Beginning Traders Can Learn to Day Trade Effectively
Beginning Traders Can Learn to Day Trade Effectively
There is a general consensus among traditional day traders that beginning traders are doomed to failure and it takes several years before they can trade effectively. Of course, this statement is anecdotal in nature and I've yet to read any scientific study to back up this claim. On the contrary, I have found that well trained and prepared beginning day traders can be very effective in their efforts.
Why?
It seems to me that if beginners are taught proper technique and the dynamics of the self discipline required to trade they tend to make fewer mistakes than their more experienced peers. Quite simply, they haven't learned many of the bad habits that unsuccessful but experienced day traders have learned. This doesn't mean that beginning traders cannot easily pick up these bad habits, but from the onset they start with a clean slate and a well drilled methodology in their mindset. If they are able to incorporate his methodology as taught, many beginning traders enjoy surprising success.
Traditionalists will scoff at my thesis, but experience with beginning day traders has shown me the wisdom in this line of thinking. To be sure, this success took me by surprise, at first. It took me some time and effort to arrive at an explanation for the surprising success I have seen. The logical conclusion was that they follow rules to the tee and stayed with a single methodology. I would contrast this mental state to that of many experienced traders who are constantly on the lookout for the new set up or trading system that might revolutionize their trading. Oddly enough, it is my opinion that this constant search results in a muddled trading skill set.
I don't mean to suggest that expanding your trading knowledge is a bad thing; no, all day traders should maintain a "student" mentality when it comes to acquiring trading knowledge. You cannot know too much about a given topic, and the day you stop learning is the day you begin a slow decline in your trading acuity. At face value, the preceding paragraph may seem at odds with my last statement. But it isn't, not really. Learning more about trading does not necessarily mean that you must revamp your trading style with every new book or article you read. On the contrary, most successful traders have a consistent style of trading which they have nurtured throughout the course of their trading careers.
On the other hand, beginning day traders can begin with a time-tested trading methodology and if they execute that methodology with skill and consistency, will find themselves in the same boat as a longtime trader. Of course, I would imagine the temptation to learn more than a single methodology, even though it is successful, would be a natural compulsion. In fact, I have observed this phenomenon on numerous occasions and beginners initial success oftentimes begins to suffer as they intermingle contradictory trading styles in an effort to learn more. It is is nearly impossible to harness an inquisitive mind, and beginning traders are certainly no exception to this rule. But from the onset, when they stick to the initial system which they have diligently learned they can be very effective, and have results which reflect this effectiveness.
My observation is that beginning day traders effectiveness can be short-lived as they began to deviate from the effective and time-tested system they were taught. Unfortunately, I have no answer as to how to keep the beginning student focused on the system they were taught. Most individuals naturally seek to improve themselves, though in this case the quest for improvement might actually sabotage what they have already learned. My experience has shown me that at about the two month mark, beginning students performance begins to wane; a result I theorize that comes from deviating from the affective system they learn and trying new and non-complementary techniques to the system they were initially taught.
I suspect I am not the only trading educator who has noticed this tendency for a results drop-off at two months, though I have never heard it discussed or written about. I suppose that we, as educators, must work hard at reinforcing the wisdom of staying with the original ideas and skills we taught, as they were developed through long hours of trading and study. Of course, I have serious doubts that anyone can curb the thoughts of a curious mind. After all, it is human nature to want to learn more and improve your skills.
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