When a trader or trading firm hires a coach, there is a significant investment of time, effort, and (often) money. Coaches are generally sought when trading results are substandard, which means that time is at a premium. Hiring the wrong coach or seeking the wrong goals with the right coach is thus more than a missed opportunity. It can dig traders further into a hole and reduce the odds of eventual success.
So how do we know if coaching will be helpful to a trader? The psychology research on change processes in counseling and therapy, as well as my own experience across a variety of trading settings, suggest three predictors of coaching success:
1) Relationship Between Coach and Trader - It's the quality of the relationship that often gets people through the inevitable "two steps forward, one step back" frustrations of change. In a good helping relationship, the coach sees the trader's potential, demonstrates a concrete understanding and empathy for the trader's situation, and is seen by the trader as both caring and competent. Very often, I find, the good helping relationship is one that transcends the pure business relationship. Every trader I work with gets my email address and home phone number; I do not charge for those contacts and, indeed, strongly encourage those. It's one way of demonstrating that my level of commitment will match that of the trader. Too, when traders make significant progress, I get excited; it's a real rush for me. I think traders can sense that. They know when a coach is emotionally invested in their success. If the coaching relationship lacks that commitment and spark, the odds of it being successful are meaningfully reduced.
2) Readiness For Change - Research in psychology finds that change is most likely to occur when people are prepared to take actions necessary to make changes. Many times, traders are aware of problems but don't know what to do--or aren't emotionally prepared to take action--to change those problems. A good example is a trader who might need to alter his trading style to adapt to changing market conditions. He might be reluctant to tackle the uncertainty of remaking his trading, which will necessarily extend the length of time it takes to make changes. The traders who are most ready to make changes are often those who are in some discomfort and who have tried all the easy fixes. They are prepared to do what it takes to turn things around. If you're seeking a coach and aren't ready to work on yourself every day and week, you might be best off saving time and money and waiting until the readiness is higher.
3) Involvement In Change - When I reviewed the research literature on change in counseling and therapy some years back, the brief conclusion that I came to is that "talk is cheap". Coaching needs to be more than talk: it needs to produce new skills and new experiences. Good coaching is hands on and goal-focused; it targets specific areas for change and introduces concrete strategies for accomplishing those changes. Too often, coaching talks about trading rather than works directly on trading. Some of my best work has occurred while I was watching a trader trade and could make very specific suggestions about improvements. That made the change work very immediate and involving. The more emotionally and behaviorally involved a trader is in the change process, the more successful that process is likely to be.
One interesting study found that, if positive changes and a solid relationship had not materialized by the third meeting, the counseling was unlikely to be successful--ever. Within a short time, you should have a good feel for the quality of the working relationship, the specific goals you'd be working on, and the concrete ways you'll be tackling those. Within those first few meetings, you should already be feeling that you're on a promising path. If you don't experience all the above with a new trading coach, treat the coaching like a trade and quickly exit the losers.
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