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The Differences Between Coaching and Mentoring in Trading

Mentoring traders is a fairly simple task. We can ask another trader what to show us what he does,  utilize his same routines, and through disciplined repetition, walk away with a functional trading model.

However, as life unfolds, we can get so caught up in the day-to-day that we lose track of our objectives, get drained by “small stuff”, or lose perspective on what is really important versus what is superfluous. Ultimately this sends us on a tangent, and we get further and further away from the routines that were working, initially. Fears, self-doubt, insecurity but also avarice, ambition, envy, anger and pride get in our way, steal our peace and just stop any progress we wanted to make.

Coaching is all about removing interferences and allowing you to express your true potential.

Think about your favorite athlete, your favorite performance artist, or the people that are most successful in what they do. Think about Michael Jordan, Phil Mickelson, or even Paul Tudor Jones. Would it surprise you to know they all employed one or more coaches, in order to establish and reach excellence?

But how exactly does this happen? What guidelines can a coach or mentor offer you, that will let you continue to perform at high levels without further professional help, in the face of considerable uncertainty (the markets) and day-to-day personal problems?

When To Seek a Mentor

A mentor is useful whenever you’re transitioning into a new venture, or haven’t yet found your “sea legs” so to speak. Here is the kind of personal situation where mentoring would make sense:

  • you have a couple of years of experience under your belt (you’ve given it your best shot): it’s difficult to mentor people that haven’t already attempted to understand the markets on their own. People that confront the markets and fail, learn a lesson in humility that all successful traders (including the Market Wizards) have gone through. Only with a humble mindset is it possible to learn anything at all, because only at that point are we willing to try something different, or listen to the advice of someone else.
  • you are not under pressure to trade for a living: in my experience, anyone who is under pressure to perform is unable to maintain an objective and collected mindset. Instead of waiting for the markets to line up and offer a Grade-A opportunity, the traders I’ve helped, that were under pressure, would scour over charts each day “looking” for setups, transferring the 9-5 job mentality to their trading and hence forcing things. This is why I truely believe that you cannot, and should not trade, if you need the money.
  • you have the time to study the markets: once again it’s a matter of being in a relaxed state of mind, with no pressure to perform, and having time to soak up the “lessons” from the mentor, review them, test things and record observations.
  • you want to cut to the chase: mentoring is a great way to shorten the learning curve, of all the above conditions are met. The value of a mentor resides mostly in the years of experience he has gained. Learn from his mistakes, listen to his advice, learn his speciality. And then you can continue exploring other venues, other systems, but you’ll always have a functional model to fall back on.

Mentoring is about the desire to learn from someone else, because you’re stuck or have reached a plateau. In my own experience as a mentor, I typically end up transferring my own daily and weekly routines over to the trader gradually, and then through constant feedback I make sure the trader stays on track, gains consistency and ends up seeing the markets through my own eyes.

Then the period after this is left to the trader to mould things to his own personality and  experiment with the various inputs. Here is a video of how a former mentoring student of mine confronts the markets.

When to Seek a Coach

Coaching is quite different than mentoring. A mentor needs to have experience in the field. A coach does not, because coaching is all about removing interferences that are blocking the trader from expressing his full potential.

Coaching is about believing in people’s potential, and helping them to overcome their limits (which are usually mental and self-imposed).  It’s about elevating people in a lasting way. As a coach I have a positive perspective on human potential. I want you to do well and will do anything I can to help you reach the next level.

