04, April 2015: Sometimes it seems like just you and your computer against the entire world. Starting out with a simulated trading account seemed like a good idea and in many ways, it was. Learning how to configure a trading platform, when the markets in which you were interested were most active, how the market prices responded to economic news releases — all these things were valuable in the learning process where you started out knowing virtually nothing and needed to learn virtually everything.
Eventually, you felt confident enough to fund a live trading account and make some live trades. Immediately, you were confronted with an uncomfortable reality: Live trading and simulated trading are vastly different scenarios. When you were practicing with $50K or $100K of pretend money, you could let trades run, knowing in the back of your mind that no matter what happened, you couldn’t be hurt and your simulated margin was large enough to handle the frequent market gyrations.
Contrast this with the feeling you experienced when you pulled the trigger on the first trade with your $5,000 margin account, and within seconds, $50 or $100 of your real money vanished.
You closed your trade and proceeded to attempt to analyze what went wrong. How could something that had worked so many times in simulated trading go so wrong, so quickly, the very first time it was for real?
Many traders will admit to having the exact same experience or one very similar to it. There was a valuable lesson imparted. The lesson was that the difference between simulated trading and live trading is so enormous as to practically defy description. If you were smart or lucky, you shut down your trading platform and took two or three days to let the physical and emotional sensations subside. If you were not, you quickly rushed into another trade, wanting nothing more than to “get even,” only to find yourself in an even deeper financial hole.
Learning to trade does not have to be this way.
You do not have to start from zero or reinvent the wheel. All you need to do is find a mentor who has already gone through your experience and has survived to learn how to trade without throwing away money or causing severe psychological damage to the mind.
A mentor is someone who has years of good and bad trades under his or her belt, so that you can start where they are, instead of all the way back at the beginning.
It might seem as though finding a legitimate mentor would be impossible in the dog-eat-dog-every-man-for-himself world of trading, but it is possible.
True mentors know that the very best way in the world for they themselves to get to be better traders is to show someone else how to trade. These people are rare and in most cases they will charge you for their services. There are also large numbers of fakers who really do not know any more about trading than you do. They will sell you options systems, binary options signals and forex trading strategies that are seldom no more effective than flipping a coin.
The ideal mentor is the one who will let you watch him or her during a live trading session as they trade their own accounts with real money.
One of the most valuable lessons they will impart to you is that at times, no matter how badly you want to trade, the markets are simply not active enough to justify the risk. This is one of the hardest things for new traders to accept, that at times, the best trade is no trade at all.
Another is that no matter how carefully the market is analyzed, the uncertainty factor is always present. The best planned trade in the world can turn into the worst trade no matter how many factors are examined beforehand.
A good mentor can also teach you how to deal with one of the other uncomfortable realities of trading: how to recognize a bad trade and prevent it from becoming a disastrous trade due to an unwillingness to admit that you were wrong.
Finally, a good mentor will teach you when to take a profit and when to let a trade run in pursuit of a bigger profit.
You could learn all of these things on your own. Having a mentor speeds up the process exponentially, hopefully getting you to the position of dealing with the uncertainties of trading and the financial and psychological effects before you go broke or crazy.
Along with all the other steps you are taking in your journey of becoming a trader, you should definitely start the process of locating a mentor. If you can find someone with many years of experience and thousands of trades behind them willing you guide you, you can save years of expensive trading frustration. This is equally, probably more, important than learning to analyze charts or apply technical indicators, or even simulated trading. Start your search for a mentor right away. There is no better way to gain trading effectiveness more quickly.