A trading mentor is an experienced individual who has been in the industry for a long time and helps to guide a less experienced one. This process is known as mentorship and the person being mentored can be referred to as a protege or an apprentice.
Historically, traders who have a good mentor tend to be more successful. That’s because trading is not an easy thing. As you possibly know, more than 80% of all people who start trading don’t succeed.
Most importantly, every trader loses a substantial amount of money at a certain period. So, in this article, we will look at the concept of mentorship and how to get a good one.
What is trading mentorship?
Trading mentorship is simply a relationship between a trader and an experienced individual. In this case, the experienced professional will offer regular advice to the trader with the goal of helping him succeed.
It is worth noting that a mentor is different from a role model and a teacher.
A role model is a highly successful person who you look up to. For example, most investors look up to Warren Buffett, one of the best investors of our time. At times, it is possible for a person to move from being a role model to a mentor.
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A trading teacher, on the other hand, is a person who teaches you everything about the market. In most cases, you will need to pay the teacher a certain fee for his services. A mentor will typically not charge you a fee.
A successful day trader is one who has a role model, mentor, and teacher. The three individuals will help you learn how trading works and how to define a good trading philosophy.
Why you need a trading mentor
Having someone who will guide you to become a good trader is not essential, but it certainly helps your trading career. There are several reasons why you need such a person.
Combine all skills
First, a mentor will help you put it all together as a trader. A key difficulty in your trading journey is that you will need to learn multiple things to succeed.
For example, you will need to learn more about:
- technical and price action analysis
- fundamental analysis
- trading psychology
- money management
- risk management
and other skills.
As a stock trader, you will also learn more about the different types of stocks and how the financial market works.
Therefore, the trading mentor will help you put all these skills together in your trading journey. The mentor can guide you on the things you need to learn and those you should avoid.
For example, instead of learning all indicators, they will tell you on those you need.
Discover new possibilities
A trading mentor will help you to discover new possibilities in the financial market. Perhaps, you have experienced some success when trading some assets and even using some strategies.
A good mentor, who has been in the industry for a long time, will help you discover more and better trading opportunities. For example, if you have succeeded trading mega-cap stocks, a trading mentor can introduce you to new assets like cryptocurrencies and penny stocks.
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Identify your mistakes
An important reason why having a mentor is a good thing is that it will help you identify your mistakes. Perhaps you have been in the industry for a long time with limited success.
Your trading mentor will help you identify some of your mistakes and guide you to become a better trader. For instance, if you focus on swing trading, the mentor can introduce you to scalping and copy trading.
Deal with adversities
Finally, a good trading mentor will help you deal with adversities in the financial market. For example, the mentor will guide you to deal with losses that happen in the market.
As such, instead of just giving up, the mentor will let you identify your mistakes and become more successful.
What to look for in a mentor
There are several things you should look for in a trading mentor. First, you should look for someone who has a demonstrable experience in the financial market. This is a major challenge, especially when using an online mentor. It is incredibly difficult to verify their claims about their success.
Second, look for someone who is approachable and one who has time for you. Unfortunately, most busy traders don’t have time to mentor other people. This is understandable because of their extremely busy schedules.
Third, be careful about paying people to become your mentors. In our experience, mentors who charge people for mentorship are not all that good.
For example, if a person has 100 mentees, how much time will they devote to you? As mentioned, there is a difference between a mentor and a coach or trainer.
How to find a trading mentor
There are several ways of finding a good mentor. At Day Trade the World (DTTW™), we believe that trading as part of a trading floor is the best way to find a mentor.
In a trading office
We currently run thousands of trading floors spread around the world. As such, we have seen many novice traders grow to start their own floors by having good mentors.
Therefore, you can join an existing trading floor and use the experience of these professionals. If you are planning to become an office manager, don't worry. We have a mentoring program for you, too.
Alternatively, if possible, you can first a job at a small or large investing company or hedge fund. You will find experienced people who can mentor you.
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Within your friends
Second, a mentor can be your friend who has been in the industry for a long time. Such a mentor is a good one because they know your strength and weakness. As such, they will help you become better professionals.
While this is a valid method, perhaps the easiest to follow, it also has its cons. A friend may be afraid to correct you too often or can be too tolerant of your mistakes. Consider this option carefully.
Further, you can find a online mentor. These are successful people who offer their mentorship services through the internet. They will often charge you a fee for their services.
While online mentors can be good, you should take them with a grain of salt and do further research about them.
As we have mentioned, it is not easy to verify the skills of a mentor (or supposed mentor) online. Thus, there is a risk of bumping into a scammer.. this certainly does not help our career!
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In this article, we have looked at the concept of trading mentorship and why you need to find a good one.
Most importantly, we have explained some of the top steps to follow when getting a good mentor. The simple rule is that you should get someone who is knowledgeable and one who has time to guide you.
External useful resources
- Where can find a day trading mentor? - Quora