Tag Archives: mentorship

Mentoring requests and my response

Mentoring

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 ‘marketswithmadan@gmail.com’. 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 !!

Finding the right trading mentor

Along with filling my tires with air and the tank with petrol, I always wash my car before embarking on a road trip. Not only is a clean machine more pleasing to the eyes, but a clean windshield is more transparent to the eyes. This pristine condition however, is about as ephemeral as that freshly filled tank of petrol. Between the smoke and dirt, to pollution and oil, it is amazing how quickly, dirt and gunk can collect on a clear windshield and morph it into an opaque sheet of glass. Even after, I generously apply my windshield washer fluid, I cannot attain the level of transparency I had achieved at the car wash.

Just like car windows, we go through life, and as we progress, we all collect some level of gunk on our souls and subconscious minds. This gunk consists of misinformation, prejudices, conflict, trauma, and myriad other experiences that form negative layers on our psyches. These layers form an opaque film that prevents us from seeing the world in the way it truly exists. And being unable to see reality clearly, will severely limit one from fulfilling their true potential.

This obscuration and its destructive effects, are often exposed and magnified when trading. Negative habits and emotions cause more trading losses, than misreading a chart or misinterpreting market fundamentals. It is often said that the eyes are the window to the soul, but anyone who has ever traded, knows that trading can expose one’s weaknesses, and open up a Pandora’s Box of vulnerabilities, that are there for all to see and quantify.

The only way traders are able to shed this fabric of filth is through self-discovery. You can read as many books on trading as you desire, and create new indicators and ways of looking at, and analyzing the market, but if you don’t look at, and analyze yourself first, it will be difficult to find success.

The road to self-discovery inevitably leads to the path to success, but you must first be able to chip away at the layer that obscures you vision and clouds your view of the road. By determining and eliminating your weaknesses, negative habits, and negative emotions, you will then be able to trade with a clear head and clear vision. But, this is easier said than done. To ease out this ‘chipping away rough edges’ process, we tend to look out for a much more experienced/able person to teach/coach/mentor us. This is exactly where the process of mentoring can be extremely helpful (if not inevitable) in our trading profession.

This blog post has not been confabulated much in the trading books/seminars and articles but nevertheless, a very cardinal topic. As trading is a performance endeavor, it’s natural to think that a mentor can enhance a trader’s performance. Lot of folks actually say that they ‘mentor’ traders but it is actually just trader’s education. The fatal shortcoming of most efforts in trader education is that they provide teaching but not mentoring.

Difference between a mentor and coach

First of all, as we see trading as a performance endeavor, we need to understand the difference between a mentor and coach. In trading perspective, Coaches are people who help traders with the mental/emotional/psychological aspects of trading, including techniques for improving self-control and trading consistency. On the other hand, Mentors are people who help traders with the actual mechanics of trading – the ‘how-to’ aspects of defining setups, setting stops and price targets, position sizing and risk management and sometimes, play a role of a coach as well. So, a mentor can be a coach but a coach can never be a mentor.

Benefits of mentorship/coaching

1. As mentors are dedicated to our success, it is an assumption that we can see him trade live. When we see an experienced person do it live in front of us, one automatically picks up clues on intangible things. Like a child learning from his parents or a observing a mechanic at work when his listens to an engine running. Mentor can shorten that learning curve dramatically but no mentor can completely replace live experience of seeing things unfold for ourselves. Having said this point, it is pragmatically very difficult for the mentor to show him trade live as his timeframe might be different than yours.

2. It’s almost guaranteed that the nuances that a mentor has picked up over the years while looking endlessly at price action and patterns can never be observed/learned by a trainee reading a book or trying out himself until it’s too late.

3. The reason we see mentoring as a key ingredient in success across disciplines is that the right teaching guides learning trials toward optimal development. Great athletes don’t just exercise daily – they perform the right exercises. That is equally true for developing traders.

4. Think about this scenario – we can spend a lifetime browsing trading forums, online articles and reading thousands of threads, books. If you are lucky you stumble upon the right material, recognize its value and stick with it. But a mentor/coach can build a solid base of knowledge and reasonable expectations. They can also give that gentle push if one is lethargic, minute course correction when we go off-course and much more.

Many a times, people wander from one moving average crossover system after another, buy one useless indicator after another or spend years deciphering the code left behind by W.D. Gann (no disrespect to Gann followers), figuring out the influence of Neptune, Uranus and Jupiter on the Nifty and blow up account after account to end up with debt, job loss, a divorce and drinking problems.

5. This game is just too difficult and too challenging that if we are not tenacious, it will be only a matter of time before the market chews you up, swallows you up whole, and spits you right out again (like that scene from Anaconda where that big snake spit out people after swallowing). The only way we’re going to achieve great things in the markets, is to be tenacious to overcome these challenges. When times get tough, how will we gather our senses and get up? A right mentor can do that with ease. Think of a personal trainer in a gym. They will correct the exercises we are doing and introduce new ones. They will help us sustain effort when we lose momentum. Over the course of our gym workouts, we don’t just improve our exercising skills. We also become a stronger person, someone more fit, and someone who feels better about themselves.

