Tips For Beginners
Len Yates

Many people ask how they should prepare themselves to trade.   That’s a good sign. It’s right that you should prepare yourself before jumping in. Here are some of the steps I consider important:
 
Read a book or two.   Read Jack Schwager’s Market Wizards. Read a good book about options. For a list of some of the best, see the bibliography at the end of this article. When you read about the experiences of seasoned traders, you benefit from their mistakes without having to pay for it by losing your own money. In short, you skip right past several years of the “school of hard knocks”, and move quickly towards successful trading. (By the way, after you’re an experienced trader, you should still read a book about trading once in a while!)
 
Attend a seminar. You can learn valuable information from instructors who have traded successfully for years. Just as importantly, you can meet other people and swap valuable ideas with them.
 
Do some paper trading. Decide on a period of time in which you will restrict yourself to mock trades (no real money involved). After you decide on a period of time, double it. There is no reason to be in a hurry. There will always be more money-making opportunities tomorrow. Odds are you will be glad you weren’t using real money during this training time!
 
Some doubt the value of paper trading.   However, if handled properly, it can be good practice, and an excellent representation of how you would actually perform. You obviously have to be honest with yourself. A specific decision to trade must be accompanied by an immediate entry in the log. No entry – no trade! Once a trade is entered, you’re stuck with it. No fair using the eraser! Enter the current date and time with every trade. As for price, to be conservative, you should enter the “asked” on purchases, the “bid” on sales.
 
One of the problems people have with paper trading is maintaining their motivation.   Here’s an idea: You might tell yourself that unless you achieve a certain profit objective during the trial period, you’re not going to allow yourself to get started with real money. Instead, you’re going to have to go around again and do another trial period. This creates an incentive to do well in the trial period.
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