Thursday, February 26, 2009

Coaching Traders as a Supervisory Process

The last several posts have suggested that successful traders follow markets much like psychologists track the conversations of people they see in counseling. This implies that trading success is not so much a function of beating the market--and certainly not fighting the market--but rather listening to the market's communications. The effective trader attends to what is happening in markets--and what is not happening--in order to read patterns and themes in those market communications. What derails traders, like psychologists, is reacting to these communications in personalized ways, allowing one's own ego to get in the way of truly hearing the meaning of what is being communicated.

If this analogy holds, then the ideal coaching of traders might be less like conducting a counseling session than conducting a supervision session with a therapist in training. When a psychologist learns therapy in graduate school or a psychiatrist learns it in residency training, a core part of the learning experience consists of individual and small group supervisory experiences. An experienced faculty member reviews audio or videotapes of counseling sessions with the trainees, pausing at crucial junctures to point out what was communicated, what was done well, and what was missed. Typically, the supervision concludes with specific ideas of what to pursue in the next week's session, based upon the case review.

This supervisory process sensitizes the therapist-in-training to several things: what to listen for, how to generate ideas about people's core themes and conflicts, and how to intervene effectively at the right times (when people are most ripe for change). Such listening, conceptualization, and timing skills are surprisingly similar to the challenges that active traders face. Clinical supervision is a time and labor-intensive process, not unlike apprenticeships in the trades. It is, however, a time-tested framework for teaching performance skills that cannot be acquired simply by reading textbooks.

I am not convinced that the common models for coaching traders, which structures the learning process more like counseling sessions than supervisory ones--which treats the trader more like a client than a professional in training--is the ideal one. Might it be the case that we could meaningfully improve trader success by providing traders with "clinical" supervision, grounded in market and performance review? More on this topic to come.



Bryan said...

I've really enjoyed the recent posts on emotional intelligence, therapy and trading. Thanks

JMJAtlanta said...

How appropriate that I was finishing the re-read of chapter 6 in your performance book. Using video to review trading is a big help to me being my own coach.

I know I'll pick up on more things over time. At the moment the list of things to work on is too large. I'll keep narrowing the list, and I'm sure I'll notice more patterns in the recordings.

I'm looking forward to receiving your new book.

Panama said...

I'm intrigued with your ideas on the making of a successful trader and I certainly respect them. Coaching, mentoring, counseling, psychoanalyzing - It sounds like a near impossible recipe for success, especially if the patient trader is already damaged or of limited resources for professional TLC.

I've been trying to sort out an idea without satisfactory resolution yet. In many of life's event (outside of trading) success is often a function of mood/attitude/character at the outset or while engaged. And for different events, different perspectives are required to achieve efficiency/success ranging from being open-minded and congenial to being angry, determined, even bull-headed. In addition, different people with different personalities can achieve similar results using entirely different strategies.

When it comes to success in trading the market (sometimes a moody, vengeful bitch, other times playful and predictable) how can I quickly recognize her mood today and identify the approach/attitude that I might take to get her to work for me (and to reduce the amount of work I often do against her). Mine may be a different approach that you and others should take for the similar results, but without a conceptual framework for sorting this out I'm in the spin cycle.

Thanks for you thoughts

ron said...

traders working together in groups of trusted traders will become enormously successful,,,your insights are transformative

Trader M said...

I really like your analogy here.

My wife is a psychotherapist (LCSW) and the idea that my trading is analogous to her therapy has me smiling. In a scenario where I didn't have to worry about paying the bills for my family, I have often thought of going back to school to become a therapist.

JDMoodie said...

I know of one training organization that structures their program similar to what you are suggesting. The weekend is spent cramming information and studies then you spend the next five days actively trading under guidance from professional traders. They let you go and review your decisions and ideas, on the fly if needed, and afterwards as well. Now they let you use their capital for this training so it is a live and real environment...but with someone else's money.

I considered attending but, as with any decent program, the price is a little prohibitive and it is seven straight days. Very intense.

The followup is the key as they allow you to re-attend at any time for no additional charge.

I leave the name out intentionally as I am sure that you are not interested in promoting unknown programs.


Curtis said...

Some of recent post are the most relevant yet. I think the problem is that for someone to make the best trading decision based on what the market is doing then they must believe in themselves or in the odds or something. Yet they need to have a good understanding of odds, in general. I do think games of chance can help with that because that should give one an understanding of what its like to lose a lot with great odds. One of the interesting problems is how a trader will have an idea of what the market is doing and be right and then enter into some irrelevant trade or take an opposite position obviously a bad trade. Why do people this? Because they really don't believe in themselves or in anything, there must be some nagging thought that everything is random in their mind.

OKL said...

I think starting with the role and importance of traders in capital markets would be a good start.

For me, I have no idea how important the role of retail traders are... I know I'm doing this primarily for myself... but is there someone else or something that is benefiting from my activity?

adan said...

what i'm amazed at is, the consistency of excellant relevant articles posted

sincerely, amazing....