My own bias, as long-time readers are no doubt aware, is that learning how to trade is not a matter of finding the ideal indicator or trading pattern. Rather, trading is a performance skill, not unlike chess or baseball.
Here are a few thoughts regarding ways of initiating this learning process:
Start With a Framework:
It’s a way to think about markets. Too often new traders try to start by learning technical patterns and setups, without really understanding how markets operate.
Start With Observation:
Learn one or two patterns well and build on those. Trading blogs and books are good sources for patterns that you might want to start with. Don’t be too much in a hurry to “trade for a living”. That’s more performance pressure than most people can bear.
Start With Simulation:
If you can’t make money in simulated trading, you certainly are not going to succeed going live. Simulation is the bridge between learning and doing; it’s an important skills-builder.
Start Thinking Like a Trader:
That means knowing what traders look at when they assess markets, the economy, news events, etc
If I were starting out as a trader now, I would keep it very simple. I’d learn to identify ranges in markets and ways of determining when markets are likely to remain range bound vs. break out and trend. I’d practice just those two setups: breakout trades and “mean reversion” trades that move from one end of a range toward the other. I’d start very small, and I’d learn to set stops and target levels based upon repeated experience with these patterns.
Published at: Breet Steenbarger