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Market Tuition versus Educational Tuition (The Simple Truth)

Capt'n Calico (Captn_Calico)
Mar 14 2010 at 11:11
posts 7
After reading quite a few posts from people new to Forex trading and regurgitating the same material over and over again I decided to post a blog where I can refer new traders to read this simple truth.

There are two types of tuition that every trader will pay. No trader is excluded and no trader is immune. This is a simple fact of life and the sooner one understands and accepts this fact the better off they are in the long run.

The first type of tuition is market tuition. This is the money paid directly into the markets be it from holding on to a losing position for far too long all the while hoping the markets will turn around, or not understanding the psychologies of the market and when they see the market push very strongly in one direction the emotions kick in and you open a trade either long at the top or short at the bottom. There are many other reasons one could pay market tuition, but in short it is paying money into the markets that 1) doesn't need to be paid; and 2) goes a lot farther when put towards educational tuition.

Do not get market tuition mistaken for an expense trade. An expense trade is a trade that was set up properly (meaning you had an edge), executed properly, but due to the randomness of the markets ended up closing at a loss. For emotional and psychological reasons we do not call them failed trades as the term failed carries with it a sense of failure and subconsciously sends the wrong message to the brain. Every business has expenses, and trading is no different. So when we have a trade that was set up properly, executed properly, yet still closed at a loss, a professional trader considers it a standard business expense. It's all part of doing business, and as any business professional will tell you... it takes money to make money.

The reason why 95% of all traders fail is because either consciously or subconsciously they choose to pay market tuition over educational tuition. Most traders don't even realize that they are paying market tuition as they just see it as a loss. And these persistent traders who come back time and time again dumping more capital into their account only to repeat the process until they reached their 'uncle' point and give up trading Forex completely.

If you were to ask those 95% of traders who have given up trading how much money they actually spent on market tuition, the numbers would astonish you. It far outweighs the amount of money spent on educational tuition by a factor so big it will make your head spin. The reason for this is simple.

1) There is very little to gain by paying market tuition, (maybe) using a site like this to journal your trades and analyze why you're losing capital, only to make adjustments to try to stop the bleeding and repeat this process over and over again.

2) We are emotional creatures, and our emotions do not fare well when we are losing money, in fact our emotions start to work against us which only makes us lose money at a faster rate.

I know when I blew up my first account I was devastated. I had to go through the five stages of grief and loss as it felt just like I had lost a loved one. It was at that point that I began to scour the Internet looking for any and every Forex trading material I could get my hands on. I spent many a nights reading through forums, and online e-books trying to figure out a winning strategy. The problem is that there is just too much material out there and none of it gave me confidence or an edge in trading. What worked one week failed the next, and emotionally I was at the point where I was scared to pull the trigger. I'm sure they're traders out there who can relate to this.

It wasn't until I decided to spend some capital on my educational tuition that I became a professional trader. By professional trader I mean someone who can read charts, understand the psychology behind the price action, identify a trade set up, and execute with confidence all the while attempting to keep emotions out of the process. I understand money-management, and how to stay in the game for the long term. I now know when to get in a trade but more importantly when to get out of a trade. This goes for both profit and expense trades. In short, a professional trader has time-tested setups that when followed give any trader a proven edge in the marketplace, and the experience and confidence to operate an odds based business successfully.

Educational tuition is the money spent with a professional trader who has been in your shoes, and made it through the heat and pressure only to come out shining like a diamond in the jewelry store. Educational tuition is far more valuable than market tuition because I learned from the mistakes that my mentor has learned from without spending an ounce of market tuition to get this knowledge. In fact chances are my mentor learned this knowledge from his mentor without spending his hard-earned capital on market tuition, as this knowledge is handed down from generation to generation as the student becomes the mentor and proceeds to pass down all of his accumulated knowledge to his student's, as the cycle continues.

Now keep in mind that this only works when you have a mentor who is focused on the success of the student. There are far too many people selling 'teach me to trade' packages / books where their whole business model is focused on selling units. The only time the success of the student comes into play is when it's time to pay for more classes / books or more mentorships, and in that sense they actually don't want the students to succeed because then that closes the door on their business model. They would rather sell the fish, or sell material all about the fish, rather than truly teaching how to fish.

