Well, JB, since we're all tossing you our 2-cents, here's mine:
1. You can learn this game from home, but it takes a lot of time and you have to work hard -- I mean REALLY hard: 10-, 12-, 14-hrs/day kind of hard in the beginning, every day for 6-12 months before you can begin to get a useful and reliable perspective on the game. (I call it a game; others just call it WORK.)
2. Keep your losses as small as possible on the roughest part of the learning curve. You WILL lose money in the beginning and it WON'T be fun. (Unless the worst thing happens, which is that you make a lot of money in the beginning and get the idea that you're good at it, in which case your chances of eventually losing ALL your money go up bigtime.)
3. Bobby Fisher, on the topic of finding the very best moves in a chess game, said: "When you find a good move, STOP! Don't make it. Just put it in your pocket and keep looking for an even better one." In the beginning of your studies, when you think you have learned a new thing about trading -- a new trick, a new setup, a new angle -- STOP! Don't rely on it too soon. Test it carefully with small shares over a considerable period of time. Lots of newbie traders get booted out of the game because they get giddy about something that worked well for them for a few weeks, then suddenly it stops working and they fail to adjust. Yes, you need to be confident in order to act spontaneously when you recognize a good opportunity, but that confidence should be born of sober experience, not newbie enthusiasm.
3. I agree with Brandon, that the most important element is not the method you learn, not the books you read, not the teachers you follow -- the most important factor is YOU. YOU have to find out how much discipline, how much intelligence, how much knowledge, how much talent is necessary to win, and then YOU have to be the one to be honest enough with yourself to say if you have these qualities or not. Some people are just not cut out for this game and God help them if they don't realize it or won't admit it.
4. Last but not least -- and this is kind of a followup on the previous item -- only YOU are responsible for not letting yourself get boinked. The number of newbies who have been screwed by gurus, by brokers, by crooks, is legion. They fall for every trick in the book. I don't care what kind of jerks, fakers, liars, technical glitches, or demon MMs you run into, YOU are the one who puts your money at risk:
"Son, no matter how far you travel, or how smart you get, always remember this: Someday, somewhere, a guy is going to come to you and show you a nice brand-new deck of cards on which the seal is never broken, and this guy is going to offer to bet you that the jack of spades will jump out of this deck and squirt cider in your ear. But, son, do not bet him, for as sure as you do you are going to get an ear full of cider."
--Damon Runyon
Your first line of defense against this is basic money management. Sure, you'll get caught in some nasty situations from time to time -- like the time a friend of mine was long a stock that got halted because the CEO had just jumped off a 16th story balcony! -- but basic money management tells you not to put too much of your capital into any single position. If you were one of the irrationally exuberant newbies who bet the ranch on the EMLX hoax every 10 points all the way down from 100 to 50, only to sell at the bottom -- or worse, shorted your whole stack near the bottom and got caught in the halt that reopened over 100 -- well, you got an ear full of very expensive cider and probably got kicked out of the game!
Your second line of defense against these things is to be a good judge of people, of crowds, of situations. Have a sense of danger. Mikhail Botvinnik, a former World Chess Champion and head of the erstwhile Soviet school of chess, was a trainer of many champions, including Anatoly Karpov, the man Bobby Fisher did not want to face. Botvinnik said that what set Karpov above the rest of his students was not Karpov's brilliance -- Botvinnik had plenty of brilliant students -- but rather, it was Karpov's "sense of danger." Karpov had an uncanny ability to steer away from trouble. A good trader needs that, too.
Gee, this is fun, talking about trading in terms of chess! Maybe I should write a book, eh? ;-)
Good luck and all that,
ig |
