It is Saturday evening and here I am. Last one month, my email box was swamped with requests for mentoring (as of yesterday, it stands at 32 requests). I was doing ‘blanket’ denial for all the requests except one but due to my natural propensity to respond to questions/requests, I replied to those emails with the reason for denying the requests. Eventually, it came to a point where I thought it is better to compose a blogpost about it.
As trading is a mind-numbing activity for me, in the past decade, I have helped few traders (free of cost) for months together with their trading related despairs and few of them are successfully trading fulltime. As I derive colossal pleasure out of these conversations/interactions, it was a win-win situation for me.
Rough plan for mentoring
Out of these 32 requests, I already took a person under my wings to assist in his trading career. He came up with his own system (as am not a system seller, I told him clearly that I will not help him with system building from scratch but I would be able to help him out to enhance it).
Having walked his path before, I think am more like a watchtower for his trading related activities and I believe I can positively impact his trading progress. I spend 1 hr per week over the phone with him and have few conversations over email/chat about his trading related evolution. We both know that there are no guarantee of success for him due to this relationship but we hope that it will shorten his learning curve (when someone who has walked his path is able to guide).
As I don’t have a structured way of doing this activity, this is what I have in mind for him. (We are in step 2 of the process right now)
1. If needed, enhancing his existing system (if am able to spot any logical flaw in entry/exit based on my experience, would suggest that). If the system sounds logically good to me, we go to the next step.
2. As there are 100s of ways to make money in the markets, we quickly progressed on to this step (sticking with the 1st step for a longer time is tantamount to ‘holy grail’ search).
So, backtesting the system for atleast 5-10 years to derive parameters to analyze if it is going to suit the trader’s psychology and if it is worth putting the money in. One system will not suit everyone (so he has to come up with his own) and if a trader is already attuned with his existing system (by trading it live) but not profitable consistently, he is an ideal person for me to help out.
3. Devise a money management plan based on his trading capital, his risk comfort level and backtested parameter (and if he has real trades with the system, nothing like it).This step will take some insightful thinking from my side.
4. Risk management (can be a part of money mgmt) – maximum importance would be given to this step to ascertain the risk appetite/goal of the trader. At the end of the day, risk determines our longevity in this profession.
5. Then, real trading starts – emotions kick-in. So, it is time for the trader to understand how emotions affects trading and how to embrace them (and not fight them out). We will probably handle fear of loss, fear of missing out, taking profits early and fear of pulling the trigger. These are the common roadblocks in a trader’s mind.
6. Once we go through step #5 (which is an ongoing process), we move on to handling drawdown part – both points and time drawdown. Hopefully, I would have fortified the trader about his system drawdown in step 2 itself (during backtesting) but real trading invokes the ‘real’ emotions out of us.
7. Helping him out in increasing position size slowly but steadily – not exponentially. The money management will have a clear-cut crisp plan to do this position size increase.
8. Once the trader is successful consistently (and able to execute his system with atleast 95% efficiency), I guess my job is done. I might have created a trader who can live on his own and hopefully, help others to achieve the same.
Vital pre-requisites I look for
I like to try out new things and as i have never done this before, am thinking of assisting 2 more folks (and hopefully to develop a good friendship in the long run) but i have certain pre-requisites in mind
1. A person with good character, ethics, and morals.
2. Be a person who is committed to things, dedicated, and have a stick-to-it approach
3. Someone who is looking to do things that may be uncomfortable for him to become better.
4. Minimum of 5 lacs in his trading account (more the better as we will have room for efficient money management). If someone is an intraday player, the required trading account size can be a tad lower.
5. Atleast 1-2 years of trading the markets (part time or full time). Cannot be a complete newbie
6. At least 2 hours per day dedicated for backtesting and reading chart patterns (Believe me – this is tremendous amount of work as we will do bar-by-bar replay and few iterations would be there). System building is just 20% of the game but it forms the foundation to the remaining 80% – to be successful in trading.
Fees for this relationship
I was doing this for free all along (and still do) and have spent numerous hours with few folks when I was in Bangalore but later figured out that people do not value the time if it is done free – free meals are only worth that much, I guess. They just squander away the time spent as if it meant nothing. Honestly, it is not about the money as I don’t need this extra money at all but it will make the trader more accountable and he will come to the table more planned with sound questions/utmost sincerity. It will make me accountable too.
Am planning to charge something that is not too less for the trader to consider this as a pastime or too high for the trader to think it as a burden. 20k per month is the figure I have in mind.
So, if you think you have what it takes to be a successful trader (and meet the pre-requisites), please email me with your background in trading/what has happened so far to ‘firstname.lastname@example.org’. If you are a free-loader/don’t take this profession seriously/do not meet the pre-requisites/do not have a system already (atleast a skeleton), please don’t bother to email me.
Hopefully this post gives me a chance to interact with only serious folks who want to do something about their trading profession (or take it to next level).
Happy trading all !!