How do I know if I'm ready for a tournament?

Nobody is ever ready because there are so many weaknesses in your game you don't even know about yet. Ever see a baby horse when it's born? That's what you're like your first tournament. You're feeble, wobbly, uncertain, but getting rapidly stronger. My first tournament I lost my first four games. Your early tournaments are a training ground and experience will come the more you play in them. By the way, nobody is going to care if you do badly. Your performance won't even be on people's radar, especially if you're losing. Players are caught up in their own games and they may pay attention to who is leading but that's it. So if you get crushed (you probably will) and feel embarrassed don't worry, nobody will notice.

Truer words have never been spoken :D.

it is a mystery, but it is not given to everyone  to be a great player !!

I dont know in Brooklyn, but here in Denmark there is always many not as good as you. If I was you, I would check out the next tournement to look at the games, and if they arent much better than you, sign up!

I admit that when I first started playing, I was actually afraid of losing.  But eventually I realized that it's a part of the game, and there is no thrill of victory without the threat of losing.  Now I just play on, accept my defeats and enjoy my wins.

Josh Waitzkin says it quite good in the art of learning from chessmaster 11:

"When I look back on my competitive life so far - in chess and in the martial arts - it's true, I've won a lot of big games, championships, titles … but the funny thing, if I'm being completely honest, is that I hardly remember the wins. Most of them weren't terribly important moments in my growth as a human being. But the losses, Oh, I remember the losses. I remember the pain, the heartbreak, sometimes being inches away from a dream, a world championship title and falling just short--each big loss is crystal clear in my mind because the experience was packed with life lessons that ultimately made me the person I am today.

So if you think about that reality, of the losses being our greatest teachers, it's liberating. It sets you free to put yourself on the line, to give it your all, and to recognize that when you come out on top, it will feel nice, it will be a sign you may be learning in the right direction. But when you lose, if you have really put your heart on the line, you will be offered a unique opportunity to grow. There is no shame in losing; there is only shame in not trying.