Do Traders Really Need a Mentor?

As children, everything we do in life comes with a coach, a teacher, or a parent directing us and helping us along the way. Words of encouragement are plentiful, and there always seems to be someone looking out for our well-being. As adults, this relationship is much more difficult to establish. Wouldn’t it be nice to have someone assisting you in life and helping you find success in everything you do?

As a technology education teacher, I realized early on the importance of being more than a teacher to my students.  According to Webster’s, a teacher is: “a person or thing that teaches something; a person whose job is to teach students about certain subjects”.  Webster’s defines a mentor as: “someone who teaches, gives help, and advice to a less experienced person; a trusted counselor or guide. I believe my decision to be a mentor to them was crucial in helping my students connect the dots between the theory that I taught and their abilities, potential, and goals. By being a mentor to them I was able to provide the advice, confidence, and the network that allowed them to achieve the level of success they envisioned for themselves at the beginning of my class.  So which one would you want helping you through your journey into trading; a teacher or a mentor?

Why is it so difficult to make consistent profits when you are working to be a day trader? I have all this education, but somehow I just can't connect the dots and make money. Why is that? This is a question I get asked a lot and the answer is really very simple.  A common mistake they make is thinking they can figure out the rules and develop the strategies themselves, but end up losing not just time but most or all of their savings trying to reinvent the wheel. I know because I have been there. Numerous places on the Internet will attempt to give you an education on how to trade stocks but the real secret is not only finding the right education but