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How We Learn -- By: Bill Kraft
Copyright 2009, Makin' Hay, Inc., All Rights Reserved
Bill Kraft
Editor |
After last weekend's article, a subscriber wrote an important and
thought provoking note on the blog. He indicated that he was unable to
learn very well by reading books or watching DVDs and believed the only
way he could learn to trade was by actually doing it. I guess the smart
alec in me is grateful that this fellow didn't decide to be a pilot, but
learning to trade through trading real money may be nearly equally
dangerous. What struck me as so important about the posting was that
the writer recognized that learning through reading or watching and
listening to someone else just did not work well for him. He had
learned that he grasps new information most successfully with a hands on
approach. I sincerely believe the writer should congratulate himself on
understanding where both his strengths and weaknesses lay with regard to
learning. Once he achieved that understanding he can embark on a course
of education specifically dedicated to his personal learning skills even
without putting real cash at risk.
In the seminars I have given and in the coaching sessions I have
conducted, it is apparent that each of us learn in different ways. Some
may be auditory learners while others are visual and some do best
reading a book. Though I probably shouldn't be, I am often amazed at
how the "light goes on" for a student when they are first exposed to a
chart of price and volume after they had great difficulty in picturing a
trend or understanding how they might use Japanese candlesticks to set
stops. Most of us seem to learn best using a combination of methods
from attending seminars to reading books to watching DVDs to practice
trading. Again, most of us seem to have at least an intuitive feel for
how we can best study and understand information.
If we really want to commit to becoming better traders, I suspect
it is worthwhile for each of us take a little time to focus on how best
we learn then formulate a plan by which we can add to our trading
knowledge and abilities. If, like our friend, we can only learn by
doing, I urgently suggest it not be done by risking real money at
first. One can learn a great deal about methods and strategies by paper
trading, for example. When we paper trade, we can see how things work
and when we might want to enter a position and under what circumstances
we might want to exit. We can test strategies and practice adjustments
to trades, but we don't have to worry about losing the farm while we
practice. Please understand, I advocate paper trading as a way to gain
knowledge about trading and about ourselves. It is not the same as
trading real money. When we do put real money on the line, our emotions
will be much different than they are with a paper trade and at that
point we may have reached the point where we have no choice but to learn
by actually doing and, perhaps, using a coach to help us through some of
the emotionally driven issues we may face when real money is at risk.
If you learn well by reading, you may want to check out "Trade Your Way to Wealth" or my new book, "Smart Investors Money Machine" . If you
like to learn using videos, you might want to take a look at the DVD
that was made of my presentation in Chicago before a live audience for
Traders Library and Marketplace Books that is about to be released. Of
course, while I'd love to see you get my books or DVDs, there are a
number of great tools available beyond what I have done. Dr. Alexander
Elder's "Trading for a Living" is an excellent book for those who want
reading material as is Charles Kirkpatrick and Julie Dahlquist's
"Technical Analysis." Many brokerages offer free webinars to those who
prefer a visual presentation, and seminar companies abound. Trading
software companies also often put on presentations and I have found it
is quite worthwhile to attend seminars put on at events like Traders Expo.
Most of us can improve only with study and practice. Trading
education generally must be self-directed since few institutions yet
offer courses and even if they did, I'm not too sure that I'd want a
purely academic approach in any event. As has long been my mantra in
this area, if you really want to be a good trader I believe commitment
to study and practice are essential.
Good Trading!
Bill Kraft
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McDonald's Corp. (MCD)
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Coca-Cola Enterprises Inc. (CCE)
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Bill Kraft
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Trend Trader -- by Bill Kraft
Trend trading as we try to practice it is a form of momentum trading. We prefer to try to capture profit out of the middle of the trend rather than try to catch reversal at bottoms and tops.
Here's a look at a trade Bill is currently working on:
Nordstrom Inc. (JWN)
Trend Trader captured an 8% return before commission in just
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Good Trading!
Bill Kraft
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$10 Trader -- by Bill Kraft
We really enjoy trading stocks that are $10 and under. Often they provide the chance to enjoy high percentage gains and, of course, at worst, the risk is limited to what we paid for the stock.
Here's a look at a trade Bill is currently working on:
Mechel Open Joint Stock Company (MTL)
MTL has been showing a number of positive technical signs
during its recent trend up. This one could present an entry on a
pullback and has a long way to go to reach its split-adjusted highs of
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month winning streak in tact.
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Bill Kraft
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