A defensive approach to learning how to trade or improve your system will benefit you for life. If you decide not to take a defensive approach, you might get lucky for a short period of time, but you will have a better chance making a living gambling in Las Vegas than you will trading for a living.

Results Are Just Around The Corner
Getting results must start in mock situations. Too often traders want to obtain results without testing or getting a feel for the tools they use. I will not beat around the bush, such action is based upon greed and stupidity. As a trader, you can improve your results 100 fold by testing and understanding how an indicator works, before you place live capital on the line.

This type of testing is called back testing and paper trading. When back testing, the trader is looking to see how the indicator reacts and why it reacts the way it does. Historically studying the indicator's results will allow the trader to grasp a handle on the characteristics of the indicator and historical success rates, which do not equal future results. Although back testing does not equal future results all the time, a trader can get a ballpark expectations of what results will be obtained in the future, as long as back testing is done properly. The key with back testing is to get a feel for the indicator and how it acts in different market conditions.

After studying an indicator's historical results, the next step is for the trader to paper trade. Paper trading involves making mock trades, which do not require capital. This part of the application stage allows the trader to see if the tool can be applied real time, while obtaining results as desired. If done properly, this is where the most of the learning is done.

Note: A lot of traders overlook paper trading or only utilize it in the beginning of their career. Paper trading should be an integrated step in creating a successful system of trade for all levels of your trading career. If a trader fails to do this, then there are no excuses, the trader is making his/her decisions solely based upon greed. If this becomes a pattern, the odds favor failure in the market.

During the paper trading phase, the rules to the actual application of the indicator are adjusted for optimal results. The ideal back testing process and application of paper trading will give the trader the actual feel he/she will experience when applying the indicator with live capital.

Benefit Of Mock Trading
The major benefit of mock trading is that the emotions are eliminated from the trade. This is a plus for one reason, the indicator is applied with strict rules and no other variances are added. Therefore if the results one desires are obtained during paper trading and they vary from the results obtained with live capital, then the trader knows that the likely reason for the failure of its application is the emotions he/she is allowing into the trade.

Often times traders fail to test their tools, so when they trade with emotions and their tools, while  obtaining a negative end result, the trader is unsure which factor is the primary issue. Separate emotions from the actual application of a trading system and the trader will see clearly which of the two is causing their desired goals not to be achieved.

Emotions are the biggest killer in a trading approach. If emotions are thrown into the stage where the indicator is initially utilized, then the trader will likely become more focused on failing or succeeding, rather than understanding how and why the indicator works. When this occurs, the trader not only loses a handful of capital, he/she wastes each experience, as the trader never learns from their losses or gains.

Trading and obtaining results comes from making bad decisions and learning from them. All traders make bad decisions, those who do not learn from them tend to become employed in a new career in a couple of months.

New Indicators
Each time a trader adds a new indicator to their system or changes their approach, historical testing and paper trading should always be applied before live capital is added. The timeframe of the testing and paper trading should be no shorter than a month. If results are not being obtained with live capital, always come back to these two steps and take the capital off the line, until consistent results return.