I gave a two-day basic seminar the last weekend in August and it was
so well received that I thought it might be worth re-emphasizing the need
for traders to expand their knowledge and pursue their trading
education. Don't worry, this isn't a commercial for my seminars. The
truth is, I rarely give them any more. They are fun to do, but require a
lot of preparation. Initially, I began the seminar business in
self-defense. I had become so excited about trading that I was inviting
friends and neighbors to the house to teach them trading basics.
Unfortunately, I overdid it and got to the place where I had people over
five days a week sometimes for five or six hours a day. It got so that
I couldn't do my own trading so I decided to give a seminar and charge
attendees, thinking no one would come. I was wrong; they came and the
business grew from one basic two-day seminar to four two-day seminars
going from basics to technical analysis to trading spreads, splits,
trading the lines and volatility trading. Now I had a business that,
although lucrative, was taking up more time than I wanted to spend. I
cut back to the point where I only give a couple a year, but even that
is more than I really want to do. Trading is my real passion and
business and that is what I spend most of my time doing.
Having said all that, I do want to emphasize that trading education
is critically important. Far too many people trade without having a
clue about how to do it. In my estimation, that is the quick route to
losing money. I remember not that long ago when most people traded on
the basis of a broker's phone call. Sometimes it was a broker known to
the trader and sometimes it was a cold call. Each time the broker
called with a story about a stock. Inevitably the story dealt with the
fundamentals of the company and a suggestion that the trader buy the
stock. In those days, I often bought the story and the stock and
immediately placed an order to buy. It seemed that I never got a call
to sell. Sometimes, when the stock went down, I'd call the broker and
ask whether he thought I should sell, but the answer always was
something like: "No, you need to buy and hold." It wasn't until I began
to educate myself about trading that I asked myself the question: "Hold
'til when? Until I die?" Overall, the results for me weren't much to
write home about although I think the brokerages with the inordinately
high commissions made out quite well.
Looking at the scenario I just related, see all the mistakes I was
making. I had no plan, I had no system to manage my money, I took
someone's word without doing even a cursory investigation, I gave no
thought as to the "when" of my entry, and I failed to use a limit order
in buying a stock. Beyond that, option plays were never a consideration.
I barely knew they existed and didn't know the difference between a call
and an aspirin let alone a put. Truth was, commissions were so
expensive, only the large trader could even think of option trading.
I suspect most people who invest or trade continue to make many of
the same mistakes. Only through education and practice can each of us
expect to improve our trading. It is unlikely that the shoe salesman in
the mall or the hair dresser will provide us with that "tip" which will
result in enormous wealth. We're much better off seeking out and
listening to successful traders. Great books and DVDs exist to help the
trader. Seminars abound. It's not that we lack opportunity to learn,
it is that we fail to take advantage of those opportunities. There is
always an excuse not to do it. "I just don't have time" tops the list.
Well, it is your money and you probably worked hard to earn it. Now do
you want it to work hard for you or are you content to gamble it? If
succeeding in trading is important to you, if bringing in extra income
each month would improve your quality of life, I suggest that you make
the time to learn. An uninterrupted hour a week of studying trading and
paper trading will put you way ahead of the crowd. That's 50 hours of
education a year. Maybe that could help us to intelligently answer the
question: "Hold 'til when?"
Good Trading!
Bill Kraft
Mr. Kraft's past articles are posted on our website for your review.
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