Online Trading: How Learning It Changes Your Mind

Online trading is not child's play. Some might be surprised to read this statement. After all, we are bombarded by advertising campaigns that present online trading as a sort of panacea for all economic ills, the solution to financial problems. In short, it is portrayed a bit like a land of toys. The truth, as beginners experience firsthand, is different. It's true, online trading is an opportunity, in some cases it can lead to dramatic enrichment. However, between the starting line and the finish line there are numerous and arduous stages. The first - and it starts immediately uphill - consists precisely in learning how to practice online trading. Many focus on the contents of the training path, and rightly so... On what to study and how to do it. In this article, however, we want to offer a different perspective, we want to talk about how the human mind experiences the training path, and how human consciousness changes stage after stage, until becoming a trader, if not exactly an expert, at least able to stay on the market. We will talk about why it is necessary to favor these changes, this kind of mental restructuring. We will then delve into the stages of the learning path from the point of view of consciousness.

Restructuring the mind to learn trading

But why is it necessary to foster change at a mental, almost cognitive level? Many think of online trading as a set of aseptic, purely technical methodologies, which are sufficient to learn in their scientific nature. They ignore the role played by the emotional and psychological sphere. Making money with online trading is not only a matter of skills, but also of "mindset". Therefore, it is necessary to somehow "update" it, adapt it to the challenges of speculative investment. This, to tell the truth, happens for any activity that requires a certain intellectual commitment, far from mechanical, and which at the same time exposes to some risk. We talk about mentality, but to tell the truth we should talk about psychological endurance and resilience. Psychological endurance is necessary to manage the sensations of danger, which never leave traders, not even the most experienced ones. Resilience is necessary to develop the ability to react to adverse events. A quality that always comes in handy, in real life as well as at work, and not only in trading. A quality that must be cultivated, which certainly to a minimum extent can be innate, but which can and must be learned. How? Through work on oneself, obviously, through the management of thoughts, and the insertion of positive thoughts into one's cognitive schema.

How the minds of expert traders work

But what is the goal, the mental state that expert traders must acquire to consider the training path completed also from a cognitive point of view? In short, how do experts think. Well, online trading experts manage the emotional and psychological component almost automatically. Not only have they identified the right resources to cope with stress and always make the best of every situation, but they have also learned to use the resources. Finally, they have learned to untangle them almost automatically, like an immune system able to block the way to viruses and bacteria. In this case, let's be clear, the trader maintains a certain awareness of the problems. However, he has so internalized the norms, that respecting them pedantically does not weigh on him. We will delve into this aspect in the last paragraph.

The 4 phases of change in online trading

As we said, learning to trade, becoming a trader means preparing one's mind for even important changes. We address them below, given that the finish line, which we will call "unconscious competence" corresponds to the state described in the previous paragraph. We also specify that the stages we present now actually apply to all learning paths of activities that require great intellectual effort and that, in one way or another, expose to very important risks. In online trading, obviously, the risk is that of losing money.

Unconscious incompetence

This is the state in which all those who approach a complex topic for the first time find themselves. In this phase, people not only do not know, but they don't even know what they should know. This is a very dangerous phase, which should be crossed as soon as possible. In a situation of unconscious incompetence, in fact, the individual is susceptible to lies and fake news, and therefore can live on erroneous conventions about the complex topic in question. All aspiring traders who believe in the nonsense of some unscrupulous brokers, whose purpose is to paint trading as a simple solution within everyone's reach, and which always leads to enrichment, are in this phase. The reference is to the type of individuals describing which we opened this article. Also in this phase, aspiring traders have the tendency to start investing without having completed an adequate training path, with all that follows in terms of capital loss. Finally, we specify that the stages as we describe them, refer to an article by expert Gianluca Defendi published on Milanofinanza online on March 15, 2019 (trading, the four phases of learning).

