Do you need a mentor to show you the ropes?
How do you know which mentor is best for you?
Will you have multiple mentors during your trading career?
Or do they even help, over the long haul?
In this episode, Darren and Walter talk mentors – and why you may (or may not) want to find a more experienced trader to help you find the ropes.
Download (Duration: 29:58 / 34.3 MB)
In this episode:
00:58 – do you use mentors in learning other things?
03:25 – having a mentor is one of the best way
06:51 – devil’s advocate
08:19 – how do you choose a mentor?
10:36 – why not have two?
13:25 – driving a car (as an example)
16:15 – attracted to results and performance
18:09 – student-mentor relationship
22:01 – one size fits all
24:15 – new kid on the block
26:15 – Jack of all trades
A Mentor can pull you back in line. [Click To Tweet].
What if your mentor trades a system that doesn’t suit your personality. [Click To Tweet].
The fit between what you’re mentor trades and what you believe is critical to your success. [Click To Tweet].
Darren : There is not just strategy. It’s the whole mindset and method and how you apply the method and how you perform. Then you’re more likely to pick a good mentor.
Announcer: 2 Traders, Darren and Walter pull back the curtain on profitable trading systems, consistent money management, and profitable, psychological triggers. Welcome to the 2 Traders Podcast.
Walter: Welcome back to the 2 Traders Podcast. I’m Walter and I’ve got Darren on the line. Hi, Darren.
Darren : Hi, Walter.
Walter: Today, Darren, we’re going to talk about mentors and whether or not, as a trader, do you need a mentor. What are the pros, what are the cons, why would you seek out a mentor?
I guess when I think about this, one of the things that comes to mind is why wouldn’t you find out what a profitable trader is doing and duplicate those things?
In life, do you use mentors in learning other things? Is it helpful to do that with other things? For example, if you were to learn to be an accountant, would you go and work with an accountant and learn how to be an accountant, or would you go to university? I think most people would go to university, and they would take accounting classes and after they graduate, they’d go off and become an accountant, I suppose, and they wouldn’t necessarily need to have a mentor.
I think what’s happened over time is we’ve moved away from the mentoring model. That’s not the case in everything. For example, in Australia, if you were to become a plumber, you would have to spend a lot of time … I don’t know how many years. Is it four years or something like that? You’d have to become an assistant, and essentially, you would have a plumber mentor. You would be really cheap labor for the plumber and you would learn the trade of plumbing from the plumber, and eventually, of course, you probably are going to go out on your own or you’re going to get a pay rise and stay within the company.
That’s something that’s happened over time. If you look back, going back into Medieval times, mentoring was what happened. If you were going to follow a certain path in life, you would seek out a mentor and that’s how you would learn that trade or that way of life. It doesn’t really matter what it was that you were interested in.
When we talk about trading, one of the things that comes up is how do you … If you are going to seek out a mentor, how do you know who to choose? How do you know who to look for assuming, of course, that you do want a mentor. You could, if you wanted to, Darren, you could actually sit down, read a bunch of books, learn a bunch of trading systems, take a bunch of courses, go into some forums, ask some questions, and figure out for yourself the way that you want to trade.
What I would ask you, before we jump into choosing a mentor and all that, my question for you, Darren, is is it necessary? Is it something that most traders would end up finding useful, to go out and seek a mentor? Or is it possible to go ahead, go it on your own, and learn how to do this stuff on your own without necessarily seeking out someone who’s going to take you under their wing and teach you the ropes and all that?
Darren : I don’t think you need to have a mentor, but I think having a mentor is probably one of the best ways to learn to trade. The reason why is because I think it’s very hard for a book to get across how important the other elements rather than just your trading strategy are. Because you tend to read the book, and when you’ve read it, you’ll put it down and you go away and you start trading, and you’ll forget many of the key points because your brain will take away what it sees as important from the book and it will discount the rest.
Generally, you will discount all of the important bits, like psychology and how you’re going to react in stressful situations, and all of the emotional side. We’ll tend to discount that, a majority of us will, and we’ll take away the easy strategy bits, where to put your entry, where to put your stop, et cetera.
