How to go from trading education to trading?

I've been studying and learning trading and the markets from a background perspective for months and months, but am struggling in finding how to make the transition to actual trading.

I've tried limited backtesting programming, but I am not very good at those kinds of things, and am learning from scratch (so it could take a long, long time before I can do that). I've also tried testing others' strategies just by hand, but have found nothing that works enough and consistently to have any confidence in.

How did you make the transition from knowing trading to being a trader?

I want to have fairly consistent, proven setups, but just can't decide on my next move. I only have about 6 weeks before I lose most of my time to college now, so I don't want to waste the summer learning how to program, for instance. I figure I could print out charts full of different indicators and study, paper trade what I know and learn from experience, keep learning how to program, sit around and be indecisive, or what?

I appreciate the help.

 

It usually involves throwing out everything you have learned so far.

 

Only live trading will teach you what you need to know in the context in which you need to know it. Textbook knowledge, back testing and money management is one thing but only live trading can teach you the other important element ...Psychology.

If it were not for the fact that we are human (not computers) and susceptible to human emotions then I say a lot more people would succeed at trading. When you trade the markets you are not really trading against others even though logic and intuition would tell you otherwise. Psychology and emotional control is key here because the market will force you to take a good look at yourself in the mirror; you may not like what you see staring back and will therefore be averse to trading on sub-conscience level.

It's strange to think this but... your greatest opponent is not the people taking the other sides of your trade but its actually "you".
Once you get over that mind trip of a hurdle then all the other aspects of trading are merely academic and can be duplicated by anyone of average intelligence.
When you confront yourself and win then you know you are on the right path. I'm not going to say this is easy to do as I am still working through this stage of trading but I have seen significant improvements in my trading by merely being aware of this.

 

First of all I applaud your approach to trading because education comes first before trying it with real money. Now I know there will be replies asserting that you won't get the "feel" for trading without real money. There is truth that you are your own enemy in trading and in investing but if you don't know what you are doing it does not matter if it is real or simulation. The result will be the same. So keep testing in simulation, please.

Do what you have suggested: if you don't find the time to sit at your screen all day watching the markets move, make a printout of the charts. Say, an intraday printout of the last 10 sessions on one page. Plus a daily chart of the last few months or years as a reference. Try to find logic in the movements of the market and do not seek it in indicators. They won't help you at all. Seek it in support and resistance levels and trends.

 

Ok, i want ya to do this Monday morning. You can do this while you continue to learn about programing.

Pick a stock, future, etc...whatever, thats quiet(hahahah) at the moment but with good liquidity. Now, open a very small position
and i mean real small...like odd lot (stock) or,say, 1 car(future).
Yeah ...long or short doesnt matter...just get the trade open,ok?
Now after about 10 - 30 seconds GET OUT...close the trade. Do this several times...even if you are making a few $$ ...just get out.
Do this several times and then stop...quit. See how ya feel.
Feel what its like to win/lose ... doing it with real $$$. I think its
a good way to "transition" into a market.

the two guys who posted before me have posted good stuff.

Also, memorize this post by illiquid....it'll mean much to you later
if you survive.
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From illiquid 07-06-08 01:21 AM

Most aspiring (as well temporarily successful) traders fail because they believe all they require is an "edge". But hint hint, they don't call them "edges" for nothing, for they are meant to be smoothed away over time.

Trading is difficult to teach because the most effective traders know their markets inside out and take each situation as they come, one by one, while novices want easy to apply templates for rinse and repeat patterns. When I think in terms of my own trading, I can no longer understand/apply the concept of "edge" beyond pure experience and action; either I know the market and time frame I am trading, and take the proper steps to take full advantage, or I don't -- and lose. What experience gives you above all else is knowing exactly why you win or lose, as opposed to just guessing/tweaking the "odds" in retrospect.
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Let us hear how it went on Monday, TG.
Get it done.

rj

 

