The Four Stages of Development as a Trader


The path to trading or investment success lies within each of us. To reach the pinnacle of a trader or investor must progress through four distinct stages.

Unfortunately, most never make it past the first two stages and are therefore destined for financial destruction. Stages one and two are the ‘beginners curse’.

To get from stage two to stage three requires a change in thinking. Progression from stage three to stage four requires perseverance to master the skills developed at stage three.

The Four Stages of Personal Growth as a Trader or Investor

Stage 1 – Searching for hot tips

As a novice trader or investor you most likely begin your journey in the stock market with the insatiable desire for the latest ‘hot tip’. You will buy blindly on a “friend’s’ advice” or the so called “insider’s hot tip”.

You have probably signed up for every “stock guru’s” newsletter, buying and selling on their every recommendation. Does this sound familiar?

People love receiving ‘tips’. It’s ingrained in our human psyche. The ‘hot tip’ contains two irresistible factors: the chance to be a person “on the inside” and the illusion of easy money

The novice wants to make money, they want the trappings that come with success, but many also want the easy fix, the so called ‘fast money’.

It’s an unfortunate fact that many novice traders and investors never progress beyond this point.

Stage 2 – Searching for the ‘Holy Grail’

Some traders and investors eventually realize that “hot tips and stock guru’s” are not the answer. They are smart enough to realize that following a friend or stock guru is not the answer and it’s never going to give them the knowledge, skills or wealth that they aspire too.

The beginner soon realizes he/she needs to further their own knowledge and skill so they are capable of making their own decisions. It is at this point that the trader or investor progresses to the next stage of personal growth.

You move on from gurus and hot tips to the search for the ‘holy grail’ of trading or investing. This search takes you through book after book, seminar after seminar, and strategy after strategy.

You become trapped in an endless circle, continuously jumping from one trading system to the next.

This is known as the ‘beginners circle’.

It is deadly from both a time and money perspective. It is a futile exercise, repeated over and over again. It is the endless search for a ‘holy grail’ that simply doesn’t exist.

It is a road that nearly every one of us has, or will venture down at some point or another, as we search of that perfect stock trading system. Unfortunately, there is NO perfect stock trading system.

In fact, I would be very cautious and skeptical of anyone claiming to have found the foolproof trading or investment system. It just doesn’t exist.

What I can tell you though is that the holy grail of trading and investing does exist, but it’s not a trading system, it is your mental approach to trading and investing.

This is the real ‘secret’ that separates the stock trading legends from the novice and intermediate traders and investors.

So, beware of the beginners circle. Stop searching for the Holy Grail of trading systems and start the discovery process of what truly is the holy grail of trading and investing.

In doing so, you will move on to the third stage of personal growth as a trader or investor.

Stage 3 – Finding the Keys to Wealth Building Success

It is an extremely unfortunate fact of life, that very, very few traders and investors make it past stage two to stage three of their personal development.

For the few who do progress, it is only after they have faced the financial and emotional challenges and grown beyond hot, tips, guru newsletters and the beginners circle.

The trader or investor who reaches this level of personal growth, stops searching for the perfect trading system and instead starts developing the knowledge and skills needed to nurture for success.

The trader or investor who makes it to this level of personal growth realizes that they already hold the ‘holy grail’ – it has been there all along.

When you reach this level of growth you too will know that the ‘holy grail’ really does exist. And that it’s been there all along just waiting for you to discover it – within YOU!

The ‘holy grail’ is your ability to develop a sound trading strategy. It is your ability to analyse stocks, filter the opportunities, identify the most profitable trades, make the correct decisions and to take the appropriate actions in line with your financial objectives.

It is consistently applying what you have learnt. It requires the development of a profitable trading strategy that is complementary to your personal risk profile.

Traders and investors who reach this level of competency recognise the need for a comprehensive written trading plan.

A plan that defines: not only their method of analysis and stock selection, but their objectives, risk profile, trade, risk and money management techniques and stock trading routine.

Stage 4 – Mastery

The master trader or investor is someone who has discovered that the key to successful wealth creation lies within and has consistently practiced and honed these skills, techniques and strategies. They have gained the knowledge, learnt the skills and challenged the standard way of thinking.

At this level you understand your strengths and weakness. You have developed a trading plan that complements your goals, attitudes, beliefs, temperament and risk profile.

You take action with little or no emotional bias.

You stand aside from the masses of the market though your ability to think clearly and to act precisely, without hesitation and most importantly, in line with your trading objectives.


Buying and selling stocks is not hard, but gaining the knowledge and mastering skills required to be a successful trader or investor is probably one of the most difficult tasks confronting most traders and investors.

It requires a change in the way most people have been trained to approach the markets. It requires a will to succeed and the strength of character to persevere no matter what the markets may throw at you.

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