Rich Dad Education Blog

Becoming a professional trader has many attractive advantages. Modern technology allows the modern-day trader to work from just about anywhere. Whether it is from the comfort of one's home or a coffee shop, one can access the stocks they are following or research information necessary to make proper decisions. Trading also doesn't require an excessive amount of capital to start with. While you won't be able to quit your day job on a $1,000 account, small initial investments are attractive to an individual just getting their feet wet.

Regardless of your ambition – to manage your current holdings, to provide supplementary income, or quit your day job to eventually trade professionally – there are several areas that need to be mastered before you place your first trade.

Step One: Maintain Discipline

If you are not a disciplined individual or have the mental state to maintain it, you should never consider starting down the trading road. At best you will spend your time spinning your wheels, giving away profits in a day that you spent weeks earning. At worst, you will tear through your investment cash leaving yourself in a financially precarious position.

Trading can be successful as long as one follows the rules and guidelines that are set up for them. There have been countless times a trade has gone bad because a trader went with their gut or decided to make an exception to their trading rules. Develop a passion for becoming a disciplined trader. Find delight in passing on trade after trade that does not fit your technical criteria. You might have no idea at this point what your technical criteria for a trade are going to be, but you dang well know you are going to follow it.

Nothing you learn or do will ever be as important as mastering this first step. Successful trading is simply about maximizing probability and discipline is the cornerstone of that.

Step Two: Learn Basic Technical Analysis

Almost every trade you ever make will be based on the technical reading of a chart. While there are intermediate and advanced technical skills that you will eventually learn that will help maximize the probability of a winning trade, understanding the basic tenets of technical analysis are essential. Without mastery of them, your chances of becoming a successful trader are low.

Here is a starting list of items to master for the beginning trader:

• Candlesticks — Most charts will have candlesticks that represent the movement of a stock for the given time period. These candlesticks will represent the high, low, open, close, and amount of volatility for any given day. When combined in a pattern, these candlesticks can give additional information; however, at first concentrate on learning to read what a candlestick tells you. This should become instinctive with a little practice.

• Trends — There is an old and often used saying among traders, "the trend is your friend." Trends give you valuable information about which direction the stock has been going, and increase your probability of a winning trade. You need to easily be able to identify whether a particular stock is in an uptrend, downtrend, or trading sideways.

• Support and Resistance — Support is the price point where selling momentum has been exhausted, and buyers attracted by the perceived undervalued price step in and start buying up shares driving the price higher. Conversely, resistance is the price point where buying momentum has been exhausted, and new buyers are not willing to pay that high of a price. Being able to identify support and resistance points is critical as many of your trade setups will be based on this.

These are just a few essential components of technical analysis. Rich Dad Education offers a comprehensive course that covers these and many other components of technical analysis through the Master Trader™ course.

Step Three: Become Familiar with a Trade with at Least One Trade Setup

After becoming familiar with the basics of technical analysis, you can start practicing when to enter a trade. There are numerous trade setups that occur, but trying to learn them all at once can be overwhelming. I suggest starting with one setup and master the basic tenets of this. With time you can add other setups to your skill set.

An easy trade setup to learn is the bullish breakout. During this setup the stock is in an uptrend, selling pressure is not enough to push price lower, and the price of the stock is close to reaching the resistance (the high point) of the stock. The old resistance, once broken, can provide new support and a nice gain if entered at this time with a lower risk as you simply exit the trade if the stock falls below the old resistance point.

A simple checklist can be created for this trade setup. This list will become more comprehensive with your knowledge of technical analysis:

1) Is the stock in an uptrend?
2) Has the stock broken resistance?
3) Is there any resistance to interfere with the breakout?
4) Are the candle/pivot lows getting higher as price approaches resistance?

Please note, this is simply a practice starting list to become familiar with the basics of this particular trade. There are many things to add to this particular list before executing an actual trade with this setup. This does give a beginning a good practice point to begin with.

Step Four: Practice Your Trading with Virtual Trading

While every new trader is excited for their first live trade, one should first hone their skills in the virtual world. Virtual trading is available through most online brokers at no charge and is an invaluable aid for the beginner. Through this, you can practice your order entry, and placing triggers and targets. Your trigger is simply the price point at which you enter the trade. In simplistic terms, for the breakout trade setup explained above, this would be the point where the price of the stock broke through the old high (resistance). The target is in basic terms the point you anticipate the stock reaching. For a starter, I recommend basing this on a reward/risk of 1 to 1.

