Trading Mentors and Coaches: A Resource Linkfest

In my recent call for this linkfest, I made the distinction between trading coaches (those helping traders with the emotional aspects of trading performance) and trading mentors (those teaching specific trading methods). Both have their relevance, but it's important to not confuse one with the other. This is why I wrote the post on when coaching works and when it doesn't. Many times, especially among newer traders, the frustrations of trading are simply due to a lack of understanding of markets and the absence of any methods that would confer a consistent edge. No amount of working on the mental game of trading can substitute for the knowledge and skill of the successful professional.

On the other hand, even the best trading methods can be undone by performance anxiety, overconfidence, and a lack of focus and discipline. When it is not possible to become your own trading coach, getting help from an experienced professional can be an excellent choice. Similarly, if you're not finding success in developing your own trading approaches, working with an experienced mentor--one who truly knows and trades markets--can be a great aid to the learning curve.

This linkfest consists of services that have been recommended to me either by the coaches/mentors themselves or by readers. It is not intended to be an exhaustive list, and they are not intended to be my personal recommendations (although I can vouch for a number of people on the list). Please use it as a starting point for your due diligence in selecting the services that will be most helpful to you. For additional resources that I've found useful, please check out the Trader Development page of my personal site and the resource list at the end of my recent book.


TRADING MENTORS

Ray Barros - Ray, based in Singapore and Hong Kong, has thirty years of trading experience and conducts an intensive mentoring course to provide correct tools and and skills for traders. He offers one-to-one teaching that assesses the trader's personality, develops individualized trading plans, and teaches the skills relevant to that plan. Ray has also written extensively on the markets and developed a number of unique technical trading tools that he teaches to traders individually and in seminars. My sense is that Ray takes a personal interest in his students and their success, aiding them in setting and reaching trading goals.

Woodie's CCI Club - Woodie (Ken Wood) has been an icon of trading over the past 29 years. He has pioneered and mastered the trading of patterns of the Commodity Channel Index (CCI), rather than price bars. He has been using a chat room to teach his methods for the past ten years and conducts affordable Trade-A-Long seminars to supplement his teaching. A motto of the site is "traders helping traders", and I've personally found considerable mutual mentorship on the site. To his credit, Woodie has used the site to raise over $80,000 for charities.

DLC Profiles - Jim Dalton and Terry Liberman provide individualized and small group learning experiences grounded in Market Profile. They emphasize the entire cognitive process of learning--perception, intuition, and reason--and stress the role of study and practice in the development of mastery. Jim is one of the pioneers of Market Profile, with considerable trading and industry experience. Terry is a developer of innovative Market Profile software (WINdoTRADEr) that facilitates volume analysis within profiles of varying time frames. They also offer a newsletter, articles, and Webinars to support the education.

Linda Bradford Raschke - Linda, one of Jack Schwager's Market Wizards, has been conducting chat-room based education for years. She currently maintains two rooms: one devoted to futures, the other to stocks. I've known Linda for years and have been impressed with her integration of trading psychology into her teaching of trading methods. She also offers basic online services that illustrate setups, provide proprietary scans, and enable access to the transcripts of the daily chat room sessions. Guest educators provide supplementary learning experiences.

Alexander Trading - Joe Mertes and Tom Alexander direct a one-on-one mentoring program that lasts 12 months. The core methodology of the instruction is Market Profile, with an emphasis upon identifying trade location for optimal reward-to-risk opportunities. The instructors, with over twenty years of trading experience each, actively trade their own accounts and have started a fund for accredited investors. They also offer newsletters and conduct educational seminars and Webinars.

Daytrade Team - Founders Landon and Andy Swan and Head Trader Nick Fenton offer subscribers real-time alerts of trading setups, as well as an online trading room. A variety of alert systems are offered, including ones for daytrading, swing trading, and options trading. The online trading room provides real-time commentary and trading, with integrated chat from members. Andy Swan has his own blog and has been trading actively for over 10 years. He's currently developing a new venture: mytrade.com.

Trade Mentor - Bob Lang and Price Headley provide mentoring in such areas as charting techniques, trend identification, and specific trading strategies for options and futures. They also cover trading psychology topics, such as journaling and maintaining discipline. Their mentoring is available on a one-to-one basis through phone consultation and in-house instruction.


TRADING COACHES

Doug Hirschhorn - Doug holds a Ph.D. in psychology, with a specialization in sport psychology. He is co-author of the book The Trading Athlete: Winning the Mental Game of Trading and has extensive experience working with traders in proprietary trading firm and hedge fund settings. He is also a regular columnist for Trader Monthly magazine. Doug works with traders to help them modify destructive trading behaviors in both focus group and one-to-one formats. He also offers seminars, Webinars, and digital downloads. Doug has an impressive bio and I've been proud to work with him in several settings.

Trader Psyches - Denise Shull leads a consulting firm in the arena of trader and trading psychology, teaching traders to deal with impulsivity. The programs, including self-directed workshops and advanced coaching, are based on a systematic approach to the reciprocal relationship between reason, analysis, emotion, and trading results. Two consulting modern psychoanalysts, Dr. Gene Kalin and Dr. Deborah Greene Bershatsky, assist in client coaching through a theory and approach distinctly different from Freudian psychoanalysis.

John Forman - John brings a history as an athletic coach to his work with traders. He also has a strong background in trader education through his role as editor with the Trade2Win site and through his book The Essentials of Trading. John writes a trading education blog and offers coaching services to traders. His emphasis is two-fold: education (helping traders understand the ins-and-outs of markets) and development (helping traders identify the trading approaches best suited to them to develop a comprehensive trading plan). In addition to individual coaching, he offers trading courses through his site.

Dr. Janice Dorn - Dr. Dorn brings a background as a trader and as a physician to her coaching work. She conducts personal and group coaching, as well as live and Web presentations. Her website offers free articles and updates. Dr. Dorn also publishes a newsletter that deals with trading and behavioral neurofinance.


