The Value of Coaching And The Difficulty in Finding One
Trader education has become a hot topic in recent years. Everywhere you look there is someone offering some course, seminar, training program, or whatever. Many are very pricey, and we can certainly debate the real value of quite a few. The proliferation of the products and such can’t help but bring up some of the commonly debated topics related to whether traders can be taught or just have some innate talent which allows them to succeed. This article makes its own contribution to that discussion.
In the interest of openness, my personal view is that anyone can learn to trade effectively. By that, I mean we are all capable of trading toward a reasonable and rational set of goals and/or objectives determined by our own personal situation and means. Can everyone become George Soros, Paul Tudor Jones, or Warren Buffett? No, of course not. If we could all do that, those names wouldn’t be as big as they are. Most people simply don’t have the kind of resources traders like that have at their disposal. We all do, however, have the means to trade well within the scope of the money, time, risk tolerance, and other elements of our trading focus.
The starting point of effective trading, as with anything else in life, is education. There are certain things one needs to know in order to trade effectively. What those are vary a bit based on the market traded and instruments utilized, but there are some fundamentals. For example, all trading is based on the bid-offer mechanism at some level. There are numerous types of orders for entry in to positions and exit from them. There are exchange hours and instrument specifications. Brokerage commissions are a feature in most markets, and in all one needs to understand how profits and losses are determined. I think we can all agree that these are some of the basic building blocks of knowledge and understanding required to even contemplate trading.
At the next level we start getting more in to comprehension of the market action, its interpretation, and knowing how that translates in to profit opportunities and risk. On some level, trading requires analysis to make buy/sell decision – fundamental, technical, or quantitative. For the mechanical trader, that analysis is done through research in the development of one’s trading system. For the discretionary trader it is more an on-going process. Likewise, some kind of risk management program is a requirement, regardless of trading style or analytic method.
All of this kind of core knowledge and understanding can, in my opinion, be learned from books, lectures, seminars, courses, etc. It is akin to earning a degree. In order to get that diploma, one must prove that certain things have been learned, skills gained. Once that is done, however, one’s development becomes a more personal journey. It is the same thing in trading. There is a basic set of knowledge we must gain, but after that it is up to us to forge our own path in the markets as our own personal situation dictates.
Here is where things start getting muddled.
We must each determine our own course in trading, ideally based on a good assessment of the resources we have available to us. There are so many ways we can go, though. Everywhere there are people telling us that this path or that path is the one we should take. How are we to decide? Most of us end up stumbling along through a trial and error exploration of various systems, methods, techniques, and whatnot. Some of us find something that works. A great many do not, and quit in frustration, or broke. This is where having a coach or mentor can make a huge difference.
We need look no further than the world of athletics to see how important the role of a coach is to one’s development. I happen to coach high level collegiate volleyball, so please permit me the indulgence of using that sport as an example.