Whereas, when I … The person that made a difference to my trading was my mentor and every day, at the end of the day’s trading, we’d get together on Skype, we’d talk over my trades, we’d pick out the mistakes I made, and we’d discuss why I made the mistakes, and the decisions I was making, and I felt accountable to him because I knew … Initially, I was getting everything wrong and I was thinking I knew better. I know he said I should wait for this to happen, but this looks right now, and I could get in early and save an extra 10 pips on my stop.
We have this in-built thing where we think we’re really good at everything we do. We’re too overconfident. We believe too much in our own abilities, and that’s enough to get us through.
Eventually, after getting bollocked by him every night, night-in-night-out, for not doing it, I started to learn from that. Having someone that I’m accountable to, and someone that could go over my trades with me, for me, was really invaluable and I don’t think you can ever get that from a book or teach yourself it.
Some people will be able to, but you’d have to be a pretty special individual to do that, and I don’t know why it is. I don’t know whether it’s the modern world we live in now and we’re protected from everything now. Nothing’s left to chance. Everything’s insured. Everything that could possibly kill us, we’ve got a rule about. We’re so protected that I don’t think we, as human beings, are particularly good at dealing … we’ve never been good at dealing with uncertainty and risky situations, but I think now we’re especially bad at it. As bad as we’ve ever been at it.
Something a mentor can do is he can pull you back in line every night and not only that, when you’re trading in the day, you’re thinking right, I’m going to speak to him tonight. What am I going to tell him? Am I going to tell him that I did the right thing or am I going to tell him that I broke the rules again? For me, that was really powerful and it made a big difference. I’d say definitely, yes, mentors are very helpful.
Walter: That’s an interesting story. I didn’t know that about your mentor. Again, playing devil’s advocate, couldn’t I do what you just said with a trading buddy? Couldn’t I just … In other words, if a big piece of it is accountability and being accountable to someone, why wouldn’t I just find another trader who’s more or less on my level and be accountable to him and get on Skype everyday or whatever it is and go over our trades and make sure that we’re keeping each other in check? Why not do that?
Darren : I think you could do that, but you have to have some sort of level of belief in that person. If you’re saying they’re on the same level as you, then you might have the difficulty then, when you get together in the evening, of saying I discovered that this … did you see this today? If we put this CCI indicator there, we would’ve avoided that. You spiral a little bit out of control. I think it’s important to have somebody who at least … Not just in your mind. I think it’s important to have somebody that you believe in as well.
Walter: There’s some sort of authority or you defer to the other one? It’s more important otherwise you can build yourself in the wrong direction, start going down the wrong path if you don’t have a little bit of direction from someone who’s already been there. That makes sense.
The other question I have for you, Darren, is when you’re … Okay, let’s say we both agree, all right, it’s good to have a mentor. That’s something that in trading is quite useful. Maybe you can’t get the same out of a book or peppering someone who seems to be a good trader on a forum, on a trading forum, which there are plenty of those out there. You might be able to lock in on someone who you like the way they trade and you decide you’re going to ask him some questions, and you’re going to try and follow him around on the forum and see what you can pick up from this trader.
Let’s say you decide that’s not enough, that you do need a mentor. The question is, because I have some beliefs about this … My question for you would be, Darren, how do you know who to choose? What do you do so that, when you put the finger on the mentor, that’s the one. That’s my mentor. How do you know that that’s the mentor for you?
Darren : That’s a difficult one, really. I think you have to look … For me, I was lucky that the person … I stumbled on the person that I ended up with as my mentor. It wasn’t planned at all. He happened to be particularly good at making me think about my thought process when I was trading and not just the strategy.
For me, what made it easy for me to follow what he was telling me was I studied his system, and it always rang true to me and there was never any thought that you need to add this filter or you need to add that filter. It was pure and it rang true, and it felt right with me, basically.
Is the strategy enough? Really, your mentor should be teaching you about the whole thought process, but I didn’t … At that time, I didn’t give that any consideration at all. I think I was fortunate that he had those abilities.
I really don’t know how you would go … If I was starting again now, and I was … I wouldn’t know how to give someone advice about that.
Walter: It’s a tricky one, isn’t it? What you’re saying, and this is typical, that the mentor that you found was someone who essentially had a trading system that was very attractive to you, that resonated to you, that made sense to you, and that was something that you wanted to do, which I think is how most people end up choosing a mentor. They read the mentor’s book or see what the mentor has to say on a forum or something and then decide yeah, that’s what I want to do. That makes sense to me.
