After last weekend's article, a subscriber wrote an important and thought provoking note on the blog. He indicated that he was unable to learn very well by reading books or watching DVDs and believed the only way he could learn to trade was by actually doing it. I guess the smart alec in me is grateful that this fellow didn't decide to be a pilot, but learning to trade through trading real money may be nearly equally dangerous. What struck me as so important about the posting was that the writer recognized that learning through reading or watching and listening to someone else just did not work well for him. He had learned that he grasps new information most successfully with a hands on approach. I sincerely believe the writer should congratulate himself on understanding where both his strengths and weaknesses lay with regard to learning. Once he achieved that understanding he can embark on a course of education specifically dedicated to his personal learning skills even without putting real cash at risk.
In the seminars I have given and in the coaching sessions I have conducted, it is apparent that each of us learn in different ways. Some may be auditory learners while others are visual and some do best reading a book. Though I probably shouldn't be, I am often amazed at how the "light goes on" for a student when they are first exposed to a chart of price and volume after they had great difficulty in picturing a trend or understanding how they might use Japanese candlesticks to set stops. Most of us seem to learn best using a combination of methods from attending seminars to reading books to watching DVDs to practice trading. Again, most of us seem to have at least an intuitive feel for how we can best study and understand information.
If we really want to commit to becoming better traders, I suspect it is worthwhile for each of us take a little time to focus on how best we learn then formulate a plan by which we can add to our trading knowledge and abilities. If, like our friend, we can only learn by doing, I urgently suggest it not be done by risking real money at first. One can learn a great deal about methods and strategies by paper trading, for example. When we paper trade, we can see how things work and when we might want to enter a position and under what circumstances we might want to exit. We can test strategies and practice adjustments to trades, but we don't have to worry about losing the farm while we practice. Please understand, I advocate paper trading as a way to gain knowledge about trading and about ourselves. It is not the same as trading real money. When we do put real money on the line, our emotions will be much different than they are with a paper trade and at that point we may have reached the point where we have no choice but to learn by actually doing and, perhaps, using a coach to help us through some of the emotionally driven issues we may face when real money is at risk.
If you learn well by reading, you may want to check out "Trade Your Way to Wealth" or my new book, "Smart Investors Money Machine." If you like to learn using videos, you might want to take a look at the DVD that was made of my presentation in Chicago before a live audience for Traders Library that is about to be released. Of course, while I'd love to see you get my books or DVDs, there are a number of great tools available beyond what I have done. Dr. Alexander Elder's "Trading for a Living" is an excellent book for those who want reading material as is Charles Kirkpatrick and Julie Dahlquist's "Technical Analysis." Many brokerages offer free webinars to those who prefer a visual presentation, and seminar companies abound. Trading software companies also often put on presentations and I have found it is quite worthwhile to attend seminars put on at events like Traders Expo.
Most of us can improve only with study and practice. Trading education generally must be self-directed since few institutions yet offer courses and even if they did, I'm not too sure that I'd want a purely academic approach in any event. As has long been my mantra in this area, if you really want to be a good trader I believe commitment to study and practice are essential.
by Bill Kraft, Editor
Copyright 2009, Makin' Hay, Inc.
All Rights Reserved
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