The Cost of Learning to Swing Trade

You can read books and watch videos on just about anything today.

But until you actually get in the ring, take action and make adjustments, it will be very difficult to be competitive.

It takes practice to get good at anything. In swing trading that means you need to place actual trades and keep a journal. I wrote “actual trades” because too many believe that paper trading is a help to trading success it’s not.

Paper trading gives you a false sense of security because you are getting filled on previous fills recorded in a live market. You have no idea if you would have received the fills or what the market conditions were like at the time of the execution.

Paper trading is valuable to learn a software, not to learn how to trade.

Swing Trading Tuition

It’s not a question of whether or not you are going to pay to learn how to trade. It’s who you are going to pay. There are two schools of tuition. Experience or paid training.

The smart trader swing will pay both.

Most feel paying for training isn’t worth it. They feel they can learn on their own. This is true, you can. What they don’t realize is the first thing you MUST learn is what not to do. The sooner you learn to minimize mistakes the more money you will keep in your pocket.

This allows you to gain experience because you are not burning your inventory. In trading your inventory is your cash.

Is training expensive? No. It pays for itself if you pay attention.

Preserving Capital While You Learn

What can training teach you sooner and less expensively than experience?

Probably the number one lesson is not over-trading. We all begin with passion and enthusiasm but we must quickly learn to wait for opportunity to stack the odds in our favor. If we do not have patience for great opportunity, we will pay extra tuition for absolutely no reason.

Key lesson #2 would be trade management. When you know from the start that all trades are unique and have, different expectations, you can adjust profitable trade exits to reflect the odds of follow-through.

If the odds were lower, you would plan to exit into momentum as opposed to adding to a position looking for a larger move. Can you learn this with experience? Yes. However- you will mismanage trades until you have paid an expensive lesson with real money.

A key aspect of paying of paid training that is misunderstood is losing less while you are getting comfortable with risk. Education judged solely on performance is poor judgment.

Let’s put this in a perspective to which we can all relate. Losing weight.

If you don’t put the pounds on you don’t need to lose them. If you don’t lose money on poor ideas, you don’t have to make it back to get to even.

Training can keep money in your pocket just as much as it can help you improve performance.

It costs less to learn this lesson that it does with many trades of real money.

The Cost of Mistakes Are in Your Control

How do you gain experience but keep the dollar amount of the losses minimized?

The answer is simple but we begin trading like a hungry 20 year old at Costco. We want it all.

To learn at a reasonable cost with real money trades you must keep your share size down until you have a track record. A huge mistake traders make is allocating too much capital to new trades before they prove they can handle risk, manage trades and adjust trades.

You also need to keep shares down while you determine the validity of your strategy. Imagine investing in a single family home without seeing the property or the neighborhood.

When we trade aggressively without knowing the odds, this is what we do. You can control the costs of learning by being diligent with risk until you have proof of skills and your edge.

Experience or Paid Training?

If pressed for an answer I recommend both. Good training can shorten the learning curve and reduce losses. Experience can help you understand the training on a deeper level.

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