One last piece of advice: With the exception of Woodie's club, these services are offered on a commercial basis and many are not cheap. Traders, especially newbies, need to keep a close eye on their overhead. Investigate before you invest your time and money in these resources; get details, references, and concrete indications that the services will specifically address your interests and needs. A service is only a resource if it offers what you're looking for.

Here Are Tuesday's Blog Links, Market Indicators, and Pivot Targets

Fake and Real Education in Trading

We've heard a lot lately about fake news, both from the political right and left.  The truth is that it's difficult to report truth, objectively.  Too often agendas slant what we present, turning what should be enlightenment into persuasion or, at worst, propaganda.  A credible academic journal presents studies supporting and not supporting various ideas, allowing the data to speak for themselves as much as possible.  No one would read an academic journal that only published information supporting specific views, suppressing contrary evidence.

In trading, we see a great deal of web content, seminars, webinars, and books offered as "education".  Too often, this is fake education, in that it promotes a particular agenda that is marketed by the writer.  How often have we seen something offered as education that starts with a tease and ends with a sales pitch to get interested students to purchase a service or product?  That's an infomercial, not information.  It's not education; it's advertising.

So what is *real* trading education?

*  Real education educates.  You come away with specific information and/or skills that you didn't previously possess.  

*  Real education is on the cutting edge.  It provides new information and new skills.  It does not merely repeat what has been written many times previously.  If what you encounter in a book or webinar could have been encountered three years ago, thirteen years ago, or thirty years ago, it's rehashing, not educating.

*  Real education is grounded.  It draws upon actual research and actual practice.  It is not mere opinion or preference.

*  Real education stands on its own.  It is not a throwaway lead-in for commercial products or services.

As many of you know, I teach in a medical school.  I value the education and training of medical students and residents, and I especially respect the continuing education of practicing physicians.  Without continuing education, a physician is locked in old information and old practices and become stale.  Patients suffer.  Without quality continuing education, traders--and their capital--suffer the same fate.  Education is far too important to be left to fakery.

True continuing education for experienced traders is the next great frontier in trader development.  Not rehashings of worn out technical trading patterns, bromides about discipline, or trading tales from old timers.  Real, actionable education based on real research and real practice.  It's an important part of what distinguishes a profession from a hobby.

Further Reading:  Toward a Curriculum for Traders
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Seven Training Resources For Developing Traders

If you look at successful programs of training, you'll see three elements:

1)  Hearing - Having information taught to you;
2)  Seeing - Seeing skills being performed based on the information being applied;
3)  Doing - Trying out the skills yourself, with ongoing feedback and guidance from a mentor

Think about apprenticeship programs in the trades; the training of military recruits; the medical education of physicians; and the training of elite athletes.  All involve acquisition of knowledge/information; observation of advanced practitioners applying the knowledge; and supervised efforts to apply the knowledge oneself.  In this three-fold process, we make the transition from theory to skill development.

What we're seeing is an increasing number of offerings to developing traders that integrate the hearing, seeing, and doing through a combination of videos, live trading sessions, and active mentoring/teaching.  Back in the day, trader education generally meant someone giving a class on a topic--and that was it!  Obviously that didn't help traders translate theory into practice.

Here are some outlets for more complete training and support of developing traders that I'll list in alphabetical order.  My goal is not to formally review or endorse these, and none knows that I'm writing this article.  Rather, the idea is to point developing traders in a few directions that could prove promising.  If I have missed some excellent comprehensive resources, please feel free to let me know at steenbab at aol dot com.

*  Crosshairs Trader - David Blair has assembled a comprehensive suite of educational videos and daily watchlists, reviews, and mentoring to help traders apply chart-based setups in real time.  Great way to see how an experienced trader approaches market opportunity.

*  Exceptional Trader - Terry Liberman has assembled a unique coaching resource for traders.  The focus is not on finding trade setups, but rather on building your trading business and figuring out what *your* edge is in markets.  Regular webinars and group as well as individual coaching.  Great way to think through the big picture of your trading.

*  Futures.io - Mike has built a large and active trader community with chat and frequent webinars and downloadable trading tools and resources.  Topics on the discussion threads range from trading journals to the creation of quant tools for trading.  Great way to learn from others.

*  Investors Underground - Nate and team have assembled an active trading community that offers beginning and advanced courses, chat rooms for different strategies, daily watchlists, webinars, and mentoring.  The courses cover a range of topics from chart patterns and setups to scanning for opportunity and reading Level 2 information.  Great way to connect with a variety of mentors and traders in a community.  

*  NewTraderU - Steve Burns explicitly addresses the learning process of new traders with courses on such topics as using moving averages in trading and trading with options.  He also maintains an active blog and has written several ebooks.  Great introduction to trading.

*  OpenTrader - Ziad and Awais offer a comprehensive training program that includes a large number of videos, exercises to drill skills, and live mentoring/coaching.  A unique aspect is the grounding in auction theory and Market Profile.  Great way to approach trading with a well constructed curriculum that moves from theory to practice.

*  SMB-U - Mike and Steve have built SMB's training programs into a successful proprietary trading firm.  Detailed courses integrate video, skill drills, and a real time audio feed to their trading desk.  Topics range from foundation skills to tape reading and options trading.  Their in-house training includes practice trading on a simulator, access to quant tools to improve trading, and daily mentoring.  Great way to learn hands-on.

Interested traders will want to investigate offerings and the cost of those offerings thoroughly before seeking training.  Note that most of these services are offered for active/day traders and especially those in the stock market.  If you do investigate, I think you'll be surprised by the depth of offerings and the degree to which information is supplemented with active opportunities to watch experienced traders in action and try out their methods for yourself.

For those looking for a low overhead start with trading education, check out Adam Grimes' site, which contains a podcast covering relevant trading topics and a free trading course that tackles topics ranging from technical analysis and psychology to quant trading and options. 

