Warren Buffett says “risk is not knowing what you are doing”. Many people are investing blindly, not knowing the right way to do it and just plunge into the market. Most of them crash and burn. Hence, get an education. Rich dad says you need to be financially literate. Let’s say you are interested in learning to trade, what are the ways to get a trading education?
Join a proprietary trading firm
I think one of the best way to learn trading is to join a firm as a proprietary trader. In fact, I noticed most of the top traders in the world began from a trading firm. This isn’t surprising since one would receive proper education on trading, usually from someone experienced and “battle proven” to teach you the ropes. Moreover, the high octane environment would keep you on your toes all the time. It is a stressful place but it would bring the best out of you. Diamonds are made from high pressure over a long period of time. This is the best place to be if you are serious in trading. Prop traders get to trade the firm’s money but the firm would take part of your winnings. Another good thing is that they would provide all the infrastructure and setup for you to start trading immediately. But what would it takes for you to be a prop trader? Some firms take in only experienced traders but some make take in totally green ones. It depends on the firms. Locally, you can try brokerage houses like Kim Eng and Phillip Capital. I know SMB take in totally new traders but for a fee.
Take up Financial Engineering
Actually I disagree that financial engineering would really teach you the proper way to trade. But Dr Brett thinks that Kent State University has a good program to equip the students with the necessary knowledge and an edge over others. What I know is that you would be taught probability, financial modelling and mathematics. There are only Masters degree available for financial engineering. If you do not wish to venture into US, you can take up the Masters in NTU and NUS. Once you graduate, you can be called a quant. With this Masters, I would think you are likely to end up working in a bank rather than trading. If you do, please do not build structured products like Minibonds.
Attend trading courses
If you read the papers, you would notice there are a bunch of trading courses out there. All claim to be able to make you rich. Let’s not doubt whether it is genuine. Even if the teacher becomes a millionaire from trading, that does not mean you can do it too. Trading is very, very difficult. Just like anything in life, you need to put in committment and effort to get the results. If you are not dedicated then do not trade. Do not assume that by attending the course you would be able to earn a living from the market. It is not so easy. The course is only a beginning, and the road ahead is way, way longer than the course duration. It is not what you learn that is important, but what you do with the things you learned is more crucial. Find out more about the courses from jmot’s blog.
[Free Ebook] How should you invest your first $20,000?
We asked 14 Singapore finance bloggers to share what they would do if they could go back in time and invest their first $20,000. They can no longer rewind time, but you can learn from their experience and hopefully start with a better footing.
Find a good mentor
Another very good way to be successful in trading is to find a good mentor who walks the talk. This is not easy to find a mentor but as the Zen sayings go, “when the student is ready, the teacher will appear.” With good attitude and committment, your chance of finding the mentor that agrees to guide and groom would improve. Like attracts like in this world. If you notice most of the successful traders, they have a good mentor or teacher to teach them. Just like the world’s best violinists were taught by legendary teachers. Likewise for the world’s top sports men and women, they have good coaches. I think you get my point.
I just want to repeat the point. You must be really interested in trading before thinking of pursuing it. Do not treat it as a money machine because it isn’t. It is just like any other sports or profession. You need to put in the hours to be good. If 10,000 hours scares you, look for other ways to grow your money.