38 Steps to Becoming a Trader


Established member
A friend sent me this, I really like it as it seems to describe the process I have been though (and am still going through) so well. Unfortunately I don't know where it comes from otherwise I'd cite the reference.

38 steps to becoming a trader

They are as follows:

1. We accumulate information - buying books, going to seminars and
2. We begin to trade with our 'new' knowledge.
3. We consistently 'donate' and then realise we may need more
knowledge or information.
4. We accumulate more information.
5. We switch the commodities we are currently following.
6. We go back into the market and trade with our 'updated' knowledge.
7. We get 'beat up' again and begin to lose some of our confidence.
Fear starts setting in.
8. We start to listen to 'outside news' and to other traders.
9. We go back into the market and continue to 'donate'.
10. We switch commodities again.
11. We search for more information.
12. We go back into the market and start to see a little progress.
13. We get 'over-confident' and the market humbles us.
14. We start to understand that trading successfully is going to
take more time and more knowledge than we anticipated.


15. We get serious and start concentrating on learning a 'real'
16. We trade our methodology with some success, but realise that
something is missing.
17. We begin to understand the need for having rules to apply our
18. We take a sabbatical from trading to develop and research our
trading rules.
19. We start trading again, this time with rules and find some
success, but over all we still hesitate when it comes time to
20. We add, subtract and modify rules as we see a need to be more
proficient with our rules.
21. We feel we are very close to crossing that threshold of
successful trading.
22. We start to take responsibility for our trading results as we
understand that our success is in us, not the methodology.
23. We continue to trade and become more proficient with our
methodology and our rules.
24. As we trade we still have a tendency to violate our rules and our
results are still erratic.
25. We know we are close.
26. We go back and research our rules.
27. We build the confidence in our rules and go back into the market
and trade.
28. Our trading results are getting better, but we are still
hesitating in executing our rules.
29. We now see the importance of following our rules as we see the
results of our trades when we don't follow the rules.
30. We begin to see that our lack of success is within us (a lack of
discipline in following the rules because of some kind of fear)
and we begin to work on knowing ourselves better.
31. We continue to trade and the market teaches us more and more
about ourselves.
32. We master our methodology and our trading rules.
33. We begin to consistently make money.
34. We get a little over-confident and the market humbles us.
35. We continue to learn our lessons.
36. We stop thinking and allow our rules to trade for us (trading
becomes boring, but successful) and our trading account
continues to grow as we increase our contract size.
37. We are making more money than we ever dreamed possible.
38. We go on with our lives and accomplish many of the goals we had
always dreamed of.

Most traders will identify with this list and should be able to place
themselves within these steps. Keep in mind that very few people
progress through these steps in an orderly fashion. Developing your
trading skills is an iterative process. For example, you may reach
Step 13., find that although you were making money, your basic
premise for trading was flawed (you might have been benefiting from
the bull market, rather than your own trading prowess and then have
been rudely awakened when the market entered a bear phase) and you
may drop back to Step 4. and start 'climbing' the steps again.
Having the proper mindset, attitude and psychological makeup becomes
increasingly important as you progress through the steps. The focus
of the earlier steps is on external issues, i.e. developing
proficiency in the mechanics of trading while the focus of the
latter steps (particularly from Step 30, on) is on internal issues,
i.e. improving ourselves mentally and psychologically, maturing as
Very similar to the 55 steps (A personal journey to success.)
In "The way to trade" by John Piper
Long one

Although it was quite long, I think worth reading. But about the end...mmm... everyone wishes to get to that point (final steps) but probably very very few get there. The harsh reality of life, but we never know unless we try and the truth is that few people have the courage and ambition to go through all the required steps, no matter the field or the profession ;)
Does anyone know what happened to Livermore, unfortunately I never had the chnace to read more about him. What happened to him, I know that he shot himself, when was it? Why? Did he get pooor at the end? ;)
Found this account:

From Dana Thomas's "The Plungers and the Peacocks", 1967, 1989. Thomas was a respected New york
financial editor, and wrote five other financial and financial history books:

"Livermore came out of the crash comfortably.; he was still worth
several millions. He remained eerily inscrutable, his hair still blond,
his manner unbending. But what goes on in the mind of a man who has incurred the wrath of a nation? [He had inaccurately been said to have ruined the bull market and caused the crash by selling short. Bears beware!

One evening in November 1940, the tall, lean, aging
multimillionaire walked into the Stork Club in Manhattan with his
wife and sat down at a corner table. A photographer approached
and asked whether he could take a picture. Jesse Livermore looked up and complied without a flicker of expression. For the rest of the evening he sat, while his wife danced with friends, absorbed in thought, oblivious of the nervous gaiety around him.

The following day he appeared without his wife at the bar of the
Sherry Netherland Hotel. He asked for a table by himself. From
time to time while he ate lunch, he scribbled down notes in a little
memorandum book. He ordered two cocktails, drank them
leisurely. Then he rose, walked into the lobby, and entered the
men's room. The place was deserted. He sat down in a chair. Ten
minutes later attendants found him slumped over, blood dripping
from a hole behind his ear, a .32 caliber automatic pistol laying at
his feet."

Thus the end of one of the greatest traders of the century, not
"broke" in any financial sense but perhaps "broken" psychologically. The many who scoff at him and lamely pass on
falsehoods about him owe his memory and legacy an apology!
Great post Helen, :)

I've been there and recognise many of the steps until the last few ! You have filled me with confidence that I'm close. My dream's intact and I'm ready to walk the last mile now. Thanks for the lift !!
Helenqu said:
Developing your
trading skills is an iterative process.

I agree and in fact ITERATIVE PROCESS is the key, if you want to go too fast you will hit a wall. In quality management it isvery well known and practiced (I come from that field) :

The Kaizen approach
This is used in Quality Management


Continuous improvement, described by Imai. Basically it is a management-philosophie. KAIZEN is caracterized by low-cost, low risk, a great probability of success and a low need of specialised skills. It results in an attitude of continuous improvement. BPR (see BPR) is the quite opposite : radical redesign of the existing procedures.


5's 5 Japanese principles to achieve basic quality
Seiri : organization, separating things which are necessary from those who are not.
Seiton : neatness, order
Seiso : cleaning, maintenance
Seiketsu : standardization, visual management
Shitsuke : discipline, including self-discipline, attitude


and of course (for those who knows Quality Control domain) the famous Deming Wheel :

The Deming Wheel (or P-D-C-A Cycle)

Ch 3 - 13

© 1998 by Prentice-Hall Inc

Russell/Taylor Oper Mgt 2/e

Identify problem
Develop plan for

Implement plan on
test basis

Is the plan working

Continue cycle

1. Plan

2. Do

3. Study / Check

4. Act