Further Reading:  Fake and Real Education in Trading 

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Note:  TraderFeed will move to a weekend basis of publication starting this coming week, but I will repost popular pieces during the week re: topics that seem currently relevant.
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Training for Traders at Proprietary Trading Firms

I've been receiving an above-average number of email inquiries from people wishing to join training programs at proprietary trading firms. Although I don't maintain a referral list of such programs (the Education Department of the Chicago Mercantile Exchange has a list of member prop firms; they're a useful source of education and information), I can give you an idea of what to look for during your search.

First let's review terminology: A proprietary trading group is a group of traders that trades the capital of the firm. The firm puts up the trading capital and provides risk management, computer (IT) support, office space, and brokerage arrangements. This is in contrast with a trading arcade, which provides office space, computer support, and brokerage, but does not provide trading capital. It is a group environment for trading your own money.

A proprietary group typically generates its income from a split of trading profits, as well as by charging fees for overhead ("desk fees") and commissions. An arcade often acts as broker and makes its money from fees and commissions, but--because the trader is trading his/her own capital--does not typically take a large share of trading profits.

As a rule, firms that generate more of their own income from a split of trading profits have a greater vested interest in providing traders with ongoing training. After all, if the traders succeed, they succeed as a firm. When a firm is making most of their money from commissions, they'll generate income whether traders are profitable or not. They have less of an incentive to provide ongoing training.

Most prop firms and arcades are small operations when compared with investment banks and hedge funds. Rarely can they afford full-time staff dedicated to training. This is not necessarily out of a lack of interest in training; it's a simple economic reality. New traders trade small, and even with training, a high percentage of new traders do not succeed in the long run. It is very challenging to make a dedicated training program pay for itself.

As a result, much training at prop firms is either informal--the result of connecting with a senior trader and obtaining advice and mentoring--or is limited to several-week courses that precede live trading. Of course, it's too much to expect that a several week course could lead one to trading proficiency. Mostly the courses teach traders the basics, such as how to use the trading platform, how to manage risk, etc. It's the follow-up to the course work that is all-important.

So here are a few things to look for if you're interested in a proprietary trading firm:

* Is there a person (or persons) at the firm who take a dedicated interest in training and actively participate in mentoring new traders?

* Is there an actual training course or program that precedes live trading?

* Is the trading firm invested in training? Do they obtain a significant share of their income from splitting profits with traders?

* Does the trading firm enable you to practice trading in simulation mode prior to going live? Is someone available to provide feedback about simulated trading?

* Does the trading firm demonstrate and explain specific trading methods/setups and provide tools for identifying and trading these?

Here's an example: I'm currently working with a firm (*please* do not ask me for the name; all firms I work with are entitled to anonymity) in which the head traders share their trades with the new traders in real time. This provides valuable ongoing modeling and education. They don't have a formal course, but instead embed training into each trading day. That's the kind of commitment you want to see from a trading firm.

Of course, you'll have to match that commitment with your own. Stated motivation is not enough. I strongly, strongly recommend that traders trade in simulation mode and live (with small size) on their own prior to trying to join any prop firm. There is a great deal you can learn on your own and with online resources (including blogs and live trading rooms) and books. If you can demonstrate a favorable learning curve to a prop firm, you will be someone they want to train. For more advice on joining a prop firm, check out this post.

RELEVANT POST:

How Can I Join a Trading Firm?
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Introduction to Trading: Learning How to Trade

Where most efforts at trading education have failed is in their lack of development of a coherent curriculum. Piecemeal presentations of market patterns or indicators doesn't provide the concrete skills needed to generate trade ideas, effectively execute those ideas, and then manage positions as they trade. If we look at the curricula at medical schools, for example, we find several core components:

1) Information - Beginning medical students are immersed in basic sciences to develop a fund of information regarding the body and its health and illness. A competent physician is not just one who knows what to do, but also why to do it. This deep level of knowledge is important when it becomes necessary to make difficult differential diagnoses or to manage unusual reactions and complications following treatment. After all, you wouldn't want a surgeon operating on you if he or she hadn't been grounded in anatomy and physiology. Similarly, traders need to be grounded in the basics of their profession: how markets work, how markets affect one another and are affected by news and sentiment, how positions in market can be expressed across different markets, how risk is managed, etc. Someone who manages a personal portfolio or trades an account without such information is not so different from that surgeon who lacks knowledge of anatomy and physiology.

2) Observation - "See one, do one, teach one" is a mantra in medical education. Before a student treats patients, he or she shadows senior medical students, residents, and attending physicians to gain exposure to different specialty areas of medical practice. In my book Enhancing Trader Performance, I explain how pattern recognition lies at the heart of trading: it is necessary to observe and internalize those patterns before one develops a "feel" for them that can aid trading decisions. Observing markets in different conditions and observing traders tackle markets via online trading rooms is invaluable in bringing knowledge to life.

3) Simulation - Students practice their ability to take a history and physical by working with simulated patients before they actually go onto the hospital floors or into the clinics. They work on cadavers before they perform surgical procedures on live patients. They also follow patients under the very close supervision of senior colleagues, so that they can practice decision-making under safe conditions. Much of the second half of medical education is a learning by doing in progressively realistic, independent situations. Similarly, traders can begin learning how to enter and manage positions by practicing their skills on a simulation platform before putting their capital at risk--and by trading very small size before tackling larger risk.

4) Supervised Practice - Eventually medical students need to work on live patients and eventually they need to be responsible for their own patients. At each level of education, however, there is supervision and consultation, so that mistakes can be detected and avoided and risk to patients can be minimized. After the first four years of medical education are completed, there is a supervised process of practice called residency, in which the skills specific to a specialty area are developed. This typically lasts another three or four years. A student is not deemed ready to be a board-certified specialist until there have been many years of increasingly independent practice. Trading is no different: there are skills specific to specialized markets and trading styles; mentorship requires guidance from those who are steeped in each specialty area (scalping, portfolio management, market making, options, currencies, etc.).

