The Multiple Lives of a Stock Trader

In the same way as trading markets go up and down, traders experience different times in their trading careers. These often have to do with the level of experience of the trader, but are sometimes simply linked to the market. Regardless of whether a trader trades full time or part time, these swings and changing characteristics will be evident. For some traders, these changes will be swings from one side of a pendulum to another, while for others they will be more dramatic, requiring the trader to reinvent themselves and begin again from scratch. Regardless of your specific situation, it is important to understand these trends to get through them as well as possible so you live to trade another day.

The Downtrend

A trader’s career generally begins with a downtrend. This is the time of the trader’s career when their capital deteriorates despite their best efforts. This often occurs at the beginning of their career when they are new and enthusiastic and full of positive expectations which they fail to realize. However, all is not lost during this period and it is a time for learning and growth which generally precedes the uptrend. For beginners, the downtrend is a difficult period of doubt and stress; however, it is important to realize that even experienced and successful traders go through downtrends every so often when capital gets depleted by losses and the losses seem to mount up. The experienced trader will understand that this is part of the trading cycle, will use this period for learning, will minimize their risk and will live to trade another day.

The Uptrend

The uptrend is a more positive time in the life of a trader. Hopefully, those who experienced the downtrend managed to get through it to reach the uptrend. This is a time of increasing profits and many winning trades. It is important to use this time to continue learning so that you can maintain the winning streak for as long as possible, while understanding that every winning streak comes to an end and a downtrend may be round the corner. At the same time, enjoy the period while the going is good.

The Multiple Lives of Traders

 Some traders experience the need to begin again on multiple occasions, wiping out their capital during a downtrend and needing to begin over again once they have built their capital up enough to trade on another occasion. These multiple lives are not uncommon for traders; however, most traders try to avoid these extremes. The best way to avoid the need to totally restart again is to understand the characteristics of the downtrend and to use that time to your advantage. Swinging between the downtrend and uptrend is also a form of reinventing a new trading life, but less dramatic than those who have to begin again. Make sure to set your limits and manage your risk as well as possible to help you recover from your downtrends and reach a period of uptrend.