ES Emini Day Trading: Paying for a Trading System or Paying through Experience

Judging by the raft of email I have received of late regarding a blog entry about “Trading Concepts, Inc.”, I have decided people have some fairly strong opinions about the methodology one must employ to learn to be a trader.

Before I launch into this article, I would like to point out that no one had any disparaging remarks about Trading Concepts Inc per say, most of the comments were from readers who felt that paying to learn a system is a waste of money, or at the very least, unnecessary.  There were also several letters that strongly supported the idea of learning a trading system.  The entire group of emails was very enlightening, but a bit disturbing.

I never had to learn trading from a book or on my own as my trading education took place in an institutional setting where there were fairly strict parameters as to the expected performance of a trader.   This setting was long before emini trading made it’s entrance on the internet and most trading was still of the open outcry variety and fairly archaic.  Nothing like the nanosecond fills we get on our trades in todays environment.   I would also point out that I think I received a good and well rounded trading education, which I continued for 20+ years.

Todays trading environment is a much different scenario, where many individual investors who have not been trained to trade through the institutional channels are active in the markets.  There are some very good traders out there, but one statistic has stuck with me for quite some time.   The novice trader has 70% failure rate, and usually within three months.  I spoke with several of my retail broker friends and their opinion was 90% of traders fail after three months.  (Note:  the numbers the brokers gave me are anecdotal, not scientific)

I asked the brokers what they saw as the major deficiency in novice traders, and they listed, in no particular order.

1.  Overtrading  (this was by far mentioned as the biggest issue)
2.  Poor trade management  (trading more shares than is appropriate for your account)
3.  Chasing the market  (lack of a system oriented trading method)
4.  Inexperience (taking illogical trades)

I could not find information on how many of the group of failed traders (the 70% that busted out) that returned to give the market a second shot.  I did several Google searches and called a few academics and this topic is apparently poorly understood, so I can’t give you any meaningful research on this topic.  My guess is that most got burned once and stayed away for good, but that is just a guess.

My point is a simple one, a 70% failure rate is unacceptably high and indicates that novice traders have not been adequately trained.  I found it hard to believe, and still do, that many traders thought that getting some sound training was not a good idea.  I also mentioned that I felt most traders should seek out a mentor to help them progress in their trading skills.   I’ve met a few traders who have learned to trade through experience, but most burned through a decent amount of money in the process.   It’s not necessary.

Sitting in on several trading rooms has convinced me that their is a general lack of experience and knowledge for some novice traders.  They need to get up to speed, and training and mentorship is a heck of a lot cheaper than tearing through several trading accounts.  I’ve looked at a plethora of training programs, and most were fairly good, some better than others.

So the dilemma is simple:  You can learn to trade through experience and burning up a few trading accounts, join a trading room, or take a detailed course designed to teach you to teach your security of choice.

I endorse a state of the art trading program for beginners at Trading Concepts, Inc It’s an awesome product that will have you well on your way to success. Plus, it has a money back guarantee…you have nothing to lose and thousands to gain.