From Beginner to Expert: The Journey to Becoming a Competent Trader
Navigating the 4 stages of learning competencies.
Part 7/8: Continuous Learning — Becoming a Competent Trader
Becoming a competent trader requires a journey of learning and growth, the hits and misses, the profits and losses. The possibilities are endless, every journey is unique. Where are you at right now in your trading journey? Reflect through these four stages of learning competencies and ask yourself again.
In this article, we will explore the 4 stages of learning competency and understand how to develop the skills and knowledge required to become a successful trader. Let’s embrace a lifelong learning mindset.
“Mastering others is strength. Mastering oneself is true power.” — Lao Tzu
Welcome to the 4 Stages of Competence, a framework used to understand how you acquire and develop skills. Whether you’re learning a new language, practicing a musical instrument, or honing your professional skills, this model can help you better understand where you are in the learning process and how to progress towards mastery.
So, let’s get started!
1. Unconscious Incompetence
- At this stage, you are not aware of your lack of skill or knowledge in a particular area.
- You don’t know what you don’t know and may not see the value of learning a particular skill.
- The amount of time you spend in this stage depends on your motivation to learn.
You need to recognize your own incompetence and the value of learning the new skill. Not everyone progresses through these stages in a linear or predictable way.
Trading Reflection:
If you’re a new trader with little or no experience, it’s common to underestimate the complexity of trading. You may think that buying low and selling high is all there is to it, but as you start making trades and experiencing losses, you’ll realize how little you know. This can be frustrating and discouraging, but it’s an important step in your journey towards becoming a successful trader.
To improve your knowledge and skills, you’ll need to seek out resources such as books, videos, and advice from more experienced traders. With time and practice, you’ll gradually move towards higher levels of competence and achieve your trading goals.
“The greatest enemy of knowledge is not ignorance; it is the illusion of knowledge.” — Stephen Hawking
2. Conscious Incompetence
- At this point, recognize your lack of knowledge or skill in a particular area.
- Understand the value of learning and improving.
- Embrace making mistakes as an important aspect of the learning process.
Recognize the gap between where you are and where you want to be and take action to close that gap. Through learning and practice, you can seek further improvement.
Trading Reflection:
If you’re a new trader struggling to understand technical analysis, you may find yourself making mistakes and losing money due to your lack of knowledge. This is a sign that you are in the stage of conscious incompetence and need to learn more about technical analysis to improve your skills.
Seeking out resources like books, online courses, or a mentor who can guide you through the process. Experimenting with different strategies and indicators can help you make more informed trading decisions.
While you may not be an expert yet, being aware of your own incompetence and taking steps to improve your skills is an important part of becoming a successful trader.
“One’s only rival is one’s own potentialities. One’s only failure is failing to live up to one’s own possibilities.” — Abraham Maslow
3. Conscious Competence
- By this time, you have to develop the necessary knowledge and skills to perform a task.
- You need to consciously focus and think about the steps involved in executing the task.
- It's important to break down complex tasks into smaller, more manageable steps.
Mistakes may still happen, but you’re able to recognize them and make adjustments in real-time. Concentration and mental focus are necessary as you continue to practice and refine your skills and become more conscious.
Trading Reflection:
If you have been studying a trading strategy extensively and are now implementing it, you may find that it requires a lot of concentration and effort to execute correctly. You may feel mentally fatigued after some time.
However, as you break it down into manageable steps, with practice, you can become more efficient. You will be able to recognize and correct any mistakes more quickly. At this stage, you have the necessary knowledge and skills to trade using this strategy, but you still need to focus consciously on the process to execute it successfully.
“Conscious competence is the stage where you know how to do something, but it requires effort and focus to perform.” — Ken Blanchard
4. Unconscious Competence
- Now, you have achieved a high level of proficiency in a skill, and it has become automatic and second nature to you.
- You can perform the task while doing another task.
- It enables you to perform the task quickly and efficiently.
It takes a lot of practice and repetition to achieve this level of competence, but once you get there, it can be really valuable. And that's your ultimate goal.
Trading Reflection:
If you have been trading for several years and have developed a deep understanding of market trends, technical analysis, and risk management, you may have achieved unconscious competence in trading. You no longer need to consciously think through each step of the process and can execute trades almost effortlessly while also monitoring the market and engaging in other tasks.
Depending on how you learned to trade, you may also be able to teach others. If you took a structured approach to learning, you may be able to explain the steps involved and teach others.
“The goal of all traders is to reach the level of unconscious competence, where the trading process becomes second nature.” — Jack D. Schwager
What is your competency level?
The 4 stages of competence model can help you understand the process of acquiring and mastering skills. You can assess your progress and identify areas for your improvement.
Breaking down complex tasks into smaller steps, with practice and repetition, with your time and effort you’ll understand the process and improve effectively.
Learning and mastery is a continuous process, and you can always strive to improve and refine your skills. Doing so, you can reach your full potential and achieve a high level of proficiency.
Traders Reflection:
Approach your learning journey with a growth mindset. Embrace challenges and setbacks as opportunities to learn and improve and recognize that even experienced traders are always learning and adapting to changing market conditions.
Use these four stages of competence model as a guide and maintaining a growth mindset, you can continue to develop your skills and achieve greater success in the markets.
“Learning to trade is not a one-time event; it’s a continuous process of refinement and adaptation to changing market conditions.” — Linda Raschke
I would love to know where you are in your trading journey and which topics you find most intriguing and useful. Do you have any questions or areas you would like to explore?
Let’s make this discussion more fascinating and friendly! Remember, trading is a continuous learning journey, and we can all support each other along the way.
Next Topic 8/8: Reflect and Adjust — The Power of Reflection
Poster: Level of Competence
