“The markets are not merely an intellectual exercise”
We’re in the middle of the 12 Days of Elliott, one of our most popular free events of the year, which gives you 12 free resources over 12 days.
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But I want to show you one insight from one of the 12 Days resources which is based on Robert Prechter’s classic report “What a Trader Really Needs to be Successful.”
One of the topics discussed in that report is paper trading. Most traders know what that term means, but in case you’ve never traded in financial markets and are unfamiliar with it, paper trading is simply buying and selling stocks without using real money.
This can be done through trading simulators or computer programs which use real-time market data. The idea behind these simulators is that a trader can practice trading without risk.
However, as Robert Prechter explains in “What a Trader Really Needs to be Successful,” paper trading is far different than real-world trading:
Paper trading is useful for the testing of methodology, but it is of no value in learning about trading. In fact, it can be detrimental, by imbuing the novice with a false sense of security in ‘knowing’ that he has successfully paper traded the past six months, thus believing that the next six months with real money will be no different. In fact, nothing could be further from the truth. Why? Because the markets are not merely an intellectual exercise. They are an emotional (and in extreme cases, even physical) one as well.
The bottom line is that there is virtually no substitute for the School of Hard Knocks.
Having said that, Robert Prechter says that a successful mentor – someone who’s been in the trading trenches and has learned valuable lessons — can greatly help with a trading novice’s learning curve. Many successful traders are happy to share their hard-won knowledge and novices would do well to watch these successful traders in action – observing what they do and, perhaps more importantly, what they refrain from doing.
As an aside, Robert Prechter wrote “What a Trader Really Needs to be Successful” a couple of years after winning the United States Trading Championship in 1984.
“What a Trader Really Needs to be Successful” is just one of the resources you can access for free during the 12 Days of Elliott.
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