I don’t know how many of you have read Outliers by Malcolm Gladwell, but one of the main points definitely needs to be repeated here: practice makes better.
Sure, if you have some sort of disability or innate inability to do something, practice may not help. But, given you have some ability, and if you are reading this site you likely have some ability to trade (or you got here completely by accident and probably have no idea what the hell I am talking about). You have some ability to trade. Say it to yourself and own it.
Now you need to practice. If you are reading this article, you likely are searching for ways to improve your skills. Most likely, you aim to improve your trading abilities, but it is not like this works only in the market.
In Malcolm Gladwell’s book he states that 10,000 hours is a well accepted number for achieving a high level of strength in a certain skill. Bill Gates had access to a computer in high school, a good computer for the time, and racked up more hours of programming than nearly any college student would have had at the time, and more than most any public high school students. Those extra hours gave Gates a push. And any extra time you put into trading will give you an edge over the competition.
There is tons of competition, but do not let that frighten you. Opportunities abound. With practice you can hone your skills, reduce your losses, maximize your gains, and skip trades that have a tendency not to succeed for you. With practice, you will know your game like the back of your hand.
So, how do you practice?
Read trading books. Look at the charts. There are a lot of free ebooks on the internet, and a lot of blogs that post analyses of charts. Read along or make an analysis and then compare your thoughts on the chart to the blogger’s. Write some entries on stock forums, or in the comments of blogs. See if your theories pan out.
If you do not have enough money to constantly trade the market, or if you have fear of losing money, there are many online stock trading games. Most of them are free as well. Try inspectd.com for a stock game that can be played at any hour of the day or check out wallstreetsurvivor.com to get a free paper trading account. Either way, you’ll build up your skill.
If you want to put some real money on the line, but nothing significant, why don’t you try a micro forex account? FXCM.com has, in addition to a paper trading account, a micro forex account that allows you to trade in the real markets, using their software, for a minimum opening price of $25. I’m not sure if they are doing it anymore, but you may be able to find a link to their account promotion through google where they even give you the $25 just to open an account.
What was the point of this article?
You need to practice. People do not get better at doing without doing. It would seem to be coming sense, but sometimes we have these magical images in our heads. Sometimes the media, or our crazy uncle, or someone ranting in a chatroom leads us to believe that Warren Buffet got to where he is as though he were a successful businessman without any work at all. It is just not true. He puts in a lot of effort, a lot of work.
And if you want to get better, you will have to do so too.