The first thing that most people want to know when they start out is, “How long will it take until I am making money?”.  I can't answer that.  Some people are making great money after the first month, and some people take much longer.   That's the harsh reality of trading.

       There are a couple things I have noticed through the years, that set the winners apart from the losers.  The first is an ability to take things at face value and keep stops.  I know how simple that sounds, but as you progress through the learning process you will find it is far more

complicated than you ever imagined. 

        It requires humility.  Not everyone can admit, “I was wrong”, without a moment's hesitation.  It requires maturity, it requires resolution, and it requires a calm control over one's emotions.  Not everyone can remain logical and pragmatic when fear, greed, and hope have you in their powerful grip.   So how long does it take to learn that kind of self-awareness?  Some children are wise beyond their years, while some people go to their graves without ever knowing who they are.  It's really up to you.

       The second thing that sets the winners apart from the losers is a structured, disciplined, systematic approach.  They choose a method, stay focused, and stick with it.  That I can help you with.   It is my hope that this education plan will offer you a guideline and help you on your way.

      This plan is set up in five phases.  You will need to go through each one at your own pace.  How much time you spend at each phase is up to you, and will depend on a lot of things like your aptitude, how much time and energy you put into your education, and your level of self awareness.  Do not progress to a higher level until you have achieved a satisfactory level of competency, or successful trading percentages at your current level.

       Later, if at any time your percentages drop, you find yourself in a losing streak, or you suffer a large loss or lapse of discipline, take one step back until you have again built back up your competency and confidence.  

And as always, let me know if you need help or have any questions.

Shawn Wolff (aka Gimmie) Gimmie@mtrader.com

 PHASE ONE - EXPLORATION AND OBSERVATION

 In this phase you should be:  learning the theories and methods of trading, becoming accustomed to the tools you will be using, and starting to observe the intra-day movement of stocks.

 A.   Trading Platform

 If you are serious about trading and want to be effective in a highly competitive market, you are going to need professional tools.  This includes a direct-access broker, and a professional-level trading platform that provides real-time streaming stock quotes and charts. 

 I use RealTick by Townsend Analytics www.realtick.com so many of the charts you will be seeing in the room come from that platform.

Other commonly used quote services:      http://www.esignal.com/ 

                                                                              http://www.pcquote.com/ 

                                                                              http://www.cybertrader.com/

1.   Read your trading manual from cover to cover, and complete any tutorials provided with  

      your service.

2.   Learn and practice setting up a Level One quote screen.

3.   Learn and practice setting up your charts.

4.   Learn how to execute orders.

5.   Learn the differences between the different execution routing systems, their rules and

      limitations. Your broker should have detailed information on this, and be willing to help in

      any way you need.

B.   Observation

1.   Choose three focus stocks that have high average volume and a consistent intra-day

       range.  Suggestions: QQQQ, INTC, EBAY, AAPL, BRCM, AMZN, KLAC

2.   Spend time simply observing your focus stocks and how they move, paying attention to

      the pace of trading activity and how it changes throughout the day. Track the total volume,

      noting the times of day when the volume is low, and the times when it is high.

3.   Track the price activity of your focus stocks throughout the day. Focus on the current Bid

       and Ask, and note the size of the “spread” between the Bid and Ask. Focus on the

       current price in relation to the High of the Day and the Low of the Day. Note which times

       of day direction changes occurred and the size of each swing.

C.   Finding News Momentum

1.  The market and individual stocks are often propelled by news, so it is important to keep up-

      to-date. Start each day by looking for any potential market catalysts, market-shaking

      news, or upcoming economic reports. You can find this information on any financial

      television channel like Bloomberg or CNBC, or you can find the information online at a

      financial site like http://money.cnn.com/ or http://www.marketwatch.com/

2.    For each of your focus stocks, you should be aware of any news or upcoming earnings

       reports affecting the stock. You can find that information and research your stocks at

       http://finance.yahoo.com/

D.  Reading and Understanding

2.    Ask questions! If there is anything you do not understand, do not hesitate to ask. There

       are no “stupid” questions. The more actively involved you are, the more you will learn. So

       speak up!