Many of the problems traders experience in markets is the result of trying to short-circuit this learning process. Many times, this short-circuiting is the result of education vendors who know nothing of research/practice in education and curricular design. The challenge for new and developing traders is to locate and utilize the resources they need to structure their own learning processes. One goal of this "Introduction to Trading" e-book, as well as the book on self-coaching, is to help traders with this process.
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Should Proprietary Trading Firms Charge for Their Education?

I notice that several readers have commented upon my recent post that quoted SMB Trading's Bella. The comments concerned the fees that SMB (and other firms) charge for their training programs. This, to some, smacks of a scam.

So allow me to wade into a contentious area, one that has been hotly debated on some online forums:

I think the model in which prop firms charge a training fee before a trader can join the firm is fraught with potential problems. How it is implemented makes all the difference in the world.

As I note in this post and in this one, very high education fees may be a sign that this is actually the way that the "prop firm" is making its money. When this is the case, the firm will have five-figure fees as a rule and will allocate very, very small trading size to traders. The firm will also charge traders high commission rates. If the trader hits a certain loss limit (and the vast majority will because of the small size and high commissions), the trader will either lose their "job" or will be asked to advance more capital.

This, in my opinion, is an outright scam. There *is* no prop firm, only the illusion of one to lure newbie traders into educational programs. Very often, these efforts at education are quite thin, consisting of nothing more than the kind of garden-variety technical analysis you could pick up in any trading text. There are no skills building efforts through simulators, no substantive mentorship. Often, these watered down programs are offered to traders who trade remotely (i.e., from their home locations). That's actually a warning sign: true prop firms value teamwork, hands-on mentorship, and trading technology; it's tough to sustain those when traders are remote.

Another warning sign, ironically, is that the less-than-legitimate firms will feature unusually high payout ratios, allowing traders to keep almost all of their profits. That means that the firm is not counting on trader profitability for their own profits, and it usually means that the firm is not firmly committed to trader profits. Rather, fees and commissions are what the firm is after. The trader is a customer of such a firm, not an employee.

If you want to join a prop firm, you should be able to see the trading floor, interact with the traders, and see first hand who is making their living from their trading. If the kimono isn't open to that degree, beware.

OK, that having been said, let me take the other side of the argument:

I have no problem with firms charging a fair fee for their educational efforts. This is particularly the case when the firm is offering the education as a stand-alone offering. There are very few prop firms that make their training available to outside traders. For instance, it's very difficult to find credible educational programs on reading order flow (tape reading). The program at SMB is available at a fee for those who aren't affiliated with the firm. Traders can assess the fee and the content of the program and decide if it's a fair deal.

As a rule, if the educational offerings have a structured curriculum, opportunities for skills building (and not just information), and last for weeks or months (not just days), they have the potential to move traders' learning curves forward. I am not a fan of brief training programs, as they simply lack the time to develop skills.

When a trader is required to go through the educational program (at a fee) to join the firm as a prop trader, it's important to view the firm as two separate companies. The first company is the education provider; the second is the trading firm. It is possible that you could like the company for its education, but not for its actual trading--or vice versa. By separating out the education from the prop opportunity, you can evaluate each on its own merits.

Personally, I would view the opportunity to trade for the firm as an out-of-the- money call option. In other words, if they like me and I like them and I do well in the program, I may get a large payoff by joining the firm. But I'm going to go into the education with the idea that the option may expire worthless. I might not like the firm, they might not like me, and my trading style ultimately may not fit theirs.

Once I have that mindset, I can ask myself: would I pay the fee for the education, even if it doesn't lead to an offer to join the firm? If the answer is no, I say move on. If the answer is yes and you also like the frosting on the cake of the call option, then it makes sense to pursue the training. But no trader, in my opinion, should "pay to play". The training has to stand on its own as a career and economic value.

All of this means that joining a prop firm requires considerable due diligence. There are real scams out there, and there are honorable firms that offer a teamwork, learning-based culture and solid training. Just make sure that the firm is selling you real training, not just hopes, dreams, and fantasies. The posts below should be helpful in making the distinction.

More:

What Should a Training Curriculum Look Like?

Considerations in Selecting a Training Program

What Makes for Expertise?

Success as a Developmental Process

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Trading Addiction and Trading Trauma: Two Trading Problems Rarely Discussed

One takeaway from the recent Forbes article is that we become better as performers (and as people) as we become free.  That means freedom from destructive habit patterns, and it means freedom from the internal chatter that can control us and divert our will.  What does it mean to plan our trade and then not follow that plan?  What does it mean to engage in the very patterns--chasing prices out of FOMO, failing to take good trades--that we know harm our results?  We do the wrong things because we are not truly free.  We are imprisoned by thoughts, feelings, and action patterns that hijack the will and harm our trading, our relationships, and ultimately our fulfillment.  Psychology and spirituality, at their best, are ways of breaking out of our prisons.

If the usual trading problems place us in prison, there are two overarching problems that can place us in solitary confinement:  trading addiction and traumatic stress.  Trading addiction occurs when we become hooked by the ups and downs of profits and losses, much as a casino player can become hooked on gambling.  Much of what we politely call overtrading is actually addictive trading.  The need for the thrill leads us to place trades when our wise minds know that there is no objective edge present.  I have seen traders so addicted to active trading that they have lost life (and family) savings.

Traumatic stress is familiar to us from accounts of people who come back from war or who undergo brutal attacks or physical/emotional abuse.  Traumatic stress is different from normal anxiety that can show up in performance situations.  The hallmark of traumatic stress is the loss of stability and security and the presence of highly stormy emotions, ranging from frustration and self-blame to fear and panic.  It is not well recognized that failure to manage risk well can create massive losses--and painful trauma.  Once traumatic stress occurs, subsequent trading ends up re-traumatizing the trader, leading to further losses and emotional damage.

