That is the real question for all of us, isn't it? How can I become a better trader? Over my years of dealing with a few successful traders and a whole lot of wannabe successful traders I have observed one very significant difference. It seems that the wannabees often believe that success can come without a lot of effort. So many of those who fail seem to approach trading as something they will pick up by doing as little as possible. They may attend a seminar or two and maybe even read a book or watch a DVD or two and then start trading real money as if they had a clue what they are doing.

Imagine if a plumber or skilled auto mechanic started out that way or an electrician (zzzzzzzzzzzzzt!) or a doctor. How good would any of us likely be at our jobs without serious training yet many jump into the business of trading with superficial knowledge at best. Trading is a business. It requires effort, a lot of effort, to succeed. The business has a great deal of risk and unless one becomes trained or trains oneself to understand and deal with risk potential the prognosis is poor. Unless one understands the nuances of the strategies one employs, the prognosis is poor. Unless one knows how and where to cut losses and how to let profits run, the prognosis is poor. Unless one understands the need for money management and incorporates a way to manage money in the plan..........you guessed it. The prognosis is poor.

On the other hand, for those who are willing to undertake the necessary education, trading can be a fantastic way to add to one's net worth. It also can permit someone like me to have a wonderful quality of life. I can travel and accomplish my business anywhere I have an internet connection; I am free of employees; my commute is the distance from my bedroom to my in home office; I report to no one except the IRS; I can choose what I want to do, when I want to do it. All those abilities give me a life I really enjoy, but it did not come without a great deal of effort on my part. I attended hour upon hour of seminar, read every book on trading I could get my hands on, watched DVD after DVD and practiced, practiced, practiced.

I see so many who are unwilling to pay for a trading education though the rewards of the knowledge can be exceptional and the lack of knowledge can be and often is, disastrous. At times I have people contact me for the first time for a coaching session only after they have paid enormously in losses in their account because they had no idea how to cut losses or let profits run. The person who seeks the knowledge first in trading seems to be the rarity. Instead, many start with greed as the only arrow in their trading quiver only to be erased from the business through their ignorance and/or unwillingness to pay for their education. One way or the other we all pay. Either we pay for some structured education or we pay even more dearly through the losses we generate.

Anyway, in my view, that's how to become a better trader. Learn more. Read, attend seminars and webinars, get help before you wished you had. Study and practice, practice, practice by paper trading first and only when you see that your practice is yielding good results is it time to risk some real money. In the past when I have written about paper trading there always seems to be someone who writes saying paper trading does no good. While I disagree adamantly, I would ask in turn does it do any harm? Can a student learn anything by paper trading? I do agree that paper trading only gives us a part of the game. However, it gives us an important part. It permits us to learn the intricacies of a given strategy. If we do it correctly, it teaches us how to utilize a money management methodology. It simply adds to our knowledge. The part paper trading does not give us, at least the full effect, is dealing with out emotions during the course of a trade. I contend that while the emotions will still be very difficult to master when trading real money, it will be a lot easier if we at least have a clue of what we are doing.

Good Trading!
Bill Kraft

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Here's a look at a trade Bill is currently working on:

SPDR S&P 500 (SPY)
Friday concluded the week with a bearish on the S&P 500 (as well as on the Nasdaq Composite and the Dow 30 Industrials) and it appears as though resistance may be forming on the index. If I see a confirmation of what currently is only a suggestion of bearishness, I am considering some in the money puts on SPY with an expiration about 4 to 6 months out.

Good Trading!
Bill Kraft
Editor of $10 Trader, Option Trader and Trend Trader
"Trade Your Way to Wealth" by Bill Kraft is an Amazon.com best seller!
"Smart Investors Money Machine" is Bill Kraft's most recent publication.
"Trading for Keeps: Making Money with Low Risk Option Trades" a trading DVD by Bill Kraft