Here is the kind of personal situation where coaching would make sense:

  • the first thing is that you are already profitable in some fashion, and have a working trading model of some sort. Without this main ingredient, mentoring is definitely the better approach.
  • you feel that something is blocking you: this is a common feeling. Some traders that have specialized in one approach, frequently start seeing other opportunities in the markets and wish to exploit them, but don’t have the tools or the confidence to do so. Alternatively, it could be that some form of fear is holding back the trader from utilizing his current model to it’s full potential.
  • your trading is proceeding well, at the cost of other areas of your life: this is actually more important than pure trading issues. A trader I helped some time ago, had gone through years of torment whilst learning to trade. By the time he came out with a working model, he had serious self-worth issues and had put the rest of his life “on autopilot”. He effectively couldn’t recall much at all about his life during those years, if not the struggle to learn how to trade. This is why maintaining perspective in life is so important. You may reach an objective, but at what cost? Are you creating a life that’s truely worth living?
  • you are not reaching your objectives: once again this is a tricky situation because the natural objective for most people is “to make more money”. But if you go about the markets with that kind of mentality, usually it transforms into forcing trades, being more active and diluting quality for quantity. A better way would be to explore other trading models or a different position sizing model – which moves the focus from “money” to “playing the game better”. But more in general, some people go through the day always focused on meeting objectives and they forget to live. It’s really no different than chasing a dream and ignoring life  – which is what happens when you’re making other plans as John Lennon said. As a coach I try to match your objectives with your character and with your true priorities in life. For example, one trader I helped had a strong desire (objective) to learn how to trade profitably. Initially I mentored the trader, until he learned how to trade. The trader came back to me months later, with a positive track record but with a “hole”, with some internal discomfort still in him. As it turned out, trading wasn’t the best objective for him in the first place. Through coaching, we identified that his desire to trade was actually just an intellectual quest – to finally be able to understand the markets. But he found an actual dislike for trading in itself.

While more difficult to pin down than mentoring, coaching is about generating awareness and responsibility. A coach is a person that helps ideas emerge, a facilitator, a conscience developer. After all, we can only control or work on those things that we are conscient about.

Whatever we are not aware about will control us. So much of the coaching venture has to do with gaining an objective understanding about what is going on around us and what we are perceiving.

What my experience with traders has taught me is that more often than not, problems related to trading are not trading-inherent at all. They are only a reflection of an internal belief or issue, or a manifestation of a dysfunction somewhere else in the trader’s life.

Austin is an example of someone whom received a tad of coaching within FXRenew. Austin went through our System Development Workshop, so my work with him was the same kind of “coaching from afar” that all workshop students receive, through the interactive forum. Austin was being blocked by the usual “monetary objectives”  that traders create. The cure was simple in his case: move the focus from the monetary objective back to the process: focus on trading well, and the results will follow.

Strategies for Maintaining Peace

The late Ari Kiev and Van Tharp have written at length about the various issues that traders encounter. So going through a list of issues wouldn’t be exhaustive or useful. What might be useful, in general terms, is a strategy to achieve and maintain peace of mind in any circumstance. If you can achieve and maintain a peaceful posture, without letting your emotions get in the way of objective observation, self-awareness can be unleashed.

Here are the enemies of peace. In order to fully experience how devastating they can be, I’d encourage you to empathize with each one, using your own personal experiences or feelings. Do so in a non-judgemental way. Don’t worry about the things you feel. They need to emerge if they are to be confronted and eliminated.

  • ambition: a dissatisfaction with yourself and your activities, which can distort reality since the focus is always on the next objective and never on the process.
  • anger: a destructive emotion that can destroy any initiative.
  • avarice: believing that you need certain things when you probably don’t; the feeling that what you depend on will be taken from you.
  • envy: an irrational comparison between what you have and what others have achieved.
  • pride: a need to impress or demonstrate something.

All the above can be confronted and eliminated mostly through:

  • gratitude: an uplifting mindset that shifts the focus from what you don’t have, to what you DO have. Think of the individual that put his life on autopilot in order to learn how to trade. How much did he take for granted? His wife, tolerating his obsession? His job, providing him with the possibility to actually see if trading was up his alley? His health? The food he could place on his table? The clothing he could afford to wear? How close to a self-induced depression can a person get, if led by the wrong principles?   Always be grateful for what you have, independently from what you have, because only being focused on what you don’t have is an invitation for life or fate to take something away from you, in order to teach you a lesson.
  • humility: only through humility is it possible to make true progress. For example, most traders that I’ve helped have sought for help only after a series of hard knocks. Whether it was loss of money, loss of health or extreme frustration, most traders don’t start out being humble. The market has to teach them a lesson before they open up. More in general, humility in life means that no job is too menial, no task is too small. It means letting go of preconceived ideas and being open to being wrong. It’s the gateway towards being inquisitive, as opposed to being a know-it-all.
  • self-confidence: a broad term which means you are focused on running your own race, and you believe in your capacity to overcome whatever lif throws at you, through resourcefulness. You’ll be quiet but concentrated, working away with your head down and planting the seeds of your future success, one day at a time.

