear has made the trader hesitant to take trades

11.) Often second guessing a trade and analysis

12.) Tends to take too many trades and overtrade

13.) Might have doubts whether profitable Forex trading is achieveable, limited beliefs in trading success

14.) Starts to read books and watch webinars

15.) Still loses trades, but trades are better chosen ones

16.) Is very worried about market movements against their open position

17.) Is building a trading plan

18.) Learns to view 2 time frames

Desired behavior:

a.)    Realizes that risk management is vital for capital protection and that number one goal is to protect the trading capital

b.)    Practices with (very) small live account for proven setups and demo account for traders „out of curiosity“ / testing

c.)     Starts to build and work towards trading plan

d.)    Reads many Forex trading book and watches many webinars

e.)    Is active in learning from market movements and screen viewing

f.)     Is comparing and actively working with indicators and tools in order to choose the ones which best fit their trading style, not in order to find perfect setup

g.)    Realizes that emotions highly impact trading performance and starts to monitor own behavior and understand what strengths and weaknesses are

h.)    Is actively analyzing and working towards finding a niche and edge in the Forex market



Observed behavior:

1.)    Proper risk and money management

2.)    Risk management implementation is never altered, money management is more difficult to consistently implement

3.)    Decreased number of draw downs and severity of draw downs

4.)    Increased confidence and a sense of increased determination to succeed

5.)    Has more balanced emotions while scanning markets for opportunities, when taking a trade and when in a trade

6.)    Realizes that “Holy Grail” lies within them selves.

7.)    Experience starts to kick in when trading.

8.)    Hardly over trades

9.)    Stopped searching for tons of strategies

10.) Still has some emotional connection to 1 particular losing or winning trade

11.) Has been able to choose specific trading style, time frames, indicators and tools

12.) Learns to view multiple time frames

Desired behavior:

a.)    Narrow down your list of methods, strategties, indicators, tools and become an expert in them

b.)    Focus on becoming an expert in your niche and playing out your edge when trading in the market

c.)     Actively improve your trading psychology by using evaluations and observing yourself

d.)    Actively work on implementing correct money management

e.)    Maintain balance between confident trader, yet never overconfident

f.)     Trading plan has been fully completed

g.)    Starts to develop inner gut feeling regarding certain trades due to tons of screening time

h.)    Realizes that the opportunites must come to the trader and the trader stops chasing the market



Observed behavior:

1.)    Their own trading psychology is in sync and in line with market psychology

2.)    Consistent implementation of risk and money management

3.)    Well balanced trading psychology à not fearful, not greedy, not impatient

4.)    Super cool mind set when trading

5.)    Thinks 3 steps ahead and visualizes the desired trade

6.)    Well developed and mature trading strategies

7.)    Is not afraid to risk

8.)    Fully aware of strengths and weakness

9.)    Is more aware of time factor and when the trade is not developing as planned

10.) Is having fun when trading

11.) Resects the market

12.) Does not feel worried about lack of trades, opportunities at any given time, nor of being in a trade and managing it

Desired behavior:

a.)    Keeps working on improving their edge and on amplifying the strengths

b.)    Tries to minimize and improve weaknesses

c.)     Works on optimizing trade management and reward to risk potential

d.)    Is confident in their analysis

e.)    Is not shy of and open in explaining, displaying and showing their own trades and analysis

f.)     Keeps doing more and deeper studies

g.)    Knows exactly how market movements look like

h.)    Improves implementation of knowledge and experience into ever better analysis

i.)      Is fully aware of the different “stories” on almost all time frames

j.)      Sets long-term targets for profitability

k.)    Realizes that consistency is key

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Observed behavior:

1.)    Compounding of trading capital is possible

2.)    Very calm and cool while trading

3.)    Is aware of any and every price level on all time frames

4.)    Is able to guide others while trading

5.)    Is able to successfully mentor other Forex traders

6.)    Has tremendous data base of knowledge and experience

7.)    Has developed a very keen skill within their niche

8.)    Is able to write a book on their specialization

That wraps it up for today! Hope you enjoyed this article on becoming a better Forex trader and recognizing development stages as a trader! We believe that this will be the path for you of becoming a master Forex trader.

Please write down below in the comment’s section what kind of characteristics you recognize in yourself from above? Do you see some improvement points you can implement? Which ones?

Do you see how you can build a road map to the next stage?

Do you disagree with some of the characteristics in the stages?

Write us down below!!

Have a great weekend and Good Trading!

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