How to Shortcut the Emini Trading Learning Curve by 3 Years or More
Many beginner traders asked for shortcuts to get them to profitability. One very interesting common theme among them is the amount of time one can save from the learning process. It is well known that majority of people who try to day trade Emini S&P ended up giving up the attempt. And those who actually make it to profitability often take many years of struggle before becoming profitable. From my observations of many traders, it is actually possible to shave several years of painful struggle if they attempt day trading Emini from a well planned approach. Here are the things you can do to shortcut the Emini trading learning curve by 3 years if not more.
Note: This article is equally applicable to forex and other major financial markets.
Knowledge Acquisition vs. Hacking Your Way Through
Normal people tend to start working on a job and learn along the way. After all, that’s how it works with most of the jobs available. This hacking your way through approach works alright until the job has special requirements like being a doctor or an electrician. When the job requires special knowledge and skills before you are qualified to do it, we would study to acquire the necessary skills and licensing.
Yet, many beginner traders do not do that when it comes to trading. They often learn their ropes with real money from their trading accounts as if that is the learning fees. This makes the cost of learning to trade becoming very expensive, so expensive that the chance of surviving the learning curve becomes remote.
Day trading Emini is not rocket science. It does not require you being a genius in math or science. As a start, you need solid background knowledge in chart reading. I recommend reading my Art of Chart Reading series since I have backtested the patterns and other techniques extensively against Emini historical data. To enable ourselves to fully embrace the use of chart reading techniques, it is often a good idea to understand why markets move the way they are. If you are one of those people who needs the answer before you can commit yourself to the craft of chart reading, read my book Special Theory of Price Discovery.
By learning chart reading in a structured way, you would have saved yourself months of agony staring at the charts guessing if you see the correct pattern or not.
Guided Observation vs. Unguided Screen Time
Similar to learning anything with skill mastery component, it is very difficult to master day trading by self learning. After reading several trading books or attending some trading courses, the knowledge acquired will not fall into place immediately because of the disconnect between the knowledge and the real-time ever changing environment in trading.
Many beginner traders choose to sit in front of their computers staring at the screen and focus on every tick arriving. Although they are very focus on the price changes, they do not really learn anything useful because their experience is unguided. Their minds would develop sensory based patterns that is more likely to be harmful to their trading decisions than helping them to develop proper analysis.
I am not saying that it is impossible to learn to day trade Emini S&P all by yourself. What it takes is the willingness to not consider trading for several months and be as objective as possible in reading the charts. Slowly, your brain will develop the proper connections between the chart reading framework you have learned and the charts unfolding in front of your eyes.
Guided observation is the practice of listening or reading the opinions from an expert while seeing the same evidence (i.e. your charts) unfolding in front of you. For day trading, it means someone proficient in trading the Emini S&P telling you what he or she sees in the charts in real-time based on the framework you are already familiar with. This gives you the advantage to connect the knowledge in your head with the reality you are dealing with. Once your brain forged the connection, you will be able to apply what you have learned in similar situations.
Guided observation can cut down the time it takes to transform your knowledge into analytical skill significantly. This is the purpose of my real-time commentary service, to guide traders in improving their day trading analytical skills.
Work From A Simple Plan vs. No Plan
The moment you have developed your analytical skill somewhat, the urge to trade will increase. It is time to start with a simple trading plan and learn to stick with your trading plan. It is a common mistake made by many beginner traders to not having a trading plan in place before they start trading. Having no plan in place is often the deciding factor for which the traders cannot make it to profitability.
When you day trade without a trading plan, you put yourself in the situation where you have to decide everything on the fly. Since day trading often requires you to make complex informed decisions, you are forcing yourself to use your brain at overdrive all the time in order to keep up with the hectic trading environment. May be you are one of those people who can do that quite proficiently. For those less fortunate people without your brain power, or when you burnout your brain, you will not be able to make good trading decisions quickly. Just the mistakes alone will wipe out your account.
By having your trading plan in place, you delegate the difficult tasks of the type of trades you can engage, the kinds of trading conditions you know you are good at, the position sizing and risk management into simple to follow rules. Many people think that if they have a trading setup that often works out for them it is their edge in trading. They are wrong. The real edge in day trading is the well organized trading plan for which you can execute comfortably and consistently.
By having a very simple trading plan in place to kick start your trading can reduce the time necessary to get you to profitability. It is also essential in getting you to trading success.
Deliberate Practice with Evaluation vs. Toying with Simulators
Before you use real money in day trading, it is important to practice with trade simulators. Again, beginner traders who tried to learn day trading on their own often make the mistake of toying with their trade simulators. Trade simulator is a great learning tool if used properly. If it were used like a toy, you will not benefit from the simulation experience.
When trading with a simulator, it is important to set the simulator to start with trading capital you planned to put into the trading account. You will also set it up in a way to reflect the expected commissions and other market conditions like potential slippage in filling your orders. In other words, you want to make it as realistic as possible.
Once the simulator is setup properly, you can start to engage in deliberate practice where you learn to follow your trading plan and order management in real-time. It gives you the benefit of learning the ropes without losing real money for no good reasons. But most important of all, you or your mentor gets to evaluate your performance objectively.
The information revealed by your simulation trading results are very useful. Since you can tell the kind of trades you took, you will be able to learn from the trade records if certain type of trades are compatible with you or if you have certain weaknesses in your real-time analysis. The evaluation of your trading records can help you fine tune your trading plan.
The training you go through with trade simulator will help you build confidence in your trading approach if you use it long enough and serious enough. This is very important because casual use of the simulator will not give you this feedback. The use of simulator also remove the fear factor that often affects traders’ decision making when they are trading with real money. With enough deliberate practice, your reaction to your trading setups will become second nature and that will carry over to real trading with minimal influence from fear and greed.
Deliberate practice helps one to identify trading mistakes and problems with the trading plan early in the development cycle. This means much less time wasted on the daily struggle to turn some profit from trading real money that can overwhelm your mind and stop you from focus on what matters most – improving yourself and your trading plan. Deliberate practice can reduce months if not years from a trader’s training period.
Mastering the skills necessary to day trading Emini S&P successfully takes time but you can shorten the total timespan significantly if you are mindful of what helps you to improve yourself and what activities are wasting your time. The four stages approach to learn to day trading Emini S&P explained here can be adapted to personal situations depending on where you are in terms of your current progress in trading. We know that we are all unique, hence it is important to develop your own way in dealing with the challenges you face in learning to trade. The path towards day trading success depends heavily on your willingness to discover what works for you and put those things into good use.