If you read accounts of "trading psychology", you'll rarely encounter discussions of trading addiction or traumatic stress.  There is a reason for this.  The answer to both problems is to stop trading.  Before there can be any possible constructive return to financial markets, the addicted or traumatized trader needs to cease trading and work on their addiction and trauma.  If they ever can return to markets, it will be as very different people with very different strategies that provide them with control and consistency.    

Who in the trading world finds a vested interest in telling traders to stop trading and take care of themselves?  Not the vendors of "trading education" and trading seminars.  Not the vendors of trading software and services.  Not the proprietors of trading communities and trading firms.  Not even trading coaches.  Certainly not brokerage firms and publishers of trading materials.  Everyone who sells to the trading public (and professional traders) needs those market participants to keep trading.  There is no upside for them in telling people to back away from markets and heal their wounds, regain control of their lives, and escape the prisons created by their market involvement.

A while back I wrote an article on trading coaches as whores.  Who in the coaching world will give a trader honest feedback that they lack the skills and talents to become a successful trader?  We know from research that the vast, vast majority of people who pursue active trading will not be able to sustain an ongoing living from their efforts.  But who is willing to acknowledge that?  Who is willing to tell traders that active trading can ruin their lives, traumatize them, and leave them (and their families) scarred by addiction?  

The trading coaches, trading educators, online gurus, trading communities, trading software vendors, brokerage houses, publishers, and so many more are actually selling the same product.  They are in the business of selling hope.  There is nothing wrong with hoping, but it's important to acknowledge the damage that can be done by pursuing false hopes.  Successful trading can be a ticket to financial freedom, but many more traders may find in trading their own prisons.

Further Reading:

The Spiritual Side of Trading

TraderFeed Home Page and Index

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The Value of Multiple Mentorship in Trader Education

Previous Posts on Trader Training and Education:

Developing Successful Traders

Training Traders for Performance Niches

Qualities of an Ideal Training Program for Traders

Supervision and Training of Traders

Training and the New Breed of Prop Firms

In my recent post, I made the case for traders beginning with a broad education in markets before they attempt to specialize in a particular type of trading. When I wrote my book on how traders can improve their performance, I devoted the entire second chapter to finding one's trading niche. I pointed out that, "The greats do not become great by working hard; they work hard because they find a great niche: a field that captures their talents, interests, and imagination" (p. 13).

I made the case in the book as follows:

"Finding the right niche makes all the difference in the world when it comes to performance. A hall-of-fame pitcher might well be a flop as a hitter; a punter in football rarely makes a good linebacker; commercial print models are not necessarily the ones who dominate the runway; the best medical researchers don't always make the best teachers. Over and over we see examples where the difference between success and failure is being in the right niche" (p. 17).

Why is finding a performance niche so important? "To invest the great amount of time and effort required for mastery, an individual must emotionally bond with the talent field, creating a long-term relationship. Our task, in the initial phase of development, is to forge an emotional bond so strong that it will survive the inevitable frustrations and opportunities of the learning curve" (p. 13).

When psychologists first learn their profession, they are assigned multiple clinical supervisors. Often these supervisors represent different approaches to therapy: some may be behavioral, others may be oriented toward family systems, others may specialize in group work, etc. The idea is that the trainee learns the field--and figures out a niche--through multiple apprenticeships. Similarly, medical students rotate among many specialties and work with multiple mentors prior to declaring a specialty field.

This is why I believe that the ideal training program for new traders needs to occur within trading firms. Only at an investment bank, proprietary trading firm, or similar organization can a developing trader apprentice to different traders and gain exposure to a variety of markets and trading styles. Indeed, at the large banks where I've worked, training programs blend structured didactic experiences with the opportunity to serve junior roles on trading desks. Traders begin as assistants, learn through observation and interaction, and gradually assume the responsibilities of managing money.

To make this work, of course, a trading firm must embrace a learning culture and must make training and education a priority. When I have visited such prop firms as SMB Trading and Trading RM, one of the things that has struck me is that the traders are actively calling out and sharing their trades. It is not "every man for himself": these firms build mutual support and learning into the daily trading process. Not surprisingly, these firms also share ideas with the wider trading world (see, for instance, blogs for the two firms above, as well as T3Live); part of their recruitment is showing off their training commitment and expertise.

This is not to say that a trader can't learn from work with an individual mentor. Such work, however, may be more appropriate to later phases of the developmental process, where a niche has already been found and one is working to excel within that niche. At the start, the availability of multiple mentors and the exposure to different ways of trading and different trading vehicles allows for new traders to discover their talents.

With the possible exception of investment banks, few trading firms are large and diversified enough to represent all forms of trading. Still, within most prop firms, you'll find traders participating in different markets, trading different setups. Yesterday I worked with traders at a firm who were trading stock indexes, natural gas, oil, and currencies. Some of the traders were scalpers; others held for longer positions. At such a firm, rotation among mentors would provide developing traders a rounded exposure to markets and trading styles.

Even when firms teach a particular approach to trading that is geared for specific markets, you'll find diversity in how that approach is implemented. Indeed, if that diversity were missing, the firm would just allocate all their capital to a couple of traders and forget about hiring and training altogether! The advantage to these firms is that they have well-defined, proven methods to teach and a range of experienced traders who have found their own ways of utilizing these methods. That is not unlike apprenticeships in the art world, where aspiring painters first learn by copying the masters and only later cultivate their individual styles.

Ultimately, the key to training success is find the right marriage of mentors and students, where developing traders are most likely to find their performance niches. We are most likely to discover who we are by taking on the roles of many people, and we're most likely to discover our talents by exercising them in multiple activities.
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From Trader Education to Trader Training: A Trading Curriculum

In my recent post, I noted three research conclusions about expertise that suggested that elite levels of performance typically require ongoing, structured training. We see this among Olympic athletes, physicians, soldiers, chess players, and musicians. Nonetheless, offerings in trader education typically consist of one-off seminars, books, magazine articles, or Web posts. Missing is the notion of curriculum: a planned process for bringing beginners to competence and competent traders to expertise.

