I was talking with an investor the other day and he mentioned how odd it is that so many people come to trading with no education or training and without knowledge specific to trading yet expect to do well. There are few endeavors in which we can expect success without knowing what we are doing, but, oddly enough, it seems that many evidently believe that trading is something they can do without gaining the knowledge first. Sadly, I have been contacted by quite a few folks in that category. They have called or sought help or coaching, but only after losses had mounted to high levels.

A few weeks ago, I wrote about my coaching sessions and mentioned the cost. One reader thought my price was way out of line. Certainly, he is entitled to his opinion. The fact is, almost all traders wind up paying for their trading education one way or the other. Many prospective students have called only after having lost literally hundreds of thousands of dollars. They call to try to find ways to stop the bleeding. Compared to such losses, the cost of a day or two of coaching is minuscule. The cost of a day's coaching can be equated to the size of a relatively modest trade. Nevertheless, it seems like many new and inexperienced traders choose to pay for their trading education through the school of hard knocks, and the losses are regularly greater than the cost of getting an education up front.

I am a believer in preparation first and action thereafter. Ready, fire, aim is definitely the wrong way to go when entering the trading arena. I don't mean to suggest that everyone should hire a coach before trading. There are a wide variety of ways in which to get a trading education other than by losing money and learning the really hard way. Many books are available to guide the trader. Among them, my own "Trade Your Way to Wealth" and Dr. Alexander Elder's "Trading for a Living" can start a would-be trader on their way. DVDs and live seminars are available and many brokerages include excellent education on their website. The Options Industry Council and the CBOE are among many of the organizations that offer wonderful educational opportunities. In my view, people should avail themselves of these resources first and only after gaining some education should they even think about beginning to trade.

As I have written before, after first gaining some education one can then gain some experience without putting real money at risk by paper trading. I know paper trading isn't the same as trading real money because the same emotions are not involved, but paper trading does permit the trader to learn a strategy before exposing his emotions to real money trading.

Trading is a very high risk endeavor. Good sense would seem to dictate that we learn to appreciate the risks specific to what we are doing before we actually undertake them. Few do, and those who don't can be expected to have an exceedingly short trading life expectancy.

Good Trading!
Bill Kraft

Our Success Trading service delivers quality trading ideas for the elite investor that has the financial wherewithal and market nimbleness to profit on small moves in a stock's price. Become a member and you will be provided with email and/or PDA alerts intended to provide you with the opportunity to make many, many profitable trades.

Here is a play from the Success Trading Group:

Verizon Communications Inc. (VZ)
Our Success Trading Group members scored another winning trade this week when we closed out a position in Verizon Communications (Ticker: VZ). We are watching several stocks and are looking forward to trading next week.

Have a great weekend and we'll trade next week.
Success Trading Group Team

Our Option Trading Service is for conservative traders that understand leverage principles and enjoy the challenge of options trading. We focus on powerful option trading strategies that place volatility and momentum in your favor. And we pride ourselves on always minimizing our losses!

The Option Trader service utilizes standard trading in Puts and Calls as well as strategies using Leaps, Straddles, Credit Spreads, Calendar Spreads, and Naked Puts. But no matter how sophisticated a strategy may be, we ALWAYS know our downside potential on every trade.

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

QUALCOMM Inc. (QCOM)
QCOM is a stock that I have found over the years provides opportunities fairly frequently for both bullish and bearish trades. I currently have a spread and on Friday opened the second leg of that spread by selling the Jan 45 calls for $1.23 a share. By holding a long position in the Jan 35 calls, I have been able to sell and buy back calls fairly frequently to bring in income and reduce risk in the long leg. I am looking for a bounce up to buy to close my short leg at a profit. A bounce up from support could also provide an entry to buy some in the money LEAPS calls as well.

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