The Only Objective that Works

Most gurus in the coaching arena, from Tony Robbins to Van Tharp, talk about establishing goals and objectives – in life, as in your trading.

My experience has taught me something a bit different, because just thinking about objectives is still in some way thinking about what you don’t have. Moreover, how do you even know your objectives are suitable for your persona?

I know a person who has always had a passion for automobiles, for the mecchanics of the various kinds of motors and all those details that frankly most of us ignore when buying a car. Naturally, this person went through a professional training in high school, which was in line with his natural vocation. However, a seed was planted in his mind at a certain point during high school: that being a good mecchanic or a car salesman was not an important job. So when he received his very first rejection, after high school, not getting the job he wanted, he felt angry and pride took over. He decided he was “better” than the people that turned him down, and would go through university and become a manager somewhere.

He reached his objective of getting a degree. But it was extremely hard, because studying so much wasn’t a natural talent. Furthermore, after nearly 15 years he has yet to reach any kind of managerial position and is quite frustrated with his current job. He might be making a bit more money than a basic mecchanic, but his career is standing still.

I’d like to imagine what might have happened if he had been humble enough, and self-aware enough, to take up the job as a mecchanic. With his passion, along with a decent amount of experience on the job, perhaps one day he would have been able to apply for a position at Ferrari, or BMW, or become the mecchanic of a race-car driver or a superbike pilot. You just don’t know what could have been.

But even now, instead of looking at the decisions he has taken and taking responsibility for them, he still has all these emotions locked up and eroding him from the inside.

Here’s the key: you need to seek out a worthy purpose in life. Not money. Not success. Not fame. Not what somebody else tells you to become. Your purpose will come from within you, and will give you a means to move beyond defensiveness, ego, and tap into your spiritual potential for courage, love, compassion, by focusing on the present and chosing what ONLY YOU have.

It’s not about the objective, it’s about having passion for the pathway that leads towards that objective. In trading, this means having passion for the markets and for learning how to exploit behavioural traits in a systematic manner.

  • If you enjoy the process (in trading, as in life) you will most likely reach your objectives.
  • If you put the objective first, you might not get through the process. And even if you do, it will probably not work towards your strengths at all.

Over to You

Life really is too short. Don’t waste away in front of screens each and every day, and forget to live. Don’t sacrifice your health in order to gain wealth. Seek peace in every decision you make, and make sure you can always face yourself in the mirror after every decision, and still accept the person you’ve become.

Live each day in accordance with a worthy principle that inspires you to do good and helps you express YOUR talents, the stuff that only YOU can give to the world.

A question that can help in this sense is: if I were to disappear tomorrow, what would the world lose? What would the people around me not have anymore?

Sure, trading can be a part of your life. But don’t make it the fulcrum of your life. Don’t waste years trying to figure the markets out. Be humble, ask for help, get past that initial stage and get to a place where you can actually find out whether trading is suitable for you or not! And be open to the fact that you may find out you don’t like trading at all!

The truth is, when you remove a mental stronghold (and “being a successful trader”, “being rich”, “making tons of money”, “being important”, and similar goals are ALL mental strongholds) and listen to yourself and others in a non-judgemental and accepting way, you begin to tap into your true spiritual potential and anything becomes possible.

About the Author

Justin is a Forex trader and Coach. He is co-owner of www.fxrenew.com, a provider of Forex signals from ex-bank and hedge fund traders (get a free trial), or get FREE access to the Advanced Forex Course for Smart Traders. If you like his writing you can subscribe to the newsletter for free.

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