“I am not bound to win, but I am bound to be true. I am not bound to succeed, but I am bound to live by the light that I have.” —Abraham Lincoln
New traders frequently think that learning from the most talented traders is the best way to learn. On the contrary, new traders should seek the best teacher. There is a difference. I don’t believe in the old mantra “those who can’t do, teach,” because in trading many do both. But sometimes the best trader has no personality, or poor people skills, while a consistently profitable, but not top 10 trader, can emerge as a premier lecturer, one-on-one communicator, and mentor.
It is just human nature to be interested in how others are doing, especially compared to you. But this mentality is not in the new trader’s best interest.
If the top coaches were not the best players, then why do new traders look to the best traders for mentorship?
“Many of the great coaches were competent players in their own right, but not all-stars. They knew the game, but their passion was for teaching and developing players. They worked on their coaching game as hard as the all-stars worked on their playing game. It’s all about knowing what makes you tick, and what you’re really good at.”
The skills necessary to become a great trader are different from those required to be an effective trading coach. Being a star trader requires superior pattern recognition and discipline. On the other hand, superstar trading coaches are often:
Obsessed with finding better ways to teach
Highly motivated
Communicate clearly
Consider a trader’s unique style
Patient
Know when to get tough
Unselfish
Set firm values
Believe in the student
NEVER SATISFIED
I identify all of our weaknesses. I make a list of what we can do better. We never stop improving our training program. We never will.
A great trader constantly thinks about how to become better. They scour charts to find the next big trade and diligently reassess risk management. A great teacher thinks about better ways to instruct. Creating our webinars, videos, morning meeting agendas, trading plays, and the rest of our training program took years of work and many after-hours alone in my office saturated in grunt work.
Joe Torre was always so calm around the Yankees during their great run. No matter what the situation, when the camera found him in the dugout he always wore a calm exterior. This made an impression on me as a teacher. Part of my job is to be calm and reassuring while teaching. But this should not be mistaken for a lack of competitiveness. I am most competitive with developing our training. I am most interested in offering the very best equity intraday training program on the Street and building our firm. This is most challenging to me and the best use of my talents. It is just not interesting to me to be the best trader on the Street anymore. That dream is now for those I teach to pursue.
HIGHLY MOTIVATED
A great trader may lack the incentive to create the best training program.
They are making millions trading, so why bother teaching a new trader?
We both recognized that if we developed an excellent training program, our sacrifices would be rewarded.
COMMUNICATE CLEARLY
A great teacher communicates exceptionally well. A great trader can be incoherent.
Teaching momentum trading is very difficult. But a good teacher can sit down and figure it out.
it must be:
Simple Unexpected Concrete Credible Emotional Filled with stories
As coaches, we must teach our important points with the preceding criteria. Like a great trader who can point out the most important technical levels, a great teacher communicates each important teaching lesson with these principles. Does a great trader have the discipline and knowledge to do so?
Consistently profitable traders constantly evaluate their trading system. They make adjustments every month, every day, and even intraday.
Every day is new. There is no “system” to learn. It is about developing trading skills and then making adjustments continually.
A new trader must start by learning the basics. Architecture students do not start by designing skyscrapers. New traders must focus on developing trading skills, discipline, and controlling their emotions. They must develop a foundation from which they can build. They should start with straightforward trading setups. Simply, they should first learn how to trade.
With the mindset that all you must do is follow prescribed levels, then you are going to get stopped out, complain, and lose money. The market demands more. The market does not reward the trader seeking lazy trades, buy here and sell here.
The market is always changing. Setups that worked yesterday may not work tomorrow. It is paramount to develop trading skills so traders can adjust to market changes.
A superstar teacher, however, will teach you comprehensive trading skills so that you gravitate toward a style that is best for you.
Developing traders who wish to make more ought to look inward. Most new traders need to become better at the setups that are working for them, make more of them, and learn to add size in these trades incrementally. They also need to eliminate their mental weaknesses. Contemporaneously but slowly, they should add new setups to their quiver. This is the path to improving profits.
