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Pros and Cons of Formal Day Trading Education

Pros and Cons of Formal Day Trading Education
June 06
20:43 2011

As day trading has become more accessible through online and electronic resources the demand for formal training has increased significantly. In the world of day trading, there are many institutions and individuals who claim to possess the golden compass to a profitable career. Day traders will often pay upwards of $5,000 or more for high quality education. Before you decide to invest in formal day trading education here are some pros and cons to consider.

The most important advantage of formal education is the opportunity to learn from an expert’s point of view. The experience and knowledge of a seasoned day trader is invaluable. They have had the chance to test and develop specific strategies and styles over time that they are willing to share. You can dramatically reduce the day trading learning curve if you are able to find a master trader who is also a very good teacher or mentor.

The disadvantage of choosing to learn from an expert is that you are only learning one method of day trading. No one has a monopoly on successful day trading strategies. There are many different methods to extract money from the market. There is a possibility that the particular method or strategy you choose to invest in may not work for you. In that case, you face the risk of losing money or having to invest in re-educating yourself.

Another advantage of formal training is the opportunity to develop within a community of day traders. Most day trading education is presented in the form of workshops, webinars or forums where you can meet other day traders who are at your same level. With the right people, the accountability and support this community of peers can provide can be very beneficial. You can draw encouragement and learn new things from hearing about others’ experiences and development process.

The disadvantage of being surrounded by other traders is that you run the risk of picking up their bad trading habits. The constant exchange of ideas means that you will eventually come across faulty information.

The third advantage of formal education in day trading is that you can receive all the information you need to know in one place. The fundamental framework and knowledge for day trading is vast and very fragmented. This is to be expected since there are as many strategies and styles as there are different instruments to trade. Formal training is one method of packaging all the specifics in one place.

However, the denseness of training material can also lead to information overload. In most circumstances the material presented in day trading education is often not digestible or simply irrelevant.

After weighing the pros and cons of formal day trading education, the decision should ultimately be based on what works best for your style of learning.

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Today’s Day Trader Strategy

One of the most common and destructive mistakes a day trader makes is to simply not follow their plans. Temptation, an “obvious signal”, and just simple greed can lead traders down the road of being undisciplined. This is without a doubt one of the most dangerous mistakes, as traders will often lose more than they originally planned as they raised their amount risked.