Let's take a look at a medical school curriculum to explore what a true program for trader training might look like. The education of a medical student typically progresses through several phases:

1) Developing a Fund of Information - The beginning medical student is immersed in anatomy, physiology, biochemistry, and the like. The idea behind this is that it is not enough to know which treatments go with which illnesses: you need to understand why this is so. The fund of information helps physicians reason their way through illnesses they may not have seen before or that may have an unusual presentation. Similarly, a trader's education should not begin with indications of when to buy or sell. It should be grounded in an understanding of markets and how markets work. This means understanding the participants in the markets, from the market makers and other liquidity providers--and their activity around the bid and offer--to the hedge funds, mutual funds, investment banks, and sovereign wealth funds that exploit longer-term trends and intermarket relationships. What is program trading? What is arbitrage? How can you identify markets dominated by market makers vs. longer-term institutional participants? How do markets overseas affect our market and vice versa? How do currency and fixed income markets affect stocks; how do they affect each other; and how are all related to economic activity here and abroad? A physician *can* treat a person without understanding the intricacies of the human body, and a trader *can* trade in ignorance of supply/demand and global markets. In ambiguous situations, however, it's the well-versed doctor or trader who can best make sense of situations and act constructively.

2) Observational Learning - The next phase of education for a medical student is observational. They watch resident physicians and experienced attending physicians perform histories and physicals; they observe in the hospital by walking with doctors on rounds and learning from specific patient cases. They may assist with treatment in small ways, but their major role is to learn through immersion. Similarly, the trader who is training can benefit from watching experienced traders at their craft. You can learn from their mistakes and their strengths, and you especially learn by observing different traders doing different things. Online trading rooms, where a mentor will follow markets with attendees, are very helpful for such observational learning. Very often, the inspiration of someone you watch provides the first role model that helps you decide how you are going to tackle your profession. In medicine, much of this observation occurs during multi-week "rotations" through various medical services: internal medicine, surgery, family medicine, pediatrics, psychiatry, and the like. A trader who observes multiple markets and trading styles is most apt to figure out his or her own niche.

3) Supervised Practice - Much of the third year of medical school is observational, with increasing (though limited) participation in the treatment process over the course of the year. By the fourth year, medical students take responsibility for specific patients under the close supervision of junior and senior residents, as well as attending physicians. Observational learning continues, but the senior (fourth-year) student now also has responsibility for helping teach the beginning observational learners from the third year. During acting internships (AIs), fourth year students take on even greater responsibility, testing out what it is like to be a beginning level resident physician. Over the course of the fourth year, the decision of a medical specialty crystallizes, as the student has received feedback--from instructors and experience--regarding strengths and weaknesses. Similarly, among traders structured practice in different markets provides the feedback and experience to identify a trading niche. As I emphasized in my book, the use of trading simulators (mock trading with real market data) is particularly helpful in this regard. Simulation platforms such as Ninja Trader also enable practicing traders to gather data on their winning and losing trades, so that they can immediately see what they're doing right and wrong. This deliberate practice is a hallmark of all expertise development. Here is where an experienced, knowledgeable coach/mentor can be particularly helpful: as one who can help make sense out of the performance data, make suggestions for improvement, and help the developing trader set goals that sustain the learning curve.

4) Consultative Practice - Once the student finishes four years of medical school, he or she has an M.D. degree, but cannot practice medicine. The residency, which typically lasts three or more years, is a period of specialization and intensive learning by doing. Resident physicians take primary responsibility for their own patients, but operate with a high degree of consultation with more senior residents and with attending physicians. Whereas the first four years provided a fund of information and a knowledge of general medical practice, the residency period moves students forward in expertise development in their chosen specialty. This is where they learn the information and skills specific to fields such as surgery or psychiatry. Residents often teach medical students, but also participate in case conferences, seminars, and "grand rounds" sessions themselves to further their education. A great deal of learning is at the bedside, seeing as many different kinds of cases and participating in as many different procedures as possible. For the trader, this is where participation in a virtual trading group (an online association of serious traders) or in an actual proprietary trading group (or other trading setting) can be valuable. It is also where the education provided by investment banks is most valuable, as new traders learn from their senior counterparts at a desk and gradually take on increased levels of responsibility. Simulated trading may still be helpful, but at this consultative phase of learning, it's important to put on real positions using the real strategies that have been observed and tried out in practice. The consultative part is crucial: having mechanisms for obtaining feedback about trading processes and results. Software packages that provide comprehensive trader metrics, such as Trader DNA, are very helpful in this regard and coaching/mentoring can be quite useful--particularly when the coach is experienced in the specific kind of trading you're undertaking. Many traders develop personal and professional relationships with peer traders online that serve the important consultative function. The important thing at this phase is to trade as many different market conditions and strategies as possible to hone skills and identify strengths.

Only after four years of medical school and many years of residency (and sometimes sub-specialty training as well), is the physician considered to be sufficiently expert for board certification in a specialty and independent practice. This is a recognition that expertise develops over many years of dedicated effort. Similarly, I would not want a trader to be managing my money until he or she had a similar level of experience and a track record of growing success to document expertise.

I have drawn the parallels between medical training and the training of traders to illustrate how far the trading field is from any kind of professionalization. Only in such a vacuum is it possible for huckster "gurus" to offer their promises of quick riches at seminars, backed by the support of vendors who don't care whether their products and services are utilized responsibly or not. We are not yet at the point where enlightened trading organizations (the big leagues) develop farm team organizations or comprehensive training programs for cultivating talent. Instead, we let traders go at it themselves and accept that 1 in a thousand will survive the Darwinian selection process. I offer this post as a vision for a different way to approach trading and the development of traders. It will take visionary and out-of-the-box thinking to make such training economically viable as well as practically effective.

