there are some people who make a living by trading, and some people make a living by teaching others to trade, and some people doing both. i always wonder for those doing both, what is roughly the % breakdown of the two income sources. If there is such a guy out there, please give me some ideas. i'm beginning to have some success trading stocks. the reason i want to teach is that i believe "a teacher teaches what he needs to learn". I believe i can become a better trader through teaching. If someone out there is doing similar things, could you share your experience with me???
It sounds as though on one hand you want to make some money teaching and on the other learn through teaching. On top of that you say you've just started being somewhat successful. At that level I doubt that you would gain the confidence of your students. Anyway, just to practice my typing I'll tell you of my recent experience in helping someone get his feet wet in trading. Over the last two years I have helped a university student who works part time at a Starbucks I go to everyday. He knew that I have been trading for a living for the last 35 years or so and came to me one day with a book on TA that he had just bought to ask me what I thought of it. I knew that he was a 2nd year science major at a top university and a pretty sharp kid. So I told him that he should consider reading a different book which I recommended and that I would be happy to help him get through it. That took the better part of a year, and I felt he had graspt it. So I told him he should now start paper trading when he could spare time from his studies. But before he started working at Starbucks he had done a little bit of trading. So as the market was not completely new to him, instead of paper trading stocks as I had suggested, he jumped in and started trading the Mini-Nikkei futures contract. I don't know if he did that out of confidence or, being a poor student, that one contract cost less than buying stock. Anyway, he traded that contract when he had time for one year. And that kid made a 700% profit!!!(not a typo). And that was without any big single gains. You would think after doing that he would quit school. Nope, going on to graduate school. So, to answer one of your questions, did I learn anything by coaching him. To be honest, no. But as you can see by my handle I consider myself to be a permanent student of the market, and had really hoped that the 'You learn by teaching' saying would prove true in this case. But even though it didn't, I can truly say it was extremely satisfying to watch that kid progress. Typing practice is over. Could never really get the hang of this. Seems like I've too many fingers, or maybe not enough.
I have started offering mentoring recently myself, diversified income stream is always good. And yes it does seem to help keep me in the right frame of mind in my own trading
You make an excellent point. A great way to cement a new concept you've learned is to teach it to someone else. I kept a journal here for some time and also posted very frequently even after I closed my journal. The act of writing answers to questions, or asking questions of other traders helped me tremendously and still does. I spent several months last year developing trading strategies and trade management rules. I had a few other traders to bounce ideas off of. We had a Skype group and spent many hours together every day for about 7 months. I taught some people how I trade and in the process answered many questions. The act of doing that forced me to define what I do in a clear manner, devoid of ambiguity. In other words, sometimes I trade a breakout and other times I don't. Why? What are the parameters that would convince me to buy a new high yesterday but keep me from buying a new high just a while ago? By thinking about the things that kept me out of the second trade, I not only answer someone's question, I cement that concept in my head for the future, thereby avoiding a possible mistake. Now, note that I said I taught some people "how I trade", not "how to trade". I discovered that you can't teach someone how to trade. You can teach them how you view price action and how you trade it. You can provide them with explicit rules for entries, stops, profit targets, and additional trade management (such as letting winners run further than target). You can prove day after day that the strategies work and produce consistent profits. But even if the student were to take a test and demonstrate that s/he fully understood how to recognize setups and how to trade them, this knowledge in no way ensures the student will be a profitable trader. I discovered through my own difficult struggle to trade with Mark Douglas's "trader's mindset" and through mentoring a few traders, that the chasm between knowing and doing can be enormous.
NoDoji, thanks for your sharing. another question i got is: when you teach people the way you trade, do you worry about giving away your edge??
It is impossible to negate a true "edge" in trading if that edge is based on price action itself. There is no possible way that any number of retail traders collectively can affect long-term price action in any underlying market or symbol with liquidity. Let's use an example that I personally don't trade... the cup & handle pattern in ES emini futures. Assume we build an approach for narrowing down the specifics of a C&H pattern and trading it mechanically as possible for self-directed traders pushing the buttons manually. We can break that pattern down into three parts: the base of cup, the higher-high or lower-low handle and the breakout lid of both. Three different price levels to the same general pattern. Then we can identify and teach how to objectively quantify and measure each part... trading the "wholesale" base where best extreme price entry would be, trading the handle which is in essence just a 1-2-3 pattern in formation and then the break of entire pattern, which is the "retail" breakout entry zone. From there we can plot this general C&H formation on a 5min chart, 2min chart, 1min chart, 10,000 volume, 5,000 volume, 1000- tick, 500-tick, 20-range chart and come up with various entry points across each chart based on price bars formation. By the time you are done, there are traders working different chart settings at one, two or all three zones of the cup & handle pattern. In other words, a systematic type edge is created that spreads similar results over time across a price zone on the chart... repeated over and over and over again. ** Retail traders naturally think in linear fashion, i.e. an "edge" is when some market profile level is hit OR one squiggly moving average meets another OR some sentiment reading (TICK, TRIN) reaches a certain level OR price hits some specific S/R level, etc In reality a traders' lasting "edge" is really a dynamic approach to measuring price action as it progresses thru varied movement across the chart. An "edge" is not ability to identify one key spot on a chart... it is the learned skill of reading price and spotting the inefficient spots all across any chart. Layered, multi-leveled thinking that comes from time in the trenches
Right, I'm a technical price action trader, so there's nothing about my trading that hasn't already been taught in books and seminars for years.
market movers are the commercial end-users of commodities, large speculators such as mutual funds, hedge funds, etc and lately the U.S. Federal government market followers are retail traders. we are the tails of the dog... we will never collectively wag the dog over any large amount of time. our "edges" come from interpreting the evolving flow of price action by measuring price within itself. unless or until market(s) cease moving, our edge is universal and endless
Are you still in that Skype group, NoDoji? I'm very interested to join a discussion/trading group if anyone is in one right now and doesn't mind new members. My trading style is position trading of the S&P 500 with a focus on the big trends. Have been very successful with it.