You can calculate the reward/risk by setting the point in which you are going to exit the stock. Let's use an example to illustrate this. Let's assume that you are using a breakout strategy and the stock's high (resistance) is $100. Our trigger would be when the stock breaks through that $100 barrier, so let's use $101 as the trigger. If we set our target at 102.50 and our point where we exit the trade at 99.50, then we have a potential reward of 1.50 and a risk of 1.50 per share, giving us a 1 to 1 ratio. While this is overly simplistic for an actual trade as other variables are to be considered, using these simple formulas can be of great practice for someone trying to learn the nuts and bolts at the beginning.

The main point to take from this is that virtual trading can provide you invaluable experience at no risk. You can practice learning your skills in a simulated environment without going through the school of hard knocks.

The life of a trader can be an exciting and rewarding world. If you have interest in learning more about how to trade, research on your own or contact Rich Dad Education for a list of classes and programs that can help you begin this exciting journey.

Posted 10:29 AM | Permalink | Comments (0) | TrackBacks (0)

All great products and services first start out as an idea. These ideas can formulate in a boardroom, amongst two friends talking, or while one is taking a shower. Ideas are somewhat sporadic in nature as they seldom can be forced and can arrive in the least expected situations. Regardless of their origination point, whatever success you enjoy in business will be the result of an idea.

So the natural starting point for any new entrepreneur is coming up with an idea for a new business, product, or service. For the new entrepreneur, it is highly probable that you already have at least one, perhaps numerous, ideas that you believe will be successful. So what are the first steps to take once you decide to start making your idea a reality? As action starts to give ideas form, ideas head down one of three paths. Choosing the correct path can be the determining factor on how you spend your time, and whether your dreams become fulfilled.

Path #1 – The Super Highway to Nowhere
This path might also be named A Dime a Dozen. This path is a 26-lane superhighway in which the traffic barely moves. For most ideas, this path serves as not only the starting point but, unfortunately, the final destination as the drivers of these ideas never find one of the numerous off-ramps available.

It is not that all of the ideas on this path are bad, as some are remarkable. Ideas that if the proper planning and execution occurred would improve companies, change individuals’ lives, and alter the marketplace due to the idea’s dynamic nature and innovative properties associated with it. The common denominator for ideas on this path is inaction. This inaction is sometimes caused by fear of failure, sometimes by lack of drive, and sometimes to being stalled by minute details. Regardless of the causal forces that prevent the idea from progressing, the plain and simple fact is that ideas stall on this path because nothing is done.

Do not allow yourself to be one of the numerous drivers of ideas on this path. Develop a commitment to excellence. Develop a commitment to be unlike others. Visualize your idea for a business as a reality and take the steps necessary to make it so. Avoiding this path is easy if you simply take the necessary steps each day to move your idea forward.

Path #2 – The Never Ending Mountain Climb
This path has far fewer people as individuals that journey down this path have put their plan into action and started down an entrepreneurial path. Unlike the stalled superhighway, there is movement on this path—however, each step forward tends to be like a steep mountain hike that never ends. Every inch forward tends to take a tremendous amount of personal effort only to have the next step require an equal amount of effort. The self-employed and certain types of business owners are the most common travelers down this path.

Some might argue that this type of journey is far superior to working for someone else. Given that these are your only two choices, I would have to agree. Working for yourself brings with it a level of satisfaction and accomplishment that working for someone else never brings. However, if ideas at the start of this path are properly analyzed, tweaked, or abandoned for superior ideas, then the same amount of effort that you would be spend traveling down this path can yield far greater results elsewhere.

The simplest and most surefire way to accomplish this is to analyze your idea in the context of the Rich Dad philosophy. Rich Dad Poor Dad and Cash Flow Quadrant: Rich Dad’s Guide to Financial Freedom are two books in the Rich Dad collection that contain ample material in which to perform this analysis. Even if you have read them numerous times, reread them again with a singular objective. Take your idea for a business and read them solely with your idea in mind. You may find that your idea doesn’t fit the wealth-building principles laid out in the Rich Dad philosophy. It’s not that the idea can’t work on some level, just that it lacks the upside to be more than a self-created job or a business that requires long hours for limited potential. Perhaps the idea just needs a tweak to increase its potential, or perhaps the idea is limited in its capacity to build wealth and you need to scrap it. An honest reading of the Rich Dad material with your idea in mind should help you make this determination.

If you have what it takes to successfully journey down this path, then you are only selling yourself short by not starting your journey on the correct philosophical foundation. No one can teach you hard work, drive, and determination. If you have these admirable traits and combine them with the right idea, then your potential for wealth building, not just creating an income, increases dramatically.