What you’re saying is one of the most critical aspects of trading is the psychology of it and the emotional part and understanding how that plays with your account, basically, and your decision. How do you know if your mentor is able to give you guidance along that aspect of trading.
My question would be why not have two? Why not have a mentor that you learn the system from and then as you mature as a trader, now you seek out a mentor that’s going to help you with the mindset stuff? It’s not necessarily related to the nuts and bolts of the entries and exits and money management and all that, but it’s more about getting your mind right. Why wouldn’t that work? Would that be an option do you think?
Darren : Yeah, definitely. Or even a mentor and then a group of buddies, if you like, who are all trading the same system, which is essentially what I ended up with. Which was we had a mentor and alongside that, we had a Skype group of people that were trading the same system. We could take those ideas and share other people’s experiences and people who understood how we were feeling about certain … Did you see that setup in the U today? There was a not some much accountability with them, but a sort of empathy, and a pat on the back when you did well, and a you shouldn’t have done that. You’re breaking the rules. That works as well. There’s no reason you couldn’t have more than one mentor, though you might end up with conflicted messages.
Walter: Exactly. That’s right. Yeah, especially if there’s some overlap in what they’re teaching.
The other thing I think is something that people don’t think about when they’re choosing a mentor is the … I think there’s a … This is going to sound funny, but I think this is true. I believe this to be true. When seeking out a mentor, a lot of traders make the mistake of placing too much emphasis on how well that trader does and not enough on how well that trader teaches.
The reason why I say this is because we know in psychology, or we strongly believe in psychology, that what happens with any skill is you go through certain phases. You go through the beginning phase where you don’t know what you don’t know. Then you get intermediate where you’re aware of what you’re doing and you’re … You can think about it like driving. When you’re driving and you’re starting to learn how to drive, you don’t know what you don’t know. You have to learn how to make the car go and make it go smooth, and stop and turn, and you’re learning all of that. You’re totally a newbie.
Then you get into the intermediate phase where you know what you’re doing, you’re aware of what you’re doing, and it takes a lot of processing to do what you do, and what that means is you’re aware that you’re watching the car in front of you to see if he’s going to slow down because then you need to slow down. You can talk about what you’re doing.
I remember when I was driving, learning how to drive, one of the things that happened which was funny was somebody was in the car with me, like an older brother figure. I don’t have an older brother, but he was like an other brother, and he said can you turn the radio down, or something like that, and I was driving, and I said no, I can’t touch the dial right now. I’m driving. That’s the mindset when you’re in this intermediate phase. You’ve got so much processing power that needs to be applied to the task at hand, that you can talk about it. You’re aware of what you’re doing.
Then when you get to the expert phase, you don’t know what you’re doing. That’s because you’re doing it on automatic pilot, and anyone who has been driving for 20-plus years knows exactly what I’m talking about. It’s like you’re in a trance state, and you couldn’t even explain what you just did as a driver because it’s so … Not subconscious, but it’s automatic.
The reason I bring this up is because in psychology, we’ve seen this with lots of different skills, not just driving. My question for you, when you’re seeking out a mentor, would be are you sure that the mentor that you’ve chosen can explain clearly, in a way that you understand, what you need to know? It may sound funny to say that, but the reason I say that is because I think there are many traders out there, many traders who are much better at extracting profits from the market than I am, but they’ve been doing it for so long that I wouldn’t … There’s no way I would choose that person as a mentor because I think they would have a difficult time explaining to me exactly what they’re doing and how I can do it. I know it’s a funny thing to say, but to me, it’s one of those things that people overlook when they’re looking for a mentor is how well am I going to be taught by this individual?
Darren : Yeah, definitely. We’re attracted instantly to the results and performance rather than the methods they use, and it’s the methods they use that are going to decide how good of a trader you are. They might have amazing performance, but they might have the most complicated system ever that doesn’t suit your personality, and you’re always going to struggle with it.
I always struggled to learn Spanish. I couldn’t get Spanish. Then I got a CD by this different teacher who used a completely different method and he taught you the endings of the verbs. Then he explained that there was only, I think it’s 1,000 words in the English language that you even need to learn, and he put it in a way that made me think actually, this is really easy. Once I’d learned those five endings and that, I knew all I needed to do was learn some extra verbs and you only need a handful of them to be able to converse. I learned really quickly then.