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TOP TRADING PSYCHOLOGY POSTS - 2017

Below are top trading psychology posts for 2017.  Other trading psychology posts can be found on the pages for 2006-2014, 2015, and 2016.  Posts specific to common trading psychology problems can be found on this page; posts on unique trading techniques are available here.  If you have trouble finding posts on the topic of your interest, a good first step is to Google "TraderFeed" and the topic.  That usually brings up several posts.  If you would like to go into greater depth in your topic, the trading book page will help you figure out which text might be most relevant.  See also the curated Forbes posts.

My coaching practice is limited to trading and investment firms, so I am not able to offer coaching advice or services to individual traders.  I'm happy, however, to answer questions about the TraderFeed material, so feel free to contact me at the address on the bio/contact page.



TOP TRADING PSYCHOLOGY POSTS OF 2017

*  How to Break Our Worst Trading Habits

*  Supercharging Your Learning and Development

*  Finding Multiple Ways to Win in Markets

*  How to Identify Your Greatest Strengths and Virtues

*  Fake vs. Real Trading Education

*  When Technical Analysis Works and Fails

*  Trading Psychology From a Cognitive Perspective

*  Four Common Triggers for Trading Psychology Problems

*  A Powerful Technique for Changing Your Trading Psychology

*  The Real Way to Develop Trading Expertise

*  Is Trading Truly Your Path?

*  Three Dimensions of Focus Associated With Trading Success

*  Exercising Our Brains for Trading Success

*  Two Principles That Shape Our Trading Development

*  Three Tools to Build Trading Performance

*  Lessons From a Successful Independent Trader

*  Trading With a Higher Consciousness

*  Seven Training Resources for Developing Traders

*  Coaching Yourself for a Better Trading Psychology

*  The Real Reason Traders Lose Money

*  An Exercise to Overcome Overtrading

*  Three Best Practices of Traders Currently Making Money

*  A Simple Mistake Traders Make

*  Re-Making It as a Trader

*  Improving Your Trading Business

*  Becoming an Evidence-Based Trader

*  Behavioral Techniques for Mastering Your Trading Psychology

*  Why Hard-Working Traders Underperform

*  Four Key Trading Performance Insights

*  Turning Your Goals Into Commitments

*  How Focus Separates Trading Pros From Amateurs

*  Two Things Successful Traders Are Doing


BACK TO THE TRADERFEED HOME PAGE

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Co-Trading: How Coworking Can Transform Our Trading

In this post, I would like to introduce the concept of co-trading.  Co-trading is the collaboration of independent, curated traders within a coworking environment.  

Let's unpack what that means:

First off, co-trading features true collaboration.  That means the sharing of ideas and resources, as well as coordinated work on personal and professional development.  Within a co-trading environment, collaboration can include mentoring, coaching, research, brainstorming, performance review--all of the functions that traditionally occur within a large trading firm, such as a hedge fund.

The members of co-trading teams, however, are independent traders.  They affiliate based upon shared values, interests, and experience.  Unlike a hedge fund, co-traders trade their own capital, retain their earnings, and bear the brunt of their losses.  What is shared is intellectual capital and the benefits of operating within a community.  This works best when the co-working community is curated:  carefully selected to ensure that the commitments and benefits are mutual.

All of this occurs within a coworking environment.  Coworking is well known among professionals involved in startups.  Sharing a work environment with others who are passionately committed to what they do creates and sustains a high level of energy.  Networking among talented professionals generates learning and growth.  Surveys find that people thrive in coworking settings: they are more engaged in what they do and happier in their workplaces.  For a single membership fee, coworkers enjoy everything from comfortable lounge, cafe, and meeting space to shared technology and the flexibility to work individually or within teams.

To be sure, co-trading has occurred in other settings.  Traders have affiliated in online chat rooms and groups for years.  So-called arcades have been trading firms that offer workspace and technology to traders who rent desk space.  Co-trading is different in that traders are physically located in their work areas with other traders, but also potentially connected via videoconferencing with other co-trading pods at other locations.  The co-trader has the opportunity to trade at multiple affiliated locations, while traveling across the country, for example.

Perhaps most important of all, however, is that co-traders operate within larger shared office spaces with professionals from other fields.  Across the aisle could be professionals starting up businesses and developing apps, as well as people engaged in fields as diverse as journalism and business consulting.  In a recent trip to a coworking space in New York, I met with an insightful professional mountain climber who conducts personal development hikes for his clients.  I would never encounter such a person in my normal daily, office-based routine.

These are people who can expand each others' horizons.  If I belong to the coworking space in Connecticut, I can choose to work in the affiliated New York or Chicago office.  I can connect with my team with high speed videoconferencing, and I can participate in a new team.  The coworking space is available 24/7, which means that I always have a home away from home, free of the distractions of home.  In my co-trading site, I can attend online education events with members of my team and collaborate on implementing what we've learned.  That turns trader education into true continuing education for professionals.

Of course, co-trading won't be for everyone.  Beginners in financial markets will benefit from joining firms that offer high quality training.  Experienced traders who rely on proprietary technology, teamwork, and capital will want to retain the benefits unique to a proprietary trading firm or hedge fund.  Co-trading will most benefit experienced traders looking to maximize their independence, while simultaneously maximizing their access to other experienced peers.

This coming week, I will be exploring coworking spaces for traders.  My sense is that this could be a dynamic way of blending the benefits of teamwork with the advantages of independence.

