Recently a long conversation over coffee with a fellow trader triggered lots of thinking regarding the journey of becoming a successful independent trader. This is Part 2 in a series of blog posts, in which I will share and discuss some of these thoughts.
This post touches on goal setting, breaking down the journey and the use of mentors and coaches.
(Link to Part I: Two traders talk over coffee…)
Breaking journey down into digestible chunks
Small goals make a journey more plausible and keep motivations up – my trader buddy recently started a meditation course. In the course they encourage participants to meditate daily for a year – however they break it down getting you to aim to do 1 day, then 3 days, then five, then 8 days, then 15, then 1 month and so on. They know that bashing the ‘1 Year target’ around the heads of their newly meditating folks wouldn’t be constructive – it would be setting the bar too high.
- Traders with varying levels of trading times under their belt typically have a goal of becoming a profitable trader, or ‘trading for a living’. Being realistic, that goal is something that becomes achievable, if ever, only significantly further down the track – it must be at least the equivalent of aiming of ‘not missing daily meditation for an entire year’ on Day 1.
- Setting smaller milestones/goals should be more constructive.
- However, how does one know what those milestones should be at the start of the trading journey? One must do one’s own research to determine a good path to take. Good luck with that! Using a trading coach, or working with somebody who is a profitable trader, is probably a smarter way to go about it. Again, finding the right person might not be straight forward. It becomes easier to judge once you know what you are looking for. I have pointed out some good finds on the Suggested Sites tab.
- During our talk, we came up with our own list of milestones – establishing good processes, understanding and applying money & risk management, having at least one researched and tested profitable trading strategy, need for consistency and discipline in execution and daily trading habits, understanding and applying relevant mental aspects. These points are rather general. Incidentally, I tried to compile similar lists – back in 2013, and in 2017 – in reading these again, I realise that the lists have not changed a great deal.
- In any case – we came up with this list thanks to our own trading experiences – somebody starting out new doesn’t have any experience to draw on.
After coming up with a sensible list of intermediate milestones, the list can be used as basis for setting some timelines and goals to work towards to. Having multiple milestones along the way allows the aspiring traders to focus on one step at a time, has a goal that is somewhat within sight and reasonableness, and consequently should keep motivations at a good level.
Trading Coaches and Mentors
We agreed that all this becomes easier when working under the guidance of a coach or an experienced trader friend. I had the luck of working with principally two mentors over the recent years. Both are very experienced in teaching and developing aspiring traders (which is crucial!). Both were generous were their time and tried to help as much as possible – in various of the milestone areas mentioned above. They did so via explaining things, pointing in the right direction for additional materials, putting me in contact with others who might be able to help and simply encouraging when needed. It must be frustrating for both of them, after having invested all this time, to not see me being a profitable trader several years down the track. I will discuss my personal situation in this context, in more detail in subsequent parts of this ‘series of blog posts’, but enough on that for now.
The Turtles experiment in the mid 1980s was a good illustration of trainees succeeding under successful trader mentors. Two trader friends made a bet as to whether any random individuals off the street could be taught how to trade. Many of these recruits did succeed, provided they followed the exact mechanisms of the single trend-following strategy taught to them. Incidentally, the edge of the strategy disappeared in the 1990s and the trading strategy in its original form is no longer profitable.
Not many people were lucky enough to be chosen for the Turtles experience, however thanks to the online world that we have in the 21st century, there are a raft of trading room options available where traders share their knowledge and trades. Again, this can be a hit and miss approach. How to identify the good from the bad?
That’s all for now. Keep your eyes for Part III in this series. Additionally, please free to share your own thoughts and/or experiences on these points with comments below.