Conscious incompetence

It is in this phase that one seriously begins to learn. In this phase, in fact, the trader realizes he does not know, and inquires to understand what to learn and how to do it (e.g. how much time to dedicate). The trader is basically still in the dark about the dynamics of trading, and if he started trading he would most likely end up just like those stuck in the first phase. However, he is already sowing the seeds for personal growth. In fact, he already begins to understand the dynamics and rules of trading, begins to become familiar with the platforms, begins to sense how prices move and to get an idea of how they will move. Here an important awareness takes place, the first real modification at the mental level. The trader does not look at the market with extreme optimism, does not approach it superficially, but rather as a place (indeed a non-place) of risks and opportunities. He takes off the clothes of euphoria, of (blind) trust and puts on those of the responsible person, ready to invest in himself even before the market.

Conscious competence

This is an interesting phase. The trader has practically become one, but is still quite unripe. He has studied, has learned the necessary information and notions, probably has already practiced. He exploits the dynamics he must exploit, puts into play the skills that are necessary for a potentially profitable presence in the market. In simple words, he knows. However, it is certainly not the last stage. Also because, for now, the trader is like a person who has learned a foreign language well enough to allow him to communicate, but who still has to think, before speaking. This further step actually causes slowdowns, and a loss of effectiveness. Which, however, potentially reaches already interesting levels. Although this phase guarantees sufficient security, many spend it entirely with demo accounts. An extra precaution, but very useful, as it allows you to arrive at the appointment with the market truly prepared, probably more than you can imagine.

Unconscious competence

This is the last phase, which we briefly described in the paragraph dedicated to how the mind changes after learning trading. In this, we deepen and extend the concept. In this phase, which to tell the truth not all traders reach, the individual has internalized norms, rules and dynamics. He knows how to make money with trading (even if he doesn't always succeed, but this is physiological), above all he knows how to manage the psychological and emotional sphere. He knows "what to tell himself", what thoughts to produce, what actions to take. Everything he knows about it, he uses it. However, he does it unconsciously most of the time, automatically. The trader, in this phase, can be compared to those who have learned a foreign language and are now even fluent, therefore they do not translate in their mind before speaking. He does it freely, as if he were indeed acting automatically. This status allows the trader to do something else. To complete the transformation (if it can be called that), going from being a user of tools, as he has been so far, to being a creator of content. The reference is to the tendency, for traders in this phase, to create operational strategies and techniques on their own.

Tips for learning well and quickly

In short, there is a lot of work to do. At a technical and operational level, that is to learn strategies, market dynamics, etc. Even more on a mental level, to learn how to manage stress. Is there a way to facilitate this path? To make it shorter and less heavy? Yes, bearing in mind that an enormous amount of commitment and a strong dedication are always necessary. In this regard, here are some tips. Take your time, a lot of time. Implementing your skills and studying, even if it is not always complicated (it depends on the starting point) is always time and energy consuming. Avoid condensing everything into a short time, but take the necessary weeks and months. Also because the work also involves one's cognitive structure, one's mentality. Changes in this sense are not fast, nor can they be. Pay attention to the sources. This is advice that is especially valid for the first two phases. The first involves a disorderly search for shares, the second throws the trader into the heart of the study. Sourcing from the wrong sources at best wastes time, at worst matures prejudices and erroneous convictions, with all that follows in terms of effectiveness of (future) trading action. Admit the difficulties. Rare are the cases in which the path is linear, and everything runs smoothly like oil. The most dramatic points, the really crucial phases are the second and third, and the reason is simple: they are the phases of the first checks. It often happens that you have learned some element in the wrong form, or that you are further behind than hoped. Don't be afraid, it is absolutely normal: roll up your hands and start again from where you left off. Measure the results. Finally, you must certify yourselves, in the first person, the progress in the path. To do this, it is often simply sufficient to perform a road test and analyze the results periodically. It is a matter of comparing expectations with results, for example, of a demo account.