15/09/2009 – Prechters Tips on Trading Successfully

Bonus tip: Find a mentor.

That trader who won the championship in a record-breaking fashion is Robert Prechter, the founder and
president of Elliott Wave International. Once you think you’ve mastered his 5
tips for how to trade successfully, then the best thing to do is to
find a mentor. In this excerpt from the book,
Prechter’s Perspective, Bob Prechter discusses how sitting at the elbow
of a professional trader can make all the difference in learning the trade of
trading.

Free
47-page eBook: How to Spot Trading Opportunities

Elliott Wave International has released part one of their hugely popular How
to Spot Trading Opportunities eBook for free. The eBook sells as a two-part set
for $129. You can now download part 1 for free. Learn
more here.

(The following Q&A is excerpted from Prechter’s Perspective,
revised 2004.)

Question: Has any specific trading experience decreased your
trading success?

Bob Prechter: Yes. My first trade in 1973 was wildly
successful, and I was hardly wrong in my first six years at it. Then I had a big
trading loss in 1979, and that taught me more than the wins. The best way to
develop an optimal state of mind for trading is to fail a few times first and
understand why it happened. When you start, you’re better off speculating with
small amounts of real money. Using larger amounts of money will bankrupt you
early, which, while an excellent lesson, is rather painful. If you want to be a
trader, it is good to start young. Then when you lose your first two bundles,
you can gain some wisdom and rebound.

Q.: It sounds painful. Is there any way at least to reduce the
hard knocks?

Bob Prechter: There is one shortcut to obtaining experience,
and that is to find a mentor.
 
Q.: Did you have a mentor?

Bob Prechter: In 1979, I sat with a professional trader for
about a year. The most important thing he taught me was to keep trades small
relative to your capital. It reduces the emotional factor.

Q.: How would one select a mentor?

Bob Prechter: The best way to select one is to find a person
who is doing exactly what you would like to do for a living, then get to know
him well enough to ask if he will tutor you or at least let you watch while he
works. Locate someone who has proved himself over the years to be a successful
trader or investor, and go visit him. Listen to him. Sit down with him, if
possible, for six months. Watch what he does. More important, watch what he
doesn’t do. Finding a guy who knows what he is doing is the best lesson you
could ever have. You will undoubtedly find that he is very friendly as well,
since his runaway ego of yesteryear, which undoubtedly got him involved in the
markets in the first place, has long since been humbled, matured by the
experience of trading. He will usually welcome the opportunity to tell you what
he knows.

Free
47-page eBook: How to Spot Trading Opportunities
Elliott Wave
International has released part one of their hugely popular How to Spot Trading
Opportunities eBook for free. The eBook sells as a two-part set for $129. You
can now download part 1 for free. Learn
more here.