Anyone can be a trader, but only a handful of people actually succeed. Steps to becoming a master trader can be as simple as staying motivated or as hard as maintaining consistency.

The forex market is the largest financial market in the world with a daily volume of $6.6 trillion and millions of active traders from all around the world, but many sources stated that around 70% of forex traders lose their money and end up quitting. The reason is simple. Many traders enter the market and trade with a live account without really understanding what their trading strategy is and what it takes to be a successful trader. They might think that they know the right way to trade, but the truth is that most losing traders have not entirely "mastered" their trading strategy yet.

Becoming a master trader

According to Dave Landry, the founder and president of DaveLandry.com, the key to becoming a master in trading is the need to "practice deliberate practice". So, when it comes to trading, you need to work in order to get better with your skills. In this article, we're going to explore the four main actions that you need to do in order to become a master in your trades.

 

1. Stay Motivated

The first question that you must ask yourself before diving head first into trading is: why do you want to trade. This may sound like a silly question to ask traders because the first answer and perhaps the most obvious one that's most likely to pop in any trader's head is to make money. However, this isn't always the case for everyone.

Some traders may start their trading careers because they're not satisfied with their current job and want to try something new that could generate more money. Some others may trade to prove to their loved ones that they're awesome or simply want to fill their spare time. These factors are indeed valid and could be a motivating reason to keep you going. But if you want to become a master trader, you should come back to the core purpose of trading, which is to make money! The idea is that by being able to make constant wins and trade profitably in the long-term, you automatically fulfill your other goals as well.

Another important thing is to ask yourself whether you want to commit to the job or not. It's important to understand that generally, being a trader is no different than being a surgeon or a teacher because all of them take time to master. You simply can't build your skill to become a doctor, lawyer, or pharmacist overnight. Trading is no different. At some point, trading can even be considered harder because there is no clear path that you could follow.

Some jobs would require you to learn the essentials, take a specific test or training, and pass the qualification. It is a lengthy process, but at least it has a clear direction and can be predicted. However, when it comes to trading, there is no one book or coach that could teach you every single thing and "make" you a master trader in a certain period of time. Sometimes, you need to figure out your own way, make mistakes, and learn from your experience.

 

2. Build Sufficient Knowledge in Trading

Once you put your motivation in the right place, the next step is to prepare yourself to build your technical skills. This means you need to have at least the basic knowledge of trading before making any decision that involves real money.

A well-known author Gladwell wrote about the 10,000-hour rule, which basically talks about the need of taking 10,000 hours of intensive practice in order for someone to achieve mastery in a certain skill or expertise. The idea is that it takes time to cultivate skill as it is not given or something you were born with.

But a psychologist named Ericsson argues that what matters the most is the quality of your practice, not just the quantity alone. Without a sufficient amount of knowledge as well as strategy up your sleeve, there's only a small chance to go big at trading.

Put it this way. If you regularly look at 1,000 charts per day for two consecutive years without knowing how to read them or what the price movements mean, you won't be a successful trader by the end of the period. This is why both quantity and quality play a significant role in trading practices. You need to learn the basics of trading, how to build a strategy, and how to execute it while at the same time practicing it regularly using a real chart. You can also observe how other traders make decisions and perhaps ask them to mentor you. This is how you can shift from blind repetitions to deliberate practice.

It is also worth pointing out that high intelligence isn't necessarily what makes you an expert in technical trading. Obviously, you need to understand how the market works. But apart from that, you should be able to read the emotions of the market participants while having good control over your own. It's mostly common sense and something that can be improved over time. Remember that the actions of market participants are what drive the price to rally or decline.

 

3. Analyze Your Performance Wisely

When it comes to trading, you can't always rely on the outcome of your trade for immediate feedback because unlike most things in life, the ends of trading don't always justify the means. In trading, it's highly possible to make a stupid decision and still end up in profit. But does that make you a good trader? Certainly not.

As a trader, you need to understand that the market is a really bad teacher most of the time. So, you need to be extra careful when analyzing your trading results. Over the short term, you can take the wrong path and still make money or vice versa. But this isn't really the goal that you'd want to achieve because it won't last long.

If you want to be a master trader, focus on the process. Keep practicing your skills, stick to your trading strategy, honor your stops, and build a strong foundation for your career.

 

4. Keep Consistent

Still related to the previous explanation, a master trader needs to be discipline and consistent with their trades. This means that it's important to carry out and stick to the pre-planned trading strategy throughout the whole trade no matter what happens. And as a trader, you need to be able to do this many, many times.

Doing deliberate practice doesn't mean you need to be better at everything instantly. Instead, you need to focus on fixing one thing before moving to fix another aspect of your trade. This way, you basically piece the puzzle little by little until it's all complete. Over time, your strategy will get better and better, have a strong base, and is adaptive to various market conditions. So don't try to focus on everything at once and expect your trade to win every single time. Simply start off with one pattern. Once you get that down, slowly add others.

Essentially, there are three phases in doing deliberate practice.

  1. The first phase starts way before you actually open the trade. You need to carefully watch and observe the recent big moves on the chart. Then, you should arrange your strategy while keeping in mind that you can't trade everything at once and there is no holy grail that guarantees easy money. Sometimes the market even moves for no good reason. So, you need to plan out your strategy really well. Consider all the details, such as where do you want to enter, where should you place your stop, and how much risk you are willing to take.
  2. The next phase happens during the trade itself. Now that you've mapped out a strong trading strategy, it's time to just sit back and watch the execution. There's no need to take spontaneous actions because the market "tells" you so. Most of the time, it's just your emotions speaking. In order to avoid making bad decisions during this period, you can simply turn off the screen for a while and just observe what needs to be observed.
  3. Lastly, you should also practice evaluating your trades. In this case, you need to focus on what really happened on the market, regardless of your outcome. Analyze whether the market moved as you had predicted or did it move in the complete direction. See whether the market condition confirmed your initial setup or not. Once you master this, you'll be able to make better trades and win more.

 

Conclusion

Entering the market as a trader is one thing, but becoming a master trader is definitely a whole new challenge. It's not an easy process and can be quite time-consuming, so be prepared for a long yet rewarding journey ahead. Remember that trading is so much more than strategy and technical analysis. It's about understanding the market psychology and responding to it by taking strategic actions.

 

Therefore, to become a master trader, you need to create a long-term habit. Build a healthy lifestyle, control your emotions, and never stop learning. Also, take some time to understand yourself. There is no exact formula that could make you a master trader, so just take one step at a time and figure things out during the process.