5 Signs That You’re Becoming a More Proficient Trader

Well, by establishing that improved trading comes in many different forms. So while more favourable financial results do tend to appear at some point, precursors like newfound discipline, increased consistency, greater confidence, and more mindful thought patterns can all signal you're becoming a more proficient trader before your trading account balance does.

In fact, you're probably improving more right now as a trader than you'd initially give yourself credit for. And even worse, you may think you're struggling in your trading, but you're actually getting better with each passing month, week, or even trade. So don't make your trading success all about money. Instead, measure the effectiveness of your trading using these five (5) factors, and be sure to give yourself credit when and where it's really due.

You're a More Proficient Trader If You're Disciplined with Risk

While newbies are often concerned with chasing profit potential on their trades, the more proficient trader will think in terms of limiting losses in the event of an unfavourable outcome. They'll also be sure to select trades for which the reward/risk profile meets their higher standards, set a logical and concrete stop loss, and establish the exact point where they might take profits if the trade happens to move in their favour.

That, coupled with risking no more than 1-2% per trade goes to show that the more proficient trader is both mindful and extremely disciplined with risk. These tendencies help make traders successful over the longer term, so even if you're but a few weeks or months into your trading career, be proud if you've successfully adopted these habits, and remain steadfast in your commitment to them. You'll likely be rewarded financially for them in due time.

When You Feel More Confident In Your Analysis

Most new traders admittedly have difficulty even identifying with much certainty a pin bar reversal, hammer, or doji, much less targeting more complex patterns like head and shoulders or multi-wave formations on the charts. Perhaps that was even you earlier on in your trading career.

But if you're now able to look at charts and more readily spot patterns, use trend lines and moving averages to impart strong support and/or resistance levels, and conduct your analysis with a higher degree of confidence and clarity than before, well then, you're a more proficient trader already.

See related: Which Trading Patterns Should I Learn First?

And even if that has yet to translate into more profits or winning trades, it shows growth and improvement nonetheless. So continue to refine your methods and decision making, but give yourself credit for any strides you've made thus far as a technical analyst.

When You Avoid "Traps" That Proved Costly in the Past

Part of the disadvantage for new traders is that they lack experience in the markets. But additionally, too many fail to make adjustments once they do have some winning and losing trades under their belt. So if you, as a new trader, have been, say, fooled by a dreaded false breakout, or fallen victim to a news-driven whipsaw, or even misused leverage, what new rules or guidelines have you put into place to avoid those same "traps" in the future?

If you can reasonably and sufficiently answer this question, and have taken thoughtful steps to, say, wait for confirmation of a true breakout; or trade end of day to avoid news-driven, intraday volatility; or (hopefully) minimize your use of margin, then you're a more proficient trader for it. And while you may not have conquered the markets just yet, you are adapting your strategy and approach in the name of long-term success, and that's what the early part of your trading career is ultimately all about!

If You Don't Fall Victim to Emotion or Impulse Trades

Are you feeling calm and in control while trading today, perhaps more than you have in the past? Maybe you were nervous and fell victim to distractions early on, or allowed the outcome of your previous trade(s) to affect the ones that followed?

If so, settling into a more consistent routine and a better overall frame of mind is an essential step forward in your trading career. So if you've begun to learn how to leave emotions on the sidelines, or now have the wherewithal to stop trading if ever you become angry or rattled, then I'd say you're a more proficient trader for that, too.

If You've Learned to Simplify Your Methods Over Time

Even if your trading career is still young and you're not quite ready to write your first book about the markets, have you developed a better understanding of your methods nonetheless? Maybe your results and fact-based findings about your trades uncovered that certain confirmation signals weren't beneficial to your particular method of trading, or found that the first hour of the trading day is the least friendly for your strategy. Maybe you've even eliminated extraneous steps that enabled you to simplify your process without sacrificing performance?

In any such case, it shows that you've built up your knowledge and an improved understanding of your particular trading strategy. So even if that hasn't (yet) translated into more profits or a higher percentage of winning trades, rest assured that it does establish you as a more proficient trader nonetheless.