Path #3 – The Rich Dad Path
Those that venture down this path will journey to places few ever reach. They are committed to action and have ideas that are thoroughly analyzed and can succeed on levels that few ideas even dare to dream about. The business plans prepared for these ideas not only thoroughly prepare the individual for the journey ahead, but dazzle would-be investors in their thoroughness and potential. (For a comprehensive look at developing a winning business plan, please visit richdadeducationblog.com and read The Business Plan which ran last year.)

The journey down this path is not necessarily smooth as few great journeys are without their potential road blocks. There is the old saying that if it were easy everyone would do it. But the traits that the type of individual has that enable them to succeed on the mountain climb help increase the chances of success here, with a lot bigger upside.

To start down this path, take the idea you have and apply the Rich Dad philosophy to it in order to analyze its potential. Once this has occurred, develop a professional and thorough business plan that outlines not only the steps you need to take, but is also prepared for investors in case additional capital is required. Once the determination is made that you can proceed forward with your own ingenuity or that the proper capital has been acquired, make the commitment to action. Be relentless in this commitment as many business plans languish on the super highway to nowhere.

I hope to find you on the Rich Dad path to success and wealth building.

Posted 10:26 AM | Permalink | Comments (0) | TrackBacks (0)

Those who desire to become entrepreneurs share many similar characteristics. These individuals are driven, ambitious, and oftentimes confident people. This confidence gives them the strength to go out and succeed on their own. This confidence can also bring with it an admirable stubbornness. This stubbornness can bring with it the resilience to get through tough times and succeed where others may fail. This admirable trait can also bring with it some negative aspects. Stubbornness can bring with it the desire to be self contained and not seek out the advice and guidance of others. The desire to do it oneself can have a hampering effect on the growth and even potential success of the would-be investor.

Robert Kiyosaki has often attributed his success to surrounding himself with people smarter than himself. Anyone who has heard Robert speak knows that his level of intelligence is quite high and it might be tempting to write this off as a simple statement of modesty. When you look at the people he has surrounded himself with, you realize there is a genuine truth to the statement. Robert's advisors demonstrate a level of wisdom and specialized knowledge that undoubtedly aid Robert in his analysis of whatever financial situation is occurring. The factual information provided and guidance offered in the myriad of situations a successful person can find themselves in is invaluable.

So when Robert says that he surrounds himself with people smarter than himself, it may simply be an admission that he realizes no person can know everything. No individual can anticipate all situations that might occur in a business deal or with larger macroeconomic events that may occur. Surrounding oneself with knowledgeable advisors can not only provide information and guidance, but also ensure that the proper mindset is held as important decisions are made.

It's hard to argue with success. Talent and drive by itself can only take an individual to a certain level. Taking that next step is usually accompanied with the individual surrounding themselves with the right people. Perhaps this is most clearly illustrated in the world of sports.

In the final two minutes of an NBA basketball games, numerous timeouts occur. During televised games the camera will often focus in on the huddle where the coach is talking with the players. During the most recent finals between the Lakers and Celtics, two extremely successful coaches, Phil Jackson and Doc Rivers, were shown numerous times in these situations. Little time was spent on the X's and O's as the majority of time during these timeouts was spent on the mindset of the players. They spent their time making sure the players had the proper mindset so that their talent on the court was not impeded by other factors.

This mindset is crucial. Phil Jackson has earned the nickname the Zen Master and much of his success in coaching has been attributed to creating the proper mindset in his player's. Players like Michael Jordan and Kobe Bryant had both the talent and drive most others can only dream about. It is interesting to speculate how many championships either would have been won without Phil Jackson's coaching influence.

This influence of coaches and mentors is not limited to the game of basketball. When they are inducted into their respective hall of fames, many individuals often give credit to individuals who influenced them along their journey. They almost never credit these individuals for specific skills they helped hone or aspects of the game they taught. It is almost always the influence and guidance the individuals provided along the way. High school, college, and professional coaches are often mentioned for the help they provided, the mentorship that was offered, and the lasting influence they had on that athlete's life. It's remarkable that the difference between a hall of fame athlete and an athlete that becomes a tragic story of wasted potential may simply be a lack of guidance that was provided along the way.

In each of our quests to gain financial freedom, we will choose different paths. Some will choose real estate, some the financial markets, and others will strike down one of many different entrepreneurial paths. The specific skills that are needed for each of these may differ, but one constant will be required to succeed in any of the chosen fields. That constant is developing and maintaining the proper mindset for success.

Rich Dad coaching can help with this mindset. I suggest that you go to richdadworld.com to look into the Rich Dad coaching program to see if it is the right fit for you. The Rich Dad World site was created to give everyone a place they can go to get started to improve their own financial situation. The site has been set up to be free and offers hundreds of dollars of free tools for those that sign up. On the site you will see testimonials of several students who have participated in the coaching program and the effect it has had on their life.

