Getting StartedPsychology

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.

There are certain physical attributes which can be strong determining factors for one?s success in volleyball ? height and jumping ability being two of them. As the saying goes, you can?t teach height, and while a coach can help one jump higher, genetics goes a long way to determining what a given athlete can do in that regard. Being tall and able to jump high, however, does not guarantee success, and one can be quite good at the sport without being a top physical specimen. There is a lot more to volleyball, and that is where coaching comes in.

The role of the coach is basically that of facilitator. He or she aids the athlete in the development in their skills and the refinement of the game. For the novice that means a lot of teaching in regards to skill execution. When working with experienced players, it become much more a question of refinement and showing them how to apply what they know to the best effect given the situation at-hand.

Coaching or mentoring in trading should be the same thing. The advantages of having someone to oversee your development are many. There is the obvious element of teaching, as it is often assumed that the coach knows more about the markets and has more experience in them than the trainee. Possibly even more important, however, is the coach?s role as external observer.

When I coach volleyball, I can see things a player is doing incorrectly that they cannot see because they lack the proper perspective. I can then tell them what they are doing wrong and help them correct it. A trading coach can do the same sort of thing.

At the same time, there is the mental and emotional element to coaching which is separate from the teaching one. Especially in the case of experienced athletes, it is often more a question of maintaining a proper level of motivation and a high degree of confidence to ensure peak performance than anything else. The same can be said of trading, where one?s mental state often seriously influence one?s performance just as it does in athletics.

The question of where one finds a coach or mentor is a difficult one. Brett Steenbarger (author of The Psychology of Trading and a contributor to this site on the topic of trader development) and I recently discussed this very topic. There are certainly a great many experienced traders out there willing to share what they know in one way or another. But are they really prepared to provide the guidance needed? Some may be good teachers ? imparters of knowledge ? but lacking in the ability to be a coach in the full sense of the word. Others might be great motivators, but perhaps do not have the breadth of knowledge and/or experience needed for the educational element of coaching.

There are two major obstacles to finding a good trading coach. First of all, it is the tendency of many people to look for someone who?s had a great deal of success as a mentor. The problem with that is in a many cases those people are not well equipped to coach. It?s something seen in athletics all the time. Look to the ranks of coaches in your favorite sport. How many of them can you point to and say he or she was a great player? Now consider how many were good players, but not superstars. There are way more of the latter in the coaching ranks than the former because the average players tend to have to work harder and become better students of the game to be competitive.

The other difficulty in finding good trader coaches is that there are no real training programs for these people. As a volleyball coach I can go to training seminars and courses, earn national and even international levels of certification, and work under the direction of other coaches more knowledgeable and experienced than myself. As yet, there is no such readily available structure in trading. We cannot look, for example, at someone?s resume and see that he or she is a Level III certified coach, having been so declared by a recognized training and testing organization.

So where does that leave us? Well, clearly there is value in having a coach to help us maximize our performance in the markets. As things currently stand, though, finding a good one for our particular situation is going to remain a challenge. It requires the discipline to not just look at someone?s returns and assume that they can teach you how to do that yourself (remember, teaching you a trading system is not the same as coaching you through applying a trading system). It also requires legwork to check out a possible coach. Have they coached others before? Get references. Make sure you find someone who will fulfill your particular requirements and be a good match. If you can do that, you should see your development as an effective trader really take off.

John Forman is a Professional Forex Analyst and is currently working for Thomson Reuters and was previously Managing Analyst and Chief Trader for Anduril. He is a near 20-year veteran of trading and investing across a wide array of markets and instruments, and a former professional analyst with experience covering forex, fixed income, equities, and commodities. His analysis and market comments have been found in the financial news media across the world and he has published dozens of articles on trading methodology and analysis technique and he was also a former Content Editor for Trade2Win
John is the author of the book The Essentials of Trading: From the Basics to Building a Winning Strategy (Wiley, April 2006). He has spoken on trading and market related topics to numerous student groups and been a guest lecturer on several occasions. In cooperation with a professor, he helped design and present a university level trading course.

John Forman is a Professional Forex Analyst and is currently working for Thomson Reuters and was previously Managing Analyst and Chief Trader for Andu...

fxmarkets

Established member
834 50
"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."

"Partly" based on the above opinion expressed in the article

At best, I disagree. And can see why the author needs to relate and relay his coaching experience of college volleyball rather than relating it totally ,very specifically ,absolutely to coaching a trader operating in the trading environment.

The coach in my view should know in absolute detail the subject in which they are coaching, which is why they are very scarce indeed, probably operate by very selective invitations ,word of mouth or rare introductions, its not written about or published "completely" ,for obvious reasons.

I see it as master/ student relationship.

coaches, as introduced or defined by this article are not the former but potential for the latter.

Fx.
 
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billy1000000

Newbie
2 0
100% correct. Trading is learning. And learning is not obtaining knowledge but getting specific skills. A skill is an "aquired habit". A human needs 20 to 40 days to get or get rid of any habit. Why then an average trader needs years to learn, and many never succeed? Because the apprentice does not know what habit is the right one. Self-learning is an ineffective process of getting and abandoning wrong habits until the correct one is ever found and developed. A good coach could help do that in 40 days. Just compare: years and 40 days.
 

des44

Well-known member
281 8
I agree with the article due to personal experienc. My professional trading status only started to develope AFTER one-on-one coaching/mentoring. The reason books, lectures, and courses cannot replace this element is because there is no way to assimilate all the data properly. This important component is almost always left out of any other medium of learning.