I hope my comments can help a little. Ive been in a similar place this year. I'm right there at that transition point youre talking about....making the crossover from paper trading to real money.... and its been strangely difficult. for many reasons. many of them psychological, as others mentioned. Ive been studying for about 7 months. thats not a long time by experts standards. but 12 hours a day, as fast and furious and thoughtful as I can.... I got myself to this point. focused 100 % of my time (not working to supplement income yet)... Ive gone thru stages of skill development I never realized, there were such levels of skill ... the difference between what I know now, versus 1 month ago is like the difference between kindergarten and college grad... what I thought I knew a month ago, when I thought I was ready to trade with real money, because I was turning 50 pips profit a day in paper trading.... somehow didnt translate to the same success when I went to real money trading. and in the first month of real money trading, I lost 800 dollars. thats alot of money to lose.... the 'cost' of my real education in forex.
Now , I'm at the stage where I break even every day....a good step forward.
and the difference between breaking even and making great profits... I can tell you ... is often a matter of missing an entry timing by 10 seconds.... !! after establishing a great set up,understanding all the indicators, all the time frames, all the candlesticks...and just about ready to pull the trigger.... my inexperience still makes me hesitate sometimes....and then the rocket ship blasts off , exactly as I expected....and I lost another good trade, to fear, inexperience, and hesitation. this is where I'm at now, after 7 months of intensive training.
all this, saying, just to give you an idea of what its like in this 'transition phase'... I dont do much back testing. I focused instead on perfecting my understanding of the indicator tools I use, trendline construction, candlestick analysis, CCI, and just hours and hours of screen time.

whats frustrating now, is that I'm at the limit of loss I allowed myself before I said I wont risk any more loss.... so now, the last 2 weeks... Ive been doing this really brilliant rookie mistake.... setting my stop loss too tight...(4 pips ...(ridiculous !?!)...and 80 % of the time get stopped out for loss.... and then,of course, watch the trade go my expected way, for the 10 pip ride that I should have had. and instead I lose 5 bucks a pop. after 2 weeks of that...Ive lost another 75 dollars. explaining this now, might inspire me to take my skull and bang it into the nearest wall to whack some sense into my head, and realize that you cant trade successfully when you place your stop losses at 4 pips. duh.
and so, on it goes.

So, I forget the questions you posed ,sorry for that, but I hope some of my own experience might offer you some sense of what it can be like.
when I was paper trading I was trading agressively,intraday, and making 300 dollars a day in fake money. now, with real money.... I'm just about breaking even, and ready to turn the corner. I will be thrilled to make 30 pips profit in a day.

I know I will master the game some day.and I'm getting there. but it takes tremendous hours of screen time, and patience, and driving desire to focus your whole mind on the learning process. its like becoming a black belt in a martial art. or mastering any skill or sport. it cant possibly be achieved in one summer vacation from college.

Before I got into forex. I read the posts of experts here who all said it will take at least a year to learn the forex. I said to myself, no, I will get good at it in 3 or 4 months.
Now, I understand, they are right. and I'll be lucky if it only takes me a year.

it can take a whole week, just to get used to the shock of losing real money for the first time. then overcoming the pain of seeing your first 100 dollars go down the drain. then, hopefully you learn to stop the madness before you lose everything. and get back to paper trading for a while, etc...and then ,with patience, see how you learn one step forward , one step back...and it just takes alot of time to develop the skills.

hope my thoughts are helpful to your perspective.

 

I have to concur with tom123 100%…..I just made the transition to full-time trading.

While studying and paper trading I was making 10-15pts on ES-Mini. Now with real money I am down $3k.

I’m in the process of trying to figure out what is happening. It is all on psychology. My stops are too close but I am unclear now where they should be. As per everyone, I always enter too early and then see the market go my way after being stopped out seconds later.

This week I’ll be adjusting my entries to match my personality. I have an idea how to do so. We’ll see how it goes …

 

Forget psychology since you haven't passed randomness yet. Markets and time frames you choose will be the extent to which your "personality" impacts your trading. Beyond that, you should leave all personal belongings behind and focus all your efforts upon said market.

The one place you won't find any good entries is inside your head.

 

thanks for the feedback. It does make sense ...

 

Thank you all for your replies, especially Tom. Based on your recommendations and trading strategies, is it now wisest of me just to study charts with few if any indicators? Would this also mean that I should hold off on programming (at least during personal time, and take a class or two in college)?

Thanks for your help.