Those that sign up for the coaching program could very well start a journey that alters how they approach business and life. It could help create the mindset necessary to transcend their approach to life and business. You can find a level of success on your own, but there is no reason to limit our potential.

Posted 10:24 AM | Permalink | Comments (0) | TrackBacks (0)

Real estate investing offers numerous advantages that are attractive to beginning investors. For those desiring to exit the rat race and increase their passive income, real estate investing can provide the cash flow necessary to accomplish this goal. The techniques and principles behind successful real estate investing are straight forward and allow an individual to get started fairly quickly once the proper educational foundation is in place. At that point, the process of evaluating properties and making offers starts leading up to the much anticipated first deal of the new real estate investor.

Before that first offer is made and first deal finalized, the prospective real estate investor should set the proper foundation. This foundation is based on the knowledge of strategies needed for deals, the techniques necessary for those deals, and the people that will help make that first deal come to fruition.

Real Estate Strategies
As you venture out to find that first deal, it will be of tremendous aid to have knowledge of many different real estate strategies. While the general marketplace conditions for your area may dictate which strategy works best at any given time, there is no way of knowing precisely which strategy is going to work best for any given deal ahead of time. Having knowledge of multiple strategies increases your chances of successfully finding your first deal.

Knowledge of wholesaling, lease options, and rehab and can allow you analyze and execute a deal where without the knowledge in one of these areas, the deal wouldn’t make sense. Knowledge of properties in probate, tax liens, discount notes, and short sales can open up entirely new ways of finding profitable deals. Property management and commercial real estate can help provide some of the long-term passive income you are looking for.

For the beginning real estate investor, it is wise to start with knowledge of a few strategies and build on these strategies as you get started. You may find that your personality and market conditions drive you to a single strategy that works for you. Don’t try and learn everything before you make your first offer; rather, add knowledge as you go.

Rich Dad Education offers live and online classes in all of the areas mentioned above. This newsletter will offer articles in coming months in many of these areas which can serve as a good place to investigate new strategies or refresh your knowledge of the strategies you learn in your real estate courses.

Real Estate Techniques
There are many fundamental real estate techniques that are used in multiple strategies. These techniques will become second nature to you over time, but sometimes intimidate the new real estate investor. Don’t let this be the case for you. Make it a top priority to understand how these techniques work and to implement them in your deals.
While you will learn numerous techniques depending on the specialized field you enter, two fundamental techniques to start with are how to appraise properties and learning how to calculate what goes into the offer you make on a property. Both of these will be the focus on articles in this summer’s newsletter and are taught in many of the courses that Rich Dad Education offers.

No one can help teach you the patience needed or the tenacity required to make the amount of offers necessary before one is accepted. There are numerous marketing techniques that you will learn over time that increase your chances of speeding up this process, increasing the chances of the offers to come to you. Regardless of whether you find the offer or they come to you, learning how to properly analyze properties and how to calculate your offers are two necessary areas to master before you start out on your real estate investing journey.

Power Team
Real estate investing is a people business – it requires a large amount of connections and relationships to maximize your success. The most successful real estate investors have a large network of individuals they network with that allow them access to deals they might not have otherwise found.

For the beginning real estate investor, the building blocks of this network is the Power Team that you put together. Your larger investing network will develop over time, but your Power Team can help create the foundation of this network and give you the resources necessary to finalize your first deal. Without this Power Team you are truly limiting your potential. Undoubtedly there is a large amount of work you can do yourself, but over time a do-it-yourself-attitude limits the growth of your business.

Putting together this Power Team cannot be accomplished overnight, but not having it completely in place should not prevent you from making offers and putting the strategies and techniques you have learned into place. It should, however, be something that you spend time on in the early stages and be a priority as your real estate business starts out.

A good Power Team includes but is not limited to:
• Title company
• Escrow company
• Realtor
• Contractor
• Appraiser
• Insurance broker
• Private lender or hard-money lender
• Mortgage broker
• Property manager
• CPA
• Attorney

Each of these members plays a pivotal role in your success as a real estate investor. Finding the right individual in even one area can increase your chances of success dramatically. Finding good people and companies that fit each of these roles can elevate you to levels of success that you might not have imagined possible. Don’t do things the hard way – spend time to develop these relationships and that time will be rewarded greatly in the years that follow.

While mentioned earlier, a final piece of advice is worth repeating. Whether it is learning different strategies, techniques, or putting together your Power Team, don’t get hung up on trying to learn or put together everything before you start acting. The process of learning should only be a starting point that eventually supplements real life experience. Experience will always be the best teacher.

Posted 10:18 AM | Permalink | Comments (0) | TrackBacks (0)