Market Overview

Here's The Value Of Trading Education


This article was written by Cam White.

Learning any new skill requires a receptive mind, training, practice, and consistent application before mastery is achieved. In the 1970s, Gordon Training International introduced “The Four Stages for Learning Any New Skill.” This model works well for learning any new skill, whether it’s cooking or automotive repair. It works equally well for learning how to trade, whether stocks, forex, or futures—or Nadex binary options and spreads.

Very few traders are alike. People trade at different times of the day and have different risk/reward tolerances. Some traders like to get in and out of trades in the blink of an eye. Others are more comfortable with daily or weekly expirations. Some only like to trade Equity Indices or Commodities, while others may prefer trading Forex pairs. Some are trend traders exclusively, while others have learned to trade in any market condition. Finally, some like to trade binary options only, while others trade spreads almost exclusively.

The beautiful thing is that it’s highly likely that someone has developed trading strategies dialed-in to your trading personality. When you discover a trading strategy that gets you excited, then following a trading educator who teaches your favorite strategy can help accelerate your learning process.

Here are the four stages of learning any new skill:

Stage 1: Unconscious Incompetence – “You don’t know what you don’t know”

Stage 2: Conscious Incompetence – “You’ve learned something new, time to investigate”

Stage 3: Conscious Competence – “You know what to do, but practice makes perfect”

Stage 4: Unconscious Competence – “You know what you know, and it’s now habitual”

Of the four stages of learning listed above, Stage 3 is where the rubber meets the road. That’s where you apply the rules of a strategy in demo first, record your results and validate that the strategy is working for you. If you follow that plan under the tutelage of a veteran trading educator and a community of like-minded traders, then you will accelerate your learning process. The goal is to get to Stage 4, where trading a particular strategy is instinctive and reflexive. You know everything about the strategy, it’s probability of success, and how to manage the trade almost without thinking.

Some final thoughts about trading education:

The rules of the strategy are clearly explained. You quickly learn exactly what the setups are, and how to manage the trade.

You get validation of your setup. If the trade is in play you will know that a perfect trade setup is in play according to the trading strategy rules.

Even more importantly, you get guidance when not to take the trade. Almost every rule has an exception or two. If anything (such as pending economic news) interferes with your trading strategy, the better trading educators will call off the trade, and tell you why. And that can save you a lot of money.

Trading is a lonely business. When you are learning a new trading strategy, you can sometimes feel very isolated when you place your trades. Having an educator who can answer your questions, and a trading community that can analyze and validate or discredit your entry can be very valuable.

You are held accountable for your trade. You know the rules of the trade, the probabilities of success and how to properly execute the trade. If you decide to deviate from the rules of the trading plan and post your intentions, the trading room will likely tell you that you are on your own on this trade. If you deviate from the plan and lose, it can be a painful lesson, but you know that you only have yourself to blame.

The better trading educators will also let you know that there is no such thing as a 100% fool-proof trading strategy. This is important, because they will also help you manage a trade if it starts to move against you.

Most trading educators offer some kind of trial program, so there are multiple opportunities to find the educator who has a system that best fits your trading personality. And in most cases, you can potentially recoup the monthly subscription fee in just a few trades.

This blog post is not an endorsement of any particular trading educator. Once again, almost everyone has a different trading personality. The good news is that you will probably find a trading educator who has a system or trading plan that is best suited for your trading personality.

This information has been prepared by Nadex, a trading name of North American Derivatives Exchange, Inc., prepared by independent third parties contracted by Nadex or reproduced form third party news agencies. In addition to the disclaimer below, the material on this page does not contain an offer of, or solicitation for, a transaction in any financial instrument. Nadex accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.

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