Further Reading:  How Individual Traders Benefit From Teamwork

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What To Do When Your Trading Blows Up

 

10/30/2025 - Maybe the most difficult question we have to tackle after our trading blows up is whether trading truly is meant to be our path.  We might not truly know that until we take the steps below, get proper training, undergo intensive practice that builds positive habits, and truly internalize sound trading processes.  What we find during this re-education is that the right kind of trading either interests us and gives us energy or is a drain on our mental and emotional resources.  Each of us possesses signature strengths:  abilities that capture who we are at our best and that inspire us.  Trading may not capture our greatest strengths and might even thwart them.  If we're wired to be emotionally connected with people and help them or if we're wired for physical challenge or creative, artistic expression, trading will likely frustrate who we are as people and prove to be unfulfilling even when we make money.

The goal is not to trade.

The goal is to follow your bliss, because that is the path that will open your doors in life.

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10/29/2025 - If you hope to return to trading after a traumatic blow up, the key will be to return in a new way and in a safe way.  This means beginning afresh, with training and mentoring and exploring markets and ways of trading markets that actively engage you and that fit with your interests and strengths.  Very many times, traders blow up because they put their capital at risk without the proper training and guidance.  They have not learned from mentors, so they don't possess edges in different kinds of markets.

Once you get the training and mentoring to trade in new and promising ways, it is important to begin trading in simulation mode and then with small size so that you turn good trading into habit patterns.  Only repetition and practice can accomplish that.  To repeat the point below, the idea is not to try to make yourself disciplined, but rather to make good trading so habitual, routine, and automatic that you won't need to impose discipline on yourself.

If you're trading because you need to make money right away or because you need the thrills of risk-taking, then you're likely to put yourself on yet another blow-up path.  Trading out of need is a formula for overtrading and impulsive trading.

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10/28/2025 - So what is the next step in recovering from blowing up our trading accounts?  Once we step back from trading and deal with the hurt we've created--connecting with others, taking care of ourselves--we have to come to terms with what we've done and why we blew up.  It's not coincidence that every major spiritual and religious tradition addresses the issue of repentance.  To repent is to look at what we've done, truly acknowledge the painful consequences of our actions, and vow to never repeat those mistakes.  Our emotional/impulsive/tilted trading may have hurt our relationships, our health, and of course our financial well-being.  Facing all of that and experiencing the pain and regret from our actions is a powerful motivator for change.  In essence, we hit bottom and get to the point where our priority becomes "Never again".

It is only after we come to terms with the consequences of our faulty trading and make amends to those who have been impacted by what we've done (and how we've done it) that we can even consider returning to markets.  More important than returning to trading is committing ourselves to never make the same mistakes that brought us to this point.

And how can we prevent that?  By making sure there are always things in our lives more important to us than P/L.  By making sure we have income and savings to cushion us if trading loses money.  By making sure that we have a trading process so well learned and internalized that it becomes second nature.  It is not discipline that can successfully bring us back to markets; it's the power of habit--and turning our best trading into our most automatic routines.

We can only start over if we retrain ourselves.  

More on this to come...

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10/27/2025 - Let's take a look, step by step, at how people recover from trauma.  Trauma occurs when people's lives are shaken up.  Their security is lost; their future is threatened.  Painful outcomes intrude in their day to day thoughts and feelings, disrupting mood and outlook.  Trauma is a word we associate with stress.  A traumatic stress is one that occurs when our normal lives are threatened.

It's important to understand this, because it helps us understand why the first step in trauma is to remove ourselves from the immediate situation causing us stress and placing ourselves in the most supportive, secure environment possible.  Connecting with those who care about us; re-establishing a normal routine in life; focusing on activities that are rewarding and fulfilling:  all these help us return to a state of greater security.  

When we have helped create our traumatic stress through addictive/impulsive trading, there is something else that can begin our recovery.  It is not a coincidence that the first of the twelve steps of recovery among alcoholics is "honesty".  We need to own up to our roles in creating our problems and our hitting bottom.  No excuses, no avoidance.  We take responsibility for our actions at the same time that we seek support and routine.  Ironically, that can be the hardest step in bouncing back, but also the most promising one.  Once we take responsibility for what we've done, we re-establish the sense of control that allows us to bounce back and turn things around.

More to come...

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10/26/2025 - I have received a number of emails from traders in crisis.  They have lost money, and they have lost their dreams of success.  Instead of providing fulfillment, their trading has led to pain and anguish.  A large part of this pain is due to the fact that they blame themselves for their failure.  They recognize that they have not followed their rules and they feel that they have betrayed themselves.  In reaching out, they ask the difficult question, "Should I stop trading?"

Here is where being a practicing psychologist is different from being a trading coach.  A trading coach typically tries to help you with your trading.  A trading coach is invested in you continuing your trading because that continues your work with them.  A psychologist is focused on your health and well-being and that may or may not include trading.

Suppose we replace the term "trading" with the term "drinking".  A person could say, "I've tried to have a good time drinking and I want to go out with my friends.  I've had too much to drink at times and so I set rules to limit and control my drinking, but lately I've broken all my rules.  I wrecked my car and lost my job.  Should I stop drinking entirely"?

Well, that puts our trading problem in a new light.  We can become dependent on anything that produces big highs--and that dependence can create deep lows.  Indeed, our dependence on trading can create traumatic consequences for us, as this post points out.  In the case of drinking, it's clear that we need to take two steps:  1) stop drinking; 2) get help for the traumas our drinking has created.  That first step of stopping drinking and getting help is always the hardest.  That's why people with drinking problems who have hit bottom often reach out to groups such as AA--for support as well as advice and encouragement.  Connecting with others in healthy ways replaces the drinking.

So, if we've been trading impulsively and addictively and breaking all our rules, should we continue to trade with ever more vows of "discipline"?  Of course not.  We need to give ourselves time to heal from the traumatic consequences, and we need to find others who can support us in that healing.  Only after that period of healing has occurred should we consider returning to markets in a different and healthier way.  The goal is not to trade.  The goal is to live a happy, healthy, fulfilling life.

The first step is the hardest, but it can also give you energy, because it can be the first step toward a new life.