Today's Quote: “Take calculated risks. That is quite different from being rash." General George Smith Patton, Jr.

Are you new to trading? You probably did the smart thing. You read some books, or maybe you viewed some DVDs. Perhaps, you attended a seminar or two (or three?). So now, you are all ready to trade, right?

Well, it depends on what you mean by trade. At this point, you are like the intern, fresh out of med school. Is the intern ready for brain surgery? It is likely that despite all the education you have received so far, you will start by losing. You will realize that you applied a strategy wrong, you will make a mistake getting into something, or you will miss your stop on something. You will find that your trading plan needs adjustment (you have a trading plan, right?). The only question is, during this time, do you want to be losing a little money, or a lot of money?

We suggest that when you feel ready to pull the trigger on your first trade, when your trading plan is set to perfection, when you are knowledgeable in the strategies you want to play and in the software that will execute your trades, that you start off with very small risk amounts. If that sounds boring and easy, why not just do it for a few days until you prove to yourself that you can make small amounts of money? If you cannot do it, then do not advance to higher levels of money. This is exactly one of the concepts that our VCM Proprietary traders use.

Continue to do this to work out the mistakes. You should trade with light shares, or stocks with very tight stops. Therefore, you lose small change on any bad trade. You will be amazed how much harder it is to trade with ‘significant’ money on the line. Again, do not move up your share size or loss limits until you prove your success. Set up parameters that determine what ‘success’ is at every level.

Why do this? Simple. You will likely lose in the beginning. The only question is, lose a lot, or lose a little? Do not advance until you are trading well. There is a common statement traders make while practicing in the beginning. If they start out losing small money with small share size, but are not improving, they will decide to ‘move up the share size’ to make back the money they have lost. They are losing, but they want to make money quicker. Think about the logic in that.