Tuesday, March 16, 2010

Virtual Trading Groups: Leveraging the Learning Process

A while back, I wrote a post that described how trading dreams come true. Since that time, I've seen many traders fall short of their goals, and I've seen a good number find success.

An unusual number of those that succeed do so in part because they find opportunities for mentorship. I'm not talking about the seminars, classes, and other events that offer "education" for traders. Rather, I'm describing a professional relationship in which a more senior trader models proper trading for a junior trader; offers timely feedback to the junior trader; and helps the junior trader structure his or her learning process.

It's rare to see entirely self-taught individuals achieve world-class levels of performance. More often than not, whether in athletics, performing arts, or trading, talent develops by being exposed to talent. It does not form in a vacuum, except perhaps in very unusual cases of early prodigy (Bobby Fischer in chess comes to mind).

One potential advantage of affiliating with a trading firm is that this can afford you an opportunity to benefit from mentorship and learning-by-example. Not all trading firms cultivate a mentorship culture, however. Many traders keep to themselves, perceiving no incentives to sharing their time and ideas with others. My experience is that the failure rate of new traders is significantly higher in firms that do not follow education and training with ongoing mentorship.

For those who cannot affiliate with a trading firm, finding mentorship can be even more challenging. I have long championed the idea of "virtual trading groups", in which like-minded traders (those who trade similar markets and strategies) extend their self-coaching processes to a group-wide level. If I learn a lesson in the markets or discover something that works for me and four other traders in my group do the same, we have just created a situation in which all of our learning curves can rise exponentially.

The key is finding those like-minded traders. It *can* be done, but it takes initiative and a willingness to reach out to others, put oneself out there, and exercise a creative vision for what a virtual group might look like.

Thousands of traders individually try to reinvent wheels every year. How much more could they achieve by joining forces, sharing strengths, and mentoring each other?