As traders, we can learn from Abraham Lincoln again, who said we must be disciplined “by the better angels of our nature.” Poor traders blame their trading platform. They blame those who sit next to them. They complain about the A/C. They harp on things out of their control such as SEC taxes, ECN charges, and data fees. There is always something or someone to blame.
Coaches need to think carefully before they speak, so they are providing targeted, individual messages and feedback to their students, which is best for their development.
John Wooden wrote in Wooden on Leadership, “Many leaders don’t fully appreciate the fact that by telling someone what to do you must teach him how to do it. And this process requires patience.” As a trading teacher, you must explain why a rule is in a trader’s best interest. You ought to get the new trader to buy into the importance of this rule or any rule. The great speech writer and Wall Street Journal contributor Peggy Noonan in “On Speaking Well” counseled that “the most moving part of a speech is always the logic.” Great teachers use solid reasoning to make their teaching points. Being the boss is not a good enough reason to enforce a rule. Well, it may be, but it is not good teaching.
It is also the job of a mentor to challenge their students.If a trader is working hard but not yet getting it then they deserve patience. But standards must be set. And when traders are violating core market principles, their feelings should not be spared.
Sometimes you must get a trader’s attention by raising your voice.
A good teacher is most concerned with the improvement of their students and not being the most popular guy on the desk. As part of getting tough, sometimes a trader needs to be called out.
“If we make you so uncomfortable for missing a trade, you will eventually become so disgusted with being called out that you will stop missing the trade.”
Great teachers must be unselfish. They must sacrifice a considerable amount of their trading profits as they improve their teaching. There are talks you must have when you are tired and want to head home. There are days you have to work when you want to rest.
Our traders are taught the value of hard work on my desk. I preach that fully developed trading skills is the answer to their trading consistency. I am an exceptionally hard worker. I stay late, work weekends, and work consistently. This is not lost on any trader on my desk.
These new traders believe that if their work output is x, then their reward must be x. If only that were the case. When you begin as a trader, your work output must be 10x to make x.
Potential absent sustained effort is not rewarded by the market.
The developing traders who love trading and work at it do the best.
If you want to be a HOF trader, then embrace the value of doing something well for the sake of doing something well. If you are asked to do something, then do it as well as you can. There really is nothing else that is as satisfying. For the developing trader, 10x equals x.
The new trader who values hard work just may very well become a superstar trader.
A good teacher believes in every one of their students.
There are traders who just need to be told they are ready. They are like great thoroughbreds that just need a whip from their jockey. “It’s time.”
They can do it, they just need to be led with a teacher’s personal belief in them.
what we can learn from a great trader is one’s trading is just a mirror of one’s life. To be a disciplined trader, you must first in fact be disciplined in your life.
What good does it do to teach a new trader to trade with discipline if he is not disciplined in his own life?
Ten Things I Learned from a Professional Trader (Brian Shannon)
Here are 10 things that I learned from Brian’s lecture:
1. Brian does more preparation than 98 percent of all the traders with whom I have traded or trained.
2. Brian knows exactly how he makes money as a trader and which setups are best FOR HIM.
3. Brian accepts that the trading patterns that are best for him often may not work.
4. Brian reduces his risk in trades that are not working for him quickly.
5. Brian trades Stocks In Play just like SMB, but he goes about his search distinctly. He carries around a list of 200 stocks he most wants to watch during a given period and then hammers down from these options daily.
6. Brian readily admits two weaknesses in his trading, which are also mine: selling too early and not having size for the entire move. There is no destination for a trader. There is nothing to get. There is only continually working to improve every day.
7. Brian knows more about technical analysis than almost all traders but seeks confirmation from the order flow.
8. Brian shares that a setup may not work the first or second time. But he has the confidence and persistence to stay with his best setups and make that third trade, which may lead to a winner.
9. Brian left me an autographed copy of his book, Technical Analysis Using Multiple Timeframes, as a gift and could use some help with his handwriting. But seriously, what an awesome gift!
10. Brian loves drinking with GMan. Hard to meet a better person and trader to learn from than Brian Shannon of alphatrends.net.
when I need advice, I contact the best trading teacher that I know. We are all perpetual developing traders, and I recognize there is always more to learn.
If you are a new trader or an experienced trader who needs some advice, then find the best teacher.
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