The internet provides a massive resource for gathering information on brokers, markets, strategies and financial education. This is a positive thing, as it allows almost anyone with patience, discipline a strong work ethic to compile a trading system that works for them. With so much information though–and misinformation–it is important to remember that no one cares about your success as much as you. With this in mind, here are some things to remember as you try to make yourself a better trader through online research.
- Trading articles provide a snap shot on a particular theme. While an article may be particularly compelling, not all relevant information can be included in an article. How to exactly implement a trading strategy in real time could take an entire book to explain; articles give the bare bones. It is then up to you to fill in the details, test the material yourself, and see what you can add or take away to make the information in the article relevant to your trading.
- Online authors will usually have their own hidden biases. I, for example, am a trend trader and make very few trades when price ranges are present (see: When a Trend is Trustworthy, and When It Isn’t). Therefore, most of my articles are geared toward trend followers, although this may not always be indicated explicitly. Therefore, pay attention to the language and examples the author uses. Through this, decipher what type of trader they are, and who their target audience is. This should be clear, but sometimes it isn’t. This is why personally testing anything you read, before incorporating it into your trading, is a wise decision.
- If you are one of the lucky traders who has found a trading mentor, even the mentor won’t have the same interest in your success as you do. I am very passionate about helping traders, but their need to put food on their table will (or should) always be stronger than my passion. Therefore, you are likely to get out of the relationship what you put in. As a mentor, I expect my students to ask questions and work hard; if they don’t, I am not going to push them. If they are unwilling to put in the effort, I won’t force it, and without a lot of effort success is unlikely. It is up to the student to be hungry for knowledge and be willing to implement what is taught–a mentor can’t force this to occur, only the student can.
- What works for someone else, may not work for you. This is a tough one to understand for many folks, after all “a winning strategy is a winning strategy,” isn’t it? Not really. A strategy depends on your ability to implement it. I get bored easily and therefore like to trade a lot, so I prefer strategies that provide lots of trade signals so I am constantly analyzing and engaged. Not everyone is like that though; some traders prefer a more stress-free environment with very few signals or trades. Therefore, always keep in mind that just because something works for someone doesn’t mean it will work for you…similarly, something that didn’t work for someone else MAY work for you. This brings us the final point…
- Finally, as indicated before, test everything you read before using it with real capital. This means testing it in a demo account, making sure you can implement what you learned in real time, and that it is useful to your trading style. For example, when I learn or create a new day trading strategy which I believe I will use on a daily basis, I demo trade it every single day for months (usually 4)–that is usually 300+ trades–before deciding to incorporate it into my daily trading plan. This way I know how the strategy performs, its weaknesses and strengths, as well as my ability to implement the strategy.
There is a lot of information and misinformation out there. Ultimately it is up to you filter through and find what is best for you. Do this by understanding that most of what you find online is just a piece of the puzzle; you’ll then need to put together a bunch of pieces to come up with a winning game plan. Test everything out yourself using a demo account, making sure that you can personally act on the advice given. If you can do it in a demo account, you should be able to do it with real capital, although you may need to work on trading psychology to do so (see: Improve Your Trading? Time to Go Mental). This may all sound like a lot of work, yet that dedication is what separates pros from the unsuccessful.