Mentoring and coaching is very important and valuable.

Des44
Full-time trader
 

TheBramble

Legendary member
8,395 1,170
des44 said:
Mentoring and coaching is very important and valuable.
Absolutely agree Des. And you've done some fine work in that area which has been much appreciated by many on these boards.

But the title of the article was two-part.

"The Difficulty in Finding One". Just how does one go about finding someone suitably trained, experienced and battle-hardened, not only in the craft itself, but also themselves tutored in the art of coaching itself? A very rare combination.

It's a tough one and my own experience (not just in the area of trading) indicates only a small number ever find the right person. One they are happy with and from whom they feel they can truly benefit.

I come from solid coaching stock and I can make an observation that has been echoed across a number of disparate areas of performance enhancement research: Good coaches are rarely as good (or were ever as good if they were active in the same field themselves) as their proteges. Their skill lies in their ability to bring out that extra something from their charges.

Mentors however are a different kettle of mackerel. Mentors come up from the trenches, have seen it and done it all (and felt the pain) and if they posses or can be trained to posses the skills of the coach - they present a truly awesome combination. They are far fewer on the ground and harder to find. They must be flushed out. And they normally are by accident.

So my advice is look for the mentor - not the coach.

How to spot the difference? You have to have the luck to come across a mentor (and luck in this endeavour can be engineered) and you have to ask them to help you. With a coach - you don't normally have to ask.
 

Mr. Charts

Legendary member
7,364 1,181
Hello Des, my friend. Great to see you posting good material as you always do.
Drop me an email and we'll update.
Kind wishes,
Richard
 

Rhody Trader

Senior member
2,620 264
billy1000000 said:
Trading is learning. And learning is not obtaining knowledge but getting specific skills. A skill is an "aquired habit".
I have to disagree with that.

Learning is obtaining knowledge. Skill aquisition, on the other hand, is done through training - the repetition of the skill until it is aquired and/or perfected.
 

TWI

Senior member
2,527 252
I have learnt a lot from working with other traders who are actually trading their book at the same time and in the same place as I am trading mine. I see little value in learning from somebody who does not trade themselves and i imagine there is a high risk of paying to learn from somebody who does not really know the reality of what they are teaching.
 

FXSCALPER2

Established member
964 280
I usually hate the articles published here. But I think that is a very good article. One thing that I never get is the nonesense about how good a trader a mentor needs to be. A good coach of trading doesn't have to be a good trader at all. People who subscribe to signalling services always ask whether the people who provide the signals trade themselves. They clearly confuse analysis with trading. To provide a signal, all you have to be is a good analyst. You can be a good analysit and a bad trader.

Similarly, you can be a bad trader and a good coach and mentor. Why? Because knowing what makes a success does not make you a success. I know a novice may not be able to do that, but I can assess who is a good coach and who a good trader by just talking to someone. How? Because I know what trading is about and I want the coach to also know what trading is about. When people talk about mentors, I bet they mean someone who tells them where to buy and sell. As Taleb says, 'it is easier to buy and sell than fry an egg'.
 

TWI

Senior member
2,527 252
A good coach of trading doesn't have to be a good trader at all. People who subscribe to signalling services always ask whether the people who provide the signals trade themselves. They clearly confuse analysis with trading. To provide a signal, all you have to be is a good analyst. You can be a good analysit and a bad trader.
Would agree that an analyst is better if they do not hold a position themselves, as their research will be less biased that way, but an analyst is not teaching you to trade.
 

Directional

Experienced member
1,992 251
twalker said:
I have learnt a lot from working with other traders who are actually trading their book at the same time and in the same place as I am trading mine. I see little value in learning from somebody who does not trade themselves and i imagine there is a high risk of paying to learn from somebody who does not really know the reality of what they are teaching.
I would agree with this statement - I picked up a lot of useful insight when i was sat at Refco just listening to the traders sat behind me quietly discussing what they were doing or looking at, and which trades they were putting on and why.

If a teacher doesnt trade or cant trade, how can he *really* teach you how to overcome the pitfalls he was unable to overcome himself. He may believe he knows what it takes to become a good trader, but if he cant teach himself to do it, how can he really teach another?

Aside from the added difficulty of wading through all the snake-oil salesmen who will happily take your cash from you in return for not a lot.
 

Rhody Trader

Senior member
2,620 264
Arbitrageur said:
If a teacher doesnt trade or cant trade, how can he *really* teach you how to overcome the pitfalls he was unable to overcome himself. He may believe he knows what it takes to become a good trader, but if he cant teach himself to do it, how can he really teach another?
Actually, sometimes the person who doesn't trade particularly well can be the best coach.

As was brought up before, there should be a differentiation between identifying good trades and actually taking positions. Some people are good at one, but not the other. I'm sure we've all heard stories about traders who can pick excellent trades and really understand the markets, but just can't seem to make the returns. They have a short-coming in some way when it comes down application. Their struggles, however, can provide them with significant insight in to the trading process, which they can pass along to others.
 

Paca

Newbie
9 1
As a lot of traders I would be interested in having a coach. It's perhaps easy to find one for a certain amount of dollars. But in this case, how to find one who is really interested in sharing his/her knowledge. IMHO a good coach / mentor would be one who helps you for free (with or wothout real experience of trading). We all need to dream in this perfect world.
 

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