3.   Network and find successful traders who are willing to offer tips and help. Find others just

      starting out with whom you can compare notes.

 PHASE TWO - APPLYING THEORY

 In this phase you will begin to bring theory into your observations by learning the variables that affect each stock's movement.   You will also begin to look for opportunity in a trade, and entry and exit points.  It will be easier if you focus  on no more than one or two stocks at a time.   I find this to be the most neglected phase.  Often traders jump right into trading on paper (or even real trades!) before they really understand what they are looking for. Remember, your future trading success depends on building a proper foundation.

A. Start a Journal !

1.  Education Journal. 

If you take your education seriously, its important that you go about this in an organized, methodical, structured, disciplined way.   So keep notes on everything you are learning.   If you write it out in your own words, it will cement it in your mind.

2.  Trading Journal.

As you start to look for trading opportunities, you will want to track them in a journal.  This will be your most valuable resource to track your progress.

 B. Learn and practice the following:

1.   Learn the three parts to Gimmie's Trading System: Anticipation, Risk vs. Reward, Confirmation

2.   Learn the Catman System for finding direction changes.

3.   Learn to set a stop using the Risk vs Reward Formula.

4.   For each of your focus stocks, complete the Pre-Market Preparation.

5.   Create a "Checklist of Trade Criteria", and run through that list for every trade you are

      considering.

 PHASE THREE - PAPER TRADING

In this phase you will begin simulated trading, or paper trading.  Using the skills you learned in Phase Two, begin determining entry and exit points for your trades, and recording the outcomes in your Trading Journal. 

Paper trading can be done using either execution simulation software, or by estimating each entry and exit.  If you are estimating, you need to wait a full 20 seconds and take the price you see at the end of the 20 seconds, to make your simulation realistic.  Watch the clock rather than counting aloud, or you will have a tendency to count too fast.

The more realistic your paper trading, the more you will learn from the process, so take this seriously.  Do not get sloppy and make trades on paper that you would never consider if they were real.  And don't get cocky.  If you cheat or exaggerate, you are only cheating yourself.  I recommend keeping your records in points during this phase and focusing on success rates, rather than dollar amounts.

It is true that paper-trading lacks that element of emotion that is often responsible for early losses, but it is still the best preparation you can get before going live.  You want to make those inevitable initial mistakes on paper to preserve your portfolio as much as possible.   Posting your trades in the room is highly recommended and often helps add some emotion.  Posting publicly adds an element of peer pressure, helping you to define your trades and keep your stops.  It also allows us to help you if we can see what you are doing.

 Do not overlook this phase and start off trading real money.  This is a common mistake that can have disastrous results on your portfolio and confidence.  You need this time to build good habits and learn to apply the methods.  Go on to the  next phase only after you are paper trading at a very high success rate.

 PHASE FOUR - TRADE WITH SMALL NUMBERS OF SHARES

 When and ONLY when you are comfortable with your overall paper trading percentages, should you move on to this phase.

 During this phase you will begin real executions.  Do not trade more than 100 shares to start off with.  Trust me on this one.  It will take a period of time and adjustment to get used to your execution system, to find the correct entry and exit points, and to deal with the unexpected flood of emotions that most often accompanies this phase as you lay your money on the line.  Your percentages will drop off at first from your paper-trading percentages, so make sure that your

 paper percentages are high before you go live.  After you have adjusted though, and gotten used to executing, the good habits you built up on paper will kick in, and your percentages should again climb.

 I would mentally set aside an amount that you are prepared to spend during this adjustment period.  Consider this part of your business start-up costs, and it will greatly relieve the pressure during this critical phase.  Remember, your priority during this phase is building good habits while preserving your portfolio.  If you are serious about making a living trading, this is an essential step.

 PHASE FIVE - TRADE WITH LARGER NUMBERS OF SHARES

 Once you are trading 100 shares at a high success rate, move gradually into larger shares.  There will more than likely be another adjustment period with larger shares, as the emotions that come with a larger risk intensify, but the good habits you built with small shares quickly take over.  Once you have accomplished this, you are on your way!

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