Last updated on April 15th, 2020
There are of course no shortage of educators out there in the world of trading.
But there are also many potential obstacles to learning to trade in this way. Let’s take a look at 5 perils of learning from other traders.
1. Great trader, *%$p teacher
Just as not everyone was born to trade, not everyone was born to teach. And of course, there are far fewer who were born to trade and teach. So of all those educators out there, there are plenty who don’t have both of these skills.
They can be good at what they do without being good teachers.
Dropping a ton of information on people without helping them to understand it or show them how to apply it for example, isn’t likely to achieve the desired results in many cases.
Statistically, there will always be some who make it anyway, but it’s not always easy to predict who those people will be. It’s easy to fall into the trap of believing to some extent that you are special or different and that you are the 1% who will make it.
But realistically, it’s far better to find a path where if you are successful, you’re part of a larger group.
2. High capital requirement
In many cases, they will have a restricted level of risk capital which they are able to commit to their trading business.
But successful systems come in all shapes and sizes. Not infrequently, an educator might have been in the industry for a while and made a fair amount of money already. So the same levels of capital restrictions won’t apply to them.
But is this something that they remember?
Well not always. And for someone who is still learning, this might not be especially obvious either.
So it’s incredibly important to assess what an adequate amount of trading capital really is if you are going to follow someone else’s methodology or system.
3. Unrealistic amount of time needed
I’m not saying that the amount of time to trade a strategy is unrealistic – there are traders who sit down in front of their screens and trade for the best part of an entire session each and every day. But if this isn’t something you have the time for, then it is unrealistic for you.
The time constraints of someone transitioning to trading from a traditional job mean that if you have to commit a decent amount of time on a daily basis in order to be successful, it’s going to be extraordinarily difficult to make it.
When so much is going on in your work and life, the overbearing strain of a demanding trading routine means that when things become tough, your staying power will be challenged and is quite likely to fail to some degree.
The daily grind becomes too much and something will have to give.
So it’s essential to be realistic about how much time you can give to trading if your life were to stay the same or even get busier (for example if you were to get a new job, take on a big project, move house, get married, have a child…) if of course you don’t immediately find success and then work out whether you will still have enough time and energy left to trade the strategy you are currently looking at.
4. An incomplete picture
Like a painting that’s half covered up, an education which is only focused on certain aspects of trading will not tell you the whole story and leave you feeling unsatisfied.
There are many parts that make up a robust strategy which stands a far greater chance of achieving ongoing success in the markets. However, there are plenty of educators out there who concentrate on showing you just a fraction of what is truly required.
Inevitably, although people who are missing pieces of the trading puzzle may find short-term success, ultimately they are likely to struggle and over time, they’ll need to fill in the gaps in their knowledge and skillset.
5. Anyone can apply
Again, not everyone was born to trade.
But many people are drawn to trading by the intoxicating mix of the potential for great riches, the satisfaction of being your own boss and the great challenge of making a success of it (and the self-satisfaction that this success could bring).
Even if people do have the mental and emotional abilities necessary to find success, what they often are not ready for is having the markets unequivocally demonstrate that there are things that they are scimply not very good at.
This of course becomes all the more difficult to take for those who have already experienced some degree of success in their careers – whether or not they consciously recognize what they have achieved as success.
Finding the right place to learn
There are longer term strategies, swing trading systems and day trading methods and each of these can either be traded at minimal level or scaled up to represent a more complete trading business.
They are in many respects, straight forward to trade and yet can be tailored to take into account rather more complex rules.
Wherever you start your journey as a new trader, it’s at least as important to assess how appropriate the education or system is to you as it is to see how successful the educator or their system has been.
The one thing that you will never get back in this process is your time, so make sure that you use it wisely.