Saturday, April 03, 2010

Selecting Trading Coaches: Three Considerations

Suppose you've been struggling in the markets. You've been thinking of consulting a trading coach, but you're not sure what to look for. Here are three considerations you might keep in mind:

1) Figure out the problem before you search for a solution - Many people think they need help in taming their emotions when, in fact, it's faulty trading that is frustrating them. A while back, a trader talked to me about his need for counseling; although he was usually a calm person, his emotional outbursts were interfering with his decision-making. When we drilled down to figure out what was sparking the outbursts, we found that he was making major mistakes in placing his stop-loss and exit points. By correcting his trading process, we eliminated much of the problem. Don't always assume that working on emotions will help trading; sometimes the reverse is the case!

2) Take the time to find the right fit - We know from a wealth of research in psychology that the best predictor of success in any efforts at change is the relationship between the people working on the change. A coach can be experienced and qualified, but if the fit isn't there, the experience is likely to prove limited. One aspect of that fit is ensuring that the coach has some decent knowledge of the markets and strategies that you're trading. Personally, whether its athletics, chess, or markets, I would never work with a coach that didn't have some background in the game itself.

3) How well does the coach follow his/her own advice? - I wonder about performance coaches who don't evidence solid performance in their own fields. If a coach is not a productive, high performer, how well can he or she guide your performance? Look for tangible achievements, not boasts of success: a productive person produces. One simple gauge: check out the coach's website. If it's not updated in a while and if it is weak in its content, you know there's a problem. People who have ideas and innovations to share are happy to put their best foot forward to the world: it's the most effective marketing possible.

Finally, make sure you've tried everything on your own before deciding to rely on any coach. My Daily Trading Coach book was specifically written so that traders could learn to act as their own coaches. Once you acquire skills to move yourself forward, you'll have those for life: that can serve you well for a long and successful career.