Trading Tips

8 Ways to Limit Your Trading Education Tuition

Learning to trade is going to cost you in one fashion or another (and remember that your time has value). There are ways, however, that you can minimize that cost.

1. Start with a foundational book like The Essentials of Trading. This will make sure you’ve hit on and thought about the basic elements of your trading. That will save you time and effort (and probably money) as you move forward. I have heard from a number of traders who didn’t build the right foundation and had to go back later to fill it back in.

2. Make good use of books in general. They represent very good value considering the relatively low cost. A good book structures and presents information well, allowing you to save time hunting all over the place. I have a list of Reviews of Trading Books that I add to regularly, as well as My Top 5 Trading Books. The contributors to the FAQ book I’ve developed have their book recommendations listed here.

3. Create your trading plan. You won’t be able to fully flesh a trading plan out right away, but major elements like trading time frame can certainly be addressed early on in your trading development. The rest can be added and fine-tuned along the way. I did a series of trading plan posts in March of 2008 that are worth going through.

4. Do not attend those “new trader” seminars you see advertised on television. They are marketing tools intended to get you to buy something. They are specifically scripted and arranged to get attendees excited about whatever it is they are selling. Pure sales pitch.

5. Do not buy trading systems. Most trading systems don’t work for most people. There are a lot of variables involved in matching up a system with a trader. You are almost certainly going to be much better off in terms of both your wallet and your development as a trader if you come up with your own thoroughly tested strategy.

6. Trade live as early in the process as possible. I’ve written about this on several occasions before (see Trade real money, not paper money). Demo trading is good for learning the ins and outs of trade execution and tracking, and for testing out new ideas. In the end, though, it’s all about trading with real money, and that’s a very different beast than demo trading. It’s best to see that as early in your development as possible.

7. Start very, very small. Just about everyone who gets into trading struggles with it as first. In fact, getting to be a break-even trader is a good initial objective in most cases. Since you know you’re probably going to lose money in the early stages, why put more money in the market than is absolutely necessary? Trade tiny until you’ve proven that you’ve got it figured out. You can always add money later.

8. Pay attention to detail. Trading mistakes cost money. Oh, sure, you could get lucky and score a big winner thanks to putting in a sell when you meant to buy, but it tends to work the other way more often than not. Don’t get so excited about a trade that you fail to confirm that you do everything correctly. It’s an awful feeling to not only miss a great trade, but to take a loss because you goofed up.

Got a tip of your own on lowering trading education tuition to add to this list?

By John

Author of The Essentials of Trading

4 replies on “8 Ways to Limit Your Trading Education Tuition”

9) Try to find out as quickly as possible, if trading is the right thing for you at all! Remember that it’s perfectly fine to move the bulk of your money to a fund manager, or some other (external) financial advisor, as long as you understand the way they invest/trade and are comfortable with.
10) Don’t even think about quitting your job and go to full-time trading unless your equity curve is uptrending for at least a year, concentrate on swing or trend trading where you don’t have to be glued to the screen. You can always move into shorter time frames, once you’re profitable with the longer ones.

11) Keep the trading method simple, i.e. don’t go around purchasing exotic indicators. At least for beginners’ charts, less is more.

12) Keep the charting software costs down, e.g. why go for Tradestation when you have excellent packages like Sierra Chart at a very reasonable cost.

Keep the whole beginning part of learning with books from the library or find cheap ones to purchase. Then when your overloaded with that stuff, go to free or cheap trading blogs from longterm reputable traders and get more cognitive overload from them while also using to have some basic use on software. Then maybe buy good and useful material to continue the education process. All the while hoping that you don’t blow up your account in the process.

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