The journey from trading novice to trading pro requires picking up a number of skills. How you get there is an important decision. There are three main ways that I am aware of and the main difference between them is how long it will take to reach your goal, assuming that trading is right for you at all. The main differences between them are the difficulty and the time to learn. They are:
1. Find a mentor.
This should be the fastest method (and easiest in the sense that you don’t have to build your own system and you have someone there to correct wrong thinking immediately) and depending on your situation, could be the most economical. I wish I had not traded a real dollar at all when I first started. Looking back, it would have much better for me to pay for a mentor than learn by losing money in the markets. I may have spent the same amount as I lost in the market (not likely though), but presumably, I would have been profitable years earlier, giving me that much more time to grow my account from a sturdy foundation.
2. Take a trading course.
I would rule this to be a medium difficulty because you have a foundation already set up for you. The hard part will be learning the emotional and psychological side of trading (if that is even addressed in the course which it often isn’t, I’ve found). There are many courses out there for learning how to trade. Some are great, some are shoddy at best. Look for reviews and even better, other profitable traders who can vouch for a system.
3. Go the self-taught route.
It’s cheap, but is difficult. It takes a lot of time to go this route. It takes a self-taught trader about 6-8 years from what I’ve heard and that seems to be fitting my own situation to the T as I started in 2007 and am just becoming profitable now. It’s very important to paper trade until you can demonstrate a positive P&L. I “knew” that’s what I should do, but I could not overcome the feeling of missing out and lost a lot of money trading a negative expectancy.
With all three methods, there is always the chance that trading is just not for you and you won’t ever make it and your time and efforts would be better spent elsewhere. We all go through times like that in our development. You need to almost be a little obsessive about learning to be a trader. I have always come back because ultimately, the desire to have the freedom to direct my own life is a powerful motivator to me and has kept me coming back.
For self-taught traders who are looking for an economical way to learn, you need to reach beyond your own experience and learn from as many other reputable traders as you can (important point there, otherwise, it’s the blind leading the blind). This will give you some of your first real exposure to trading information which you can then glean bits and pieces from to start developing the skills you will need. A lot of it will probably not resonate with you, but it will give you ideas and information to build on. It’s a lot of trial and error. Find what you do well and keep doing it. Find what you don’t do well and STOP doing that. We each have our own approach to the markets that “jives” with who we are as a person. It will take time to discover who you are as a trader.
For example, it took me many years of trying to play stocks to finally realize that I’m really not that good at it. I just have no strong “feel” for it. My performance was inconsistent at best and I haven’t found a way to perform a reliable backtest. What I AM is an index trader. Seriously, I just realized this maybe two months ago. Funny enough, since I resolved this within myself, my performance has improved by becoming more consistent and thankfully, my P&L is moving in the right direction.
In the end, some of us will be long-term investors, some will be swing traders, some will be day traders and each type has at least 100’s of ways to get the job done. Performance within categories will vary depending on the skills each trader/investor brings to the table. No matter which method you settle on, the most important part of being successful at this is the mental framework and discipline you bring with you to each trade.
I have observed many traders and methods over the years while I worked out my identity as a trader. In closing, I’d like to share a few of these with you. Think of them as an “Market Wizads” in audio form.
Here is a link to video archive with a dozen or so trader interviews. I’ve found a number of them to be very informative and gave me a different perspective on trading and on myself. The interviews have improved with time in content and quality.
Hope you enjoy and I know you’ll get something out of it.