Final answer:
Before starting to trade with real money, one should pursue additional education and build a strong financial foundation by embracing compound interest and saving early. Investing an initial sum in a diversified stock portfolio can result in substantial growth over time, which is a prudent step before engaging in real money trading.
Step-by-step explanation:
Deciding when to start trading with real money is a critical step for aspiring traders. Fundamental to this decision is the principle of saving and investing early in life to leverage the power of compound interest. It is suggested that one starts with a strong financial foundation by completing additional education and training beyond high school.
Once educated, it is prudent to follow the saving money early strategy. This involves investing a sum, such as $3,000, and letting it grow over a long period, like 40 years, assuming a 7% real annual rate of return—which can result in significant growth of the initial investment.
The importance of investing in a well-diversified stock portfolio to mitigate risk and maximize long-term gains is crucial. As a trader, adhere to these financial principles before embarking on real money trading to ensure a more secure financial base and better understanding of market dynamics.