Problems faced by mentees while choosing a mentor

1. Mentee can never be sure about the success of a prospective mentor (especially, in an online world full of posers) before submitting himself fully into the relationship. And even if they are successful, they probably trade in a very different style and we would have to either relearn or get very aggravated and it would ultimately be a setback. In that sense, a coach is much easier to find than a mentor. But that is aggravating too because most of us just want someone to tell us when and how to trade.

2. If we are successful in identifying someone who is capable of mentoring and/or coaching, it would still be difficult to convince him/her to mentor/coach us. He might be able to do it for his friends/family but not for complete strangers online or someone we met in a coffee shop.

3. Finding a mentor in a trading forum/social media is like finding a needle in a haystack. All of the information that a new trader needs to be successful is out there for the taking. But there is a thousand times as much useless and misleading hogwash than there is actionable/logical information.

5. Having a mentor will not guarantee success. It still comes down to the individual sitting in that chair, clicking that order into the market and keeping their cool no matter what happens and doing this day in and day out. So, no guaranteed success can lead to discouragement in searching for the mentor/coach

Eight essential qualities of a good coach/mentor

1. He cannot be a teacher only. His primary occupation must be trading (albeit a consistently successful trader – how to figure that out? No idea)

2. He does not have to give it away for free (if you ask me personally, it’s just pie-in-the-sky).

3. It is not important to me whether he shows me his trading statement (no one will do that). I want to see immediate value in his analysis of my trading shortcomings.

4. Pro traders often share similar traits, they are humble to the market yet enormously confident of their ability to stick to a stop and target/TSL. They never ask others about their entry/exit or never post their charts to flaunt their prowess in market reading.

5. He should never get into useless egoistic arguments as successful traders never indulge in petty ego fights.

6. They have very little opinion on ANYTHING under the sun.

7. He must be able to identify trends, pull-backs and all price action with logical reason. If he can’t, he must not commit any risk to the market. And he must wait as long as it takes. All day, all week if necessary. Basically, he should exhibit enormous patience

8. He should be willing to dedicate a specific amount of time looking at my weekly/monthly progress.

Looking at the list, one might think it’s inconceivable to find a mentor/coach. Such people do exist, they are not chimeras. It takes time and effort to uncover gems. Why should stuff reveal itself to us unless we are willing to sweat blood for it?

Final thoughts on ‘mentoring’ – points to ponder

1. No a mentor (or a coach) is not mandatory to be successful. The key word is ‘mandatory’. It should be rephrased as “A mentor is not mandatory for everyone to be successful”. However, since 95% of traders are not successful might be a clue that something else is necessary?

2. If you have children – let me simplify this – would we let them out on their own, let them pick up knowledge on an unstructured basis? We wouldn’t. Skill is only developed through prodigious practice and there is no use of talent with unstructured practice. We all are not Mozart, and based on statistics neither is 99% of society. Of course, the best way to learn is to learn by doing, but there is such a thing as ‘deliberate practice’. Geoff Colvin (author of the book ‘Talent is overrated’) will give a thousand scientific and real examples on why this approach works.

3. We do not have the leisure of learning at our own pace or structure (even though that is the best option available). Trading is a ridiculously competitive dog eat dog world. Any endeavor worth undertaking is worth doing well, especially when it has unlimited potential like trading.

4. Trading is the last bastion of true capitalism. So for us to compete at our own level of possibility, we want the best tools and the best environment that we can get. Then it is up to our ability to use those tools, think on those terms and eventually expand beyond to get bigger, faster and stronger.

5. If someone is charging heftily to mentor you (reasonable charge is fine as the mentee might not take the mentor seriously if mentorship is done for free), time to take that ‘proverbial’ run in the opposite direction. Typically, good mentors don’t advertise. Human nature what it is – once you have made a substantial amount and understand how to protect it (unlike Livermore, who despite being the greatest ever, was never able to protect himself), then trading by itself is boring. Inevitably some pros start teaching, finding those pros – that have made it, been able to keep it are the ones to search for. Not easy, not supposed to be.

6. As I’ve said before, many come into trading with no formal training or background in this field and expect to make leaps and bounds in a relatively short period of time which is completely fatuous. Working with a “mentor” whose full time job is trading would be very beneficial for many traders. What people don’t understand is a mentor can’t instantly make someone profitable. Any that lay that claim should be avoided. A mentor should serve as a person that helps the trader develop a solid foundation to their trading and provide feedback as the trader continues to develop. He should also assist with developing a realistic trading strategy and attainable/measurable goals. So many get lost just in this area alone and begin the futile search for the perfect trading method.

7. If your only refuge is some online forum and/or social media, reach out to those people you admire/get inspiration from. Don’t ‘worship’ them. EGO has no place for real traders and the fact that one trader wants to worship another makes no sense. They are just people who are wrong 60 to 70% of the time anyways. Build some rapport with them over time and they will begin to trust you and ask them to help you a little here and there. Again, don’t WORSHIP them.

Good luck with your search for mentors/coaches and happy trading!!