I think if your mindset is that there’s only one or two ways to trade successfully and everything else is going to fail, then you’re going to be led down that path of thinking that the trader with the best results is the mentor for you. If you can understand that there’s so many different ways of trading successfully and it’s not just strategy, it’s the whole mindset and method and how you apply the method and how you perform, then you’re more likely to pick a good mentor.
Walter: Yeah, that’s well said. I think, from the trader’s point of view, from the mentee’s point of view, the other thing I think that sometimes is forgotten, and I saw this firsthand. When I did my doctorate in psychology, I was in a group and we all had the same mentor and we were all in this laboratory. They called it the psychology laboratory, and we all had the same mentor and she was great. One of the things I noticed was there was a student who was a few year ahead of me, and towards the end of his degree, his academic career there, there was some conflict with how he wanted to do his studies and how the mentor was suggesting. In the end, the mentor said to him, you’re going to have to … If you’re going to do your PhD this way, you’re going to have to pull me off your committee.
When you do your PhD, you have a committee of professors, and you’ve got your head mentor on there and then you’ve got three to four other professors who are helping you along the way with the process and they grill you at the end and all that.
What was interesting about this was she actually told him, she said, look, you’re not allowing me to be a mentor here. The other interesting part about that was that I’ve since learned that one of the typical results for the mentoring relationship is that the student believes that the student is now better at doing what the student learned from the mentor than the mentor. In other words, the natural process for the relationship is for the student to break off and go out on his own into the world, and start trading, for example in this example. it doesn’t really matter what it is.
That’s because the mentor has basically done the right thing. The mentor has done his job in transferring the knowledge to the student to the point the student actually believes the student can do better than the mentor and that’s one of the really interesting things I think about the relationship.
Some of my best students who I know are doing really well, I never hear from them, and the reason why, of course, is because they’ve gone through this process. They’re out and I really have to reach out to see how people are doing because they’re not interested in learning from me anymore. They’re out there doing their own thing. Most of them have quit their jobs and moved somewhere they’ve always wanted to live and they’re enjoying life, but I don’t really hear from them as much as I hear from the traders who are still struggling.
I think that’s an interesting part of the relationship too is that you shouldn’t feel bad if that’s how your mentoring relationship ends. You break off and decide he doesn’t know what he’s talking about. I know how to do this better than he does, because that’s the goal. That’s the logical result.
If you think about it, it makes a lot of sense that you’re mentor would get you to a point where you’re so confident in your skill that you actually believe that you’re better than your mentor at that stage. I think that’s something to look forward to at well for those traders who do find a mentor because it’s natural, it’s a part of the process, and it’s something that I think you should look at as your graduation. I think that’s fun.
Darren : Do you think that’s … When we’re talking about trading, is there a format that mentors … I’ve tried to mentor a few people and I’ve had mixed success, and to be fair, I think more failure than success. I think because I knew good methods to trade and I’d been mentored myself, and I knew how he’d helped me, but he had his own specific style. It’s a difficult skill to learn. Is there key methods that you should use as a mentor to help?
Walter: That’s a great question. I don’t know they can say one size fits all. I do know that I used to teach in a university, so as a graduate student, they pay you to teach classes. In the beginning, I was really bad at it. I was awful at it. I slowly learned a way to present information in a way that would help the majority. Still, you wouldn’t get to everybody, and I think part of it, Darren, from your point of view, part of it is making sure that you have a good fit between what you’re teaching and what the trader believes.
One of the things that I do when I meet students is I try to figure out what their beliefs are about the market. I don’t want to force a round peg into a square hold, so one of the things I try to do is help them along that line, is define yourself as a trader and then from there, we can decide how you’re going to trade.
I don’t know if that’s something that works for every mentor. The other thing I think is really important and I’m sure you would agree is that a lot of what is … In the end, a lot of your profit and loss has nothing to do with your system and has everything to do with you. Any good mentor … You’re going to have to either have a mentor who’s got a really solid background in discovering your beliefs and your emotions and how to manage those and who to see what’s going on internally when you take these trades, or you’re going to have to find someone else who’s really good at that. Learn the system from one mentor and then find out how to work on your emotions and yourself with somebody else.