I was lucky enough to find a mentor who truly cared about the success of his students, and was willing to stand by it with a guarantee that said he would stay with me until I became successful. He allowed me to split the educational tuition into two parts. Half was paid to start the learning process, and the other half was to be paid out of the profits that I would make under his tutelage. I thought this was pretty good because it showed that he was confident in the material he was teaching -- confident enough to believe that I would become successful enough to pay the remaining 50%. It was sold to me as a four day boot camp, but was told that after the four days was over my learning and training was not -- in short it was a one time fee for a lifelong lesson that I would be able to pass down to my children.

Aside from the material that was taught, some of which I can honestly say I've never seen anywhere either online or in print, and all of which made perfect sense in the context of his simple trading style, I found the most benefit from the one-on-one approach. Unlike reading books or participating in forums, I was able to ask questions, clarify ideas and receive real-time answers in a way that made absorbing and comprehending the material far easier and more efficient than I ever could reading a book. If I didn't understand something it was explained in a different way using a different example that allowed me to fully comprehend what was being taught.

The market tuition that I paid to my mentor was about 20 times less than what I paid to the markets when I blew up my account. Had I known then what I know now, it would've saved me a lot of heartache and pain, a bulk load of money, and about 6 to 8 months recovery time, because when you lose six figures to the Forex markets it takes a while to recover emotionally. My account blew up because I didn't know how to identify when a trade has failed, and I was naive in thinking that with all the money I had in my account I could weather any storm the Forex markets blew my way, because the markets would always come back -- in short, I couldn't take a $10,000 loss up front, so there was no way I was going to take $100,000 loss in the middle, and as my equity dwindled down to the last $30,000 I remember thinking... well for sure it's got to turnaround now markets don't go in straight lines, only to be left with $1.42 by time all the dust settled.

Having traveled this path and climbed the highest mountain only to make over the top and down the other side to the promised land, I cannot stress strongly enough the benefits of using a portion of your capital and investing it into a one-on-one mentorship with a professional trader whose primary focus is the success of his student, as educational tuition as opposed to throwing hard-earned capital away, down the drain, as market tuition-- an exercise that bears very little if any fruit at all.

For someone who doesn't know how to professionally trade, it is only a matter of time before all of their capital migrates into the professionals account. Think of market tuition as the retail price, and educational tuition is the wholesale price with the understanding that even if you pay full retail price, there is no guarantee that you learn anything.

I have personally seen many Forex traders lose mind blowing amounts of money to the markets, yet when presented with an opportunity to learn one-on-one from a professional were too cheap and decided to pass (and this was before their accounts blew up). I'm sure deep down inside they regret that decision even though pride makes it difficult for them to openly admit it. It is far easier to spend a little money and a little time to learn upfront what really works from a professional trader and become a professional trader yourself than it is to waste a lot of money and a lot of time gambling in these markets taking a trial and error approach -- and a lot less expensive too.

If any trader out there is interested in becoming a more professional trader, and would like to invest in educational tuition (as opposed to market tuition) with a mentor who guarantees and is focused on your success as a trader, then please don't hesitate to ask me who my mentor is, and I will put you in touch with him.

-- Capt. Calico
As it is with running any business we make money by buying wholesale and selling retail.
Matthew Kirkland (Kirkland)
Mar 22 2010 at 20:41
posts 1
Irwan310 (Irwan310)
Jun 04 2010 at 14:37
posts 1
Simple truth indeed!
Grid the trade/s blindly!
Jebus Krust
Nov 02 2010 at 12:49
posts 2
Simply put, this is why I subscribed to this forum. Posts like this bring value and insights about the real forex deal.

Thanks a lot for your contribution.
Paul Ng (paulng)
Nov 03 2010 at 13:33
posts 43
Yup. great post!
"The first rule of forecasting should be that the unforeseen keeps making the future unforeseeable." - David McCasland (January 5,2012, Our Daily Bread)
Nov 03 2010 at 14:25
posts 423
thanks for your input.
Feb 14 2011 at 18:34
posts 1
Hey C!
I met with Scot last Mon. He didn't respond to my emails, and was a no show for a meeting today. Any thoughts?
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