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After learning something new, it is always a
good idea to practice first before actually doing it. However, if the practicing
process drags on for too long, it will have negative effect, in my
opinion.
When I attended Investools live seminars, I was
surprised to see a good number of traders were still paper trading
despite being in the program for a relatively long period of time. I
remembered sitting next to a girl who had been attending seminars for
almost a year. She told me her contract will expire shortly and after
that; she will look for some one who is willing to sign her up as a guest
and continue her study. She took beautiful and organized notes in her
manuals. She was learning the way college students were learning in their
class. In my opinion, it is not the way to learn how to trade. In
college, our goal is trying to avoid mistake, achieve a perfect score and
get an A after the final exam. In trading, we learn from our mistakes and
improve from there. Our goal is trying to get a P after we exit the
trade.
There is a saying we can’t learn how to swim or
to bike by reading alone. I like to add trading to that list. We learn
how to trade by studying, practicing and doing at the same time. We will
undoubtedly make mistakes but we will also learn from our mistakes and
make our adjustments accordingly. Fear is also a factor. We will never
learn how to conquer our fear by paper trading. It needs actual trading
to control our emotion and our fear. I was really surprised to find out
she was still paper trading despite being in the program for almost a
year. When I asked her for the reason, she told me her main reason is the
fear of losing money in the market. She always wants to be in perfect
situation before trading with real money. Some traders are very relaxed
when paper trading but they become very nervous when real money is
involved. Emotion is the key. I think we can never be a good trader until
we control our emotion and a good way to test our emotion is by trading
with real money. As one Investools instructor put it this way: Knowledge
without action is merely an entertainment. There is one popular tricky
question: There are five birds on the tree, three decide to fly away, and
how many birds are still there? Instinctively, we think the answer should
be two birds. However, the real answer is there are still five birds on
the tree. Three birds only decide to fly
but they have not acted yet. Until they
act, every thing remains the same.
I have the luxury of being a trader before
attending Investools program so I basically bypass the paper trade
process. I only paper trade when new concept is introduced such as the spread
trade. As soon as I am familiar with the concepts and the strategy, I do
it with real money. I started out with 1 contract to boot up my
confidence and to test my emotion control. Doing real trade with 1
contract is much better than paper trading 100 contracts in that aspect.
My trading partner found that out after one month of paper trading. She
told me she actually learned more after she traded with her own money.
She wants to combine her knowledge with action because she is fully aware
of the fact that knowledge without action is merely an entertainment.
To close this article, I like to
quote an old Chinese wisdom:
百聞不如一見。
“Hearing it a hundred
times is not like seeing it once.”
And I like to expand it with two
more:
百見不如一試；
百試不如一幹。
“Seeing it a hundred
times is not like trying it once.”
“Trying it a hundred
times is not like doing it once.”
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