Okay, this article will be unique because it will point out the stages of learning curves in forex where this knowledge will let you realize whether you are competent or only feel "competent". Generally, there are four stages of learning curves if you want to master and be competent in your particular interested field or in this case, forex trading. We all know that we have to learn before we earn in the forex market. However, it might be a good opportunity to be able to measure what stage are you on if you know the four stages of learning curves. That is why below here you can measure your forex knowledge by identifying the four stages of learning curves.
1. Unconscious Incompetence
In this first stage, you feel powerful as if you are invincible, but in fact, just as Toister (2020) wrote in ThinkHDI that you just do not know that you do not know anything about what you are doing like an ant on the back of an elephant which means you are just "confident" and think that you "know". Because of that, overconfidence flows in your mind that will soon or later bring your confidence to be reduced by reality.
Honestly, this first stage reminded me of Dunning-Kruger Effect in which people who are competent always feel that they still have to learn more and thirst for knowledge. On the other hand, people who are incompetent feel that they know everything and do not want to learn more because they think that they are "smart".
This first stage of learning curves can be linked to forex trading, for example, you feel that you know everything about forex, and then after you have traded a demo account and gained profit from it, you feel that you are a master of the forex market but in fact, you only invite overconfidence when you trade on a real account that will soon or later destroy your forex account if you do not move on to the next stage of learning curves.
2. Conscious Incompetence
Coming to the next stage, that is, the second stage of learning curves where you realize that you know nothing about what you proclaimed "know" which means you are completely aware that you do not know (Toister, 2020). Thus, you know your previous mistakes when you were in the first stage of learning curves. And because you now know your mistakes, you start to learn more about what you want to master.
In the forex case, traders who have come into this second stage of learning curves start to delve more into the forex knowledge whether they get it from books, YouTube, seminars, and other sources. After that, they have learned about this and that theory like a sponge that absorbs water so easily but later they will realize that forex trading is hard and this will determine whether they are going to continue to learn or not.
3. Conscious Competence
If the learners continue to stay on the path, then, they will move on to the third stage, which is, conscious competence where according to Toister (2020), this stage is where people know the process of what they are learning and they just need encouragement to develop their skill. This means that this third stage is where your passion for the knowledge is being tested whether you will be stuck in this stage or continue to learn until it has become natural.
At this stage, forex traders are aware that trading the forex market needs to pay attention to the market conditions such as fundamental that can be seen from political and economic conditions, gross domestic product, etc. Also at this stage, forex traders will develop their own technique on how they trade, and usually, only they can use the technique properly as this is linked to their personality.
4. Unconscious Competence
Now, the fourth stage which is the last stage of learning curves according to Toister (2020) is where you will be able to use the knowledge that you have learned naturally without thinking too much. It is like when you previously learned how to walk when you were a kid and you have become able to walk naturally without thinking too much.
If we try to connect it with forex, then, your forex trading journey will become natural, you will feel like a robot at this stage because loss or profit does not matter anymore as you already have good risk-reward management and you have mastered the three pillars of trading, that is, money management, psychology, and analysis. Thus, you may find yourself that trading is boring as you just have to only follow your trading plan and adjust the plan if the market conditions change.
Conclusion
When you learn something for the first time, it may be hard but as you go along and you have a passion for the knowledge you want to learn, you will eventually be able to learn it. However, the process of learning has four stages which I have arranged in this article where you will feel "confident" at the first stage, and at the end of the stages, you will become bored of what you have learned. Forex is the same, at first, you know nothing about it but if this is your passion, then, you will at some point learn through the stages of learning curves, and eventually, you will apply it to your forex real account and feel that trading is boring.
Written by Andre I.
Reference
Toister, Jeff. 2020. How to Assess Where Analysts Are on the Learning Curve. Retrieved from Think HDI (Accessed 2 March 2022): https://www.thinkhdi.com/library/supportworld/2020/how-to-assess-where-analysts-are-on-learning-curve.aspx