Question:
I have been trying to learn to trade on a small budget about one year now. I’m not doing too bad, but looking to learn more. Can’t find that mentor you’re talking about, not even local traders. Any suggestions?
Rusty, Wantmore, Ca.
Answer:
Rusty, congratulations on your first year of trading. The fact that you have managed to get one year under your belt is good. I also congratulate you for your desire to learn more. Truly, successful traders are always learning more.
As to your mentor issue … This is tough because you really need a mentor that you can trust and knows how to trade. This is why it is best to find someone you know, or who is local. As I believe I stated, I utilized my financial advisor. If you have one, start there. If not, look to your online broker. Several of the top online brokers have local offices that provide help to their clients. If yours does not, consider switching to one that does have a local office near you. Finally, put your request on one or more of the forums on this site. Someone might help you directly, or someone might turn you onto someone who can help you find someone who might be that someone you seek. In any case, someone “out there” is waiting for you.
I have a quick thought on your small-budget trading. I like it for two big reasons. The first is that a small budget implies reasonable thinking on your part. No big risk, just learning to trade. The second reason is that small budgets can make you solid returns, if your ambitions are reasonable. Reasonable means taking small profits per trade. If you average .05% profit per winning trade (after subtracting trading costs and losses), and you have five winning trades per month on a trading budget of $5000 per month, then you have a pre-tax profit of $125 per month, or $1500 per year. Nothing to brag about, true, but winning is winning and when you win, you build your account, as well as your confidence. As you get more confident and your account builds, you begin risking more for greater returns. This is the golden path for newbie traders. Over time, you will “feel” the success and your profits will rise.
Trade in the day; invest in your life …
