Monday, October 22, 2012

The Three Phases of a Trader's Education

The Three Phases of a Trader Education


Aspiring traders typically go through three phases in this order:
  1. Methodology -- The first phase is that all-too-familiar quest for the Holy Grail -- a trading system that never fails. After spending thousands of dollars on books, seminars and trading systems, the aspiring trader eventually realizes that no such system exists.
  2. Money Management -- So, after getting frustrated with wasting time and money, the up-and-coming trader begins to understand the need for money management, risking only a small percentage of a portfolio on a given trade versus too large a bet.
  3. Psychology -- The third phase is realizing how important psychology is -- not only personal psychology but also the psychology of crowds. Read more