Long ago I had read somewhere that "there is no real advancement without a crisis"
An amateur trader becomes a professional trader passing thru various stages each separated by a crisis!
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Nothing explains these stages as beautifully as the Greiner's postulates
which I have adapted below to the stock market to understand a trader's evolution :
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A curious passerby comes to the stock market.
Doesn't know what to do, how to do.
Either he exits due to ignorance or successfully overcomes the first barrier with ideas to trade!
(Growth thru creativity : Phase I)
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This growth phase continues till their is a 'crisis of leadership'
He feels the need for some specific idea to steer him further.
Either he quits or successfully overcomes this barrier with a method!
(Growth thru direction : Phase II)
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The growth continues further till their is a 'crisis of autonomy'
He feels that the method is somehow not working.
Either he fails to find a solution to this and quits, or successfully overcomes the dilemma by letting the method guide his trades completely and not poking emotions and opinions in its signals!
(Growth thru delegation : Phase III)
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The growth moves still higher till their is a 'crisis of control'
The trader finds that method can't be followed blindly in varying situations of the markets.
It needs to be continuously adapted to the situation.
Either he surrenders or successfully learns to adapt.
(Growth thru coordination : Phase IV)
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After this the trader grows very fast till their is a 'crisis of red tape'
He finds that he has lost the fun of trading on the way and is becoming very mechanical!
Either he re-infuses excitement in trading and commits a blunder or
learns to co-exist with the reality!
(Growth thru Collaboration : Phase V )
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Is not that there are no more crises in a trader's life after this stage.
But by now he has mastered the art of overcoming the crises
and has become a professional.
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