I don’t know. It’s one of those things where … We were talking offline, weren’t we, where you were saying one of the things you do a lot is try and convince them that when you talk to traders who approach you, maybe it’s not the best idea. It comes down to fit, doesn’t it? Is it really as simple as I really like the way you trade, I want to learn from you? Or is there a little bit more to it that determines whether or not this student is a good match for this mentor?
Darren : Yeah, I think sometimes there’s that new kid on the block. He’s had some nice results. I’ll jump to him rather than thinking, like you say, thinking through it and saying does he trade in a way that I really want to trade? Maybe he trades intraday and you’re only available to trade the daily bars. I have had a few … I tried mentoring a few people that really it didn’t work out well for either party. Now I do try and get to the bottom of why do you think you want to be mentored, what do you want to get out of it, why have you picked me in particular? It’s getting that fit.
Personality wise as well. Having a chat for a bit online and seeing how you gel and if the conversation flows, and you have that conformable feeling together as well, which I had from my mentor. I looked forward to our meetings in the evening, and after a while, it didn’t … It wasn’t about trading anymore. It was more about an empathy thing. We’d get together, how’s it going, and we’d quite of talk about a lot of stuff that wasn’t related with trading at all. There was always that undercurrent about that’s the psychology of trading and that decision you’re making now is why you always exit early and little things like that.
Like we were saying, if you jump on someone who’s the new kid in town, that’s got good results and everyone else is thinking he’s the best thing since sliced bread, then you’re likely to waste a lot of time and money.
Walter: Yeah, that’s definitely the case. It’s like trading systems, isn’t it? I’ve been there where it’s this is the way I want to trade now. That didn’t work out very well. I’ll try this now. It was the … I forget what the phrase is. Master of None or whatever? What is it? It’s …
Darren : Jack of all trades?
Walter: Master of none or something like that.
Darren : Yeah. I know what you mean. I can’t think of it right now.
Walter: Yeah, Jack of all trades, master of none. It was a lot of that going on where I kept jumping and looking back, what I learned from that is that I wasn’t really involved in the money management side of it. I was blaming all of the draw downs on the system when really what I should’ve been doing was taking a close look at my tolerance for risk and my position sizing and that … When you jump away from a system is when you usually have a bad, unlucky run, and it’s how deep is that unlucky run? That determines whether or not you stick with that system. At least that’s how I found it to be for me.
I think, in sum, this is what I would say about finding a mentor. This is what Nicole said the other day. Nicola, our friend who had her webinar the other day. She mentioned that someone asked her that. He said how do you find a mentor, Nicola? She said that’s … Nicola has a great way of presenting things, and she said it’s really easy to me. It’s like how do you choose your friends.
As you said, Darren, when you’re chatting to someone, do you get along with them? Do you seem to look forward to speaking to them? It is someone who you genuinely like? It makes sense to me to find someone that you get along with, someone who you look forward to speaking to, not someone who’s in a position where you don’t … You’re scared of or something like that. I don’t think that’s going to be a fruitful relationship, and you probably want to find someone who trades in a manner that you really like, that it resonates with you, it makes sense to you, it fits with your beliefs about the market.
In the end, realize that what should happen in the end is you should get to the point where you believe you’re doing better, making better decisions, and trading better than your mentor or at least it’s possible for you to do so because at that stage, you’re probably ready to break free.
Those would be the things that I would say about finding a mentor and that would be my advice in terms of what can you do, should you find a mentor … I think you should, in most cases, and I think that if you do, it should be someone that you get along with, it should be someone that trades in a manner that makes sense to you, and that in the end, you should look forward to breaking free from your mentor because that’s part of the process.
Darren : Yeah, I’m in total agreement, Walter. As a final point from me, I’d say it takes time as well. If someone’s trying to offer you or sell you some sort of mentorship, looks like a very short course, and in three days they’re going to make you insanely rich or you’ll never lose again, then be wary of those sort of people. It takes time and it’s about building a relationship with someone, I think.
Sure, some people will pick it up quick, more quickly than others, but it should be something that’s spread out over time as well.
Walter: Yeah, that’s a great point, and definitely make sure that … Yeah, I think that’s a great point, Darren. Thanks a lot for your time and we will see you next time.
Darren : Cheers, Walter.