I am an orange belt. I've been training BJJ for 7 months, and was wondering if I should start to compete or wait until I get my green belt? I've gone to four tournaments to watch and I would like to compete but I am very nervous about doing so.
I generally like my guys to compete at around the 4-6 month worth of training mark. Enough so that you have learned some moves and know how to roll, enough so that you might've beaten some newer guys. At this point you need to feel how a real roll against someone feels like; it's different than in the gym and you need to understand that. Even a 'competition roll' against someone in your gym. After your first tournament match you'll understand a whole lot better.
I don't know anything about orange and green belts, are they kid belts? They're not white so your instructor has enough faith in your abilities to promote you.
Compete as soon as you're familiar enough with the rules to safely compete.
If you know how to tap, can breakfall, and are generally familiar with the practice of Brazilian jiujitsu, there's no reason to wait. Compete at the first low-level tournament that comes up. It will give you an experience many times that of a day training in the academy. Competition breeds perspective, goals, and priorities. Compete as soon as your instructor will endorse you to do so.
Start competing after about 6 months. I treat a competition like a seminar, no matter what the out come is I will learn a lot. Each fight I've had I've learnt something that has improved my game. Usually a loss is more helpful to your game than a win. I remember this one guy caught mew with a bow and arrow choke, I was very down after the fight. However, ever since then I started doing that choke and has now become my signature submission. I have even won two gold medals using that same submission.