Can You Teach Someone To Trade

I had an interesting email conversation with a new trader recently, and thought I should share an excerpt of the conversation, as it contains extremely important information.

Question:

What I don't understand is that all the books that I have read say that if you ask a successful trader to tell you the secret formula to their success they are not able to tell you or identify what it is and yet a lot of the trading psych books attempt to tell you what you should be doing to become a successful trader. Do you see the contradiction? Can you teach someone to trade?

Reply:

I don't believe you can teach someone to trade.

You can teach the tools and some of the fundamental principles such as money management and risk control, but learning how to trade is something that they must do themselves. All a teacher can do is provide guidance and coaching/mentoring. A student learns intuitively how to become a consistently profitable trader through practice in the markets - through continual successes and failures in the market, guided by a coach/mentor who will keep them on track, and directed by a solid plan of attack (trading plan) and review process.

Trading psych books that say you've just got to think positive thoughts and believe you'll be a successful trader, and the universe will provide - rubbish. Trading success comes from consistent application of a positive expectancy system. Consistent application comes from total confidence in your trading system and in your own ability to always act in your own best interests. Unfortunately this confidence only comes from success. You can't fake it through positive thoughts. Catch 22 situation - you can't trade successfully unless you have total confidence in yourself & your system, and you can't have total confidence in yourself & your system until you trade successfully.

Without total confidence, the implementation of your trading plan will be affected by all your internal fears, and you will act totally opposite to your own best interest. Every trade contains the seed of total success or total failure. You won't want to take the loss because of what ultimate failure means to you (loss of face, not worthy of love, whatever), so you'll hold on to a losing trade as it continues past your stop loss. You won't want to let your profits run out of fear of the market taking that money away, and having to once again face your ultimate fear, so you'll take the money that is available and run (and then watch the market continue on without you).

Where does that leave the beginner trader?

Well, most simply give up after losing money. Those who persist though eventually stop the search for a holy grail indicator solution and look for an answer elsewhere. And that answer is - in the absence of total confidence - something else that can keep you on the path of consistent application of your trading plan as much as possible:

· firstly you need a positive expectancy system (proven through back testing & forward testing)

· appropriate goals (process based, not outcome based), and action steps based on those process goals.

· peak performance mindset (this is where visualization & affirmations and all that other stuff come in - not to just believe that the universe will provide you with success because you deserve it, but rather to keep you implementing the action steps (process goals) that are needed for proper implementation of your plan)

· regular review, to identify diversion from your planned course, and get you back on it.

· repeat, repeat, repeat, for as long as it takes for you to gain confidence.

As you use this process to stay on track, you'll get increasing success, and therefore increasing confidence, which leads to it being easier to stay on track, leading to more success and more confidence. It builds on itself over time. Eventually, what is required for successful trading will be intuitively internalized.

What am I getting at here: It can't be taught. You learn it yourself through trial and error, and through 'unlearning' all your fear based decision making processes.

I like that - you need to 'unlearn' your way to trading success.

So when you ask a successful trader what is the secret - there isn't one - they can show you the tools that they use, but they can't explain the internal intuitive decision making that goes on - it's beyond consciousness.

All someone else can do is to teach a new trader the processes, but learning to become world class requires implicit learning through consistent application. Practice, practice, practice. This is where trading psych (and sports psych and any other peak performance psychology can help). So if the trading psych books are telling you to just believe in yourself more, and visualize that sports car in the driveway of your 10 million dollar mansion - get a refund - it's all rubbish. But if the trading psych book provides guidance on goal setting, positive mindset, and consistent application of your plan (as proven in sports psychology) then it's a good book. That's what the trading psych books are doing - not providing you with the 'secrets', but pointing out to you the path towards discovering your own success.

Based on that, to answer your question:

· No, I don't believe someone can be taught to trade. They can be taught the process and the tools. If they are committed enough, they will then learn to trade through their own trial and error.

· No, I don't see a contradiction. The successful trader can't show you their secrets, because there are no secrets. The psych books (at least the good one's) are also not showing the secrets, but rather pointing to the process and tools that can keep you on the disciplined path of implicit learning.

Happy Trading,

Lance Beggs

Trading Website: www.YourTradingCoach.com

Trading Blog: www.YourTradingCoach.blogspot.com

YouTube Videos: http://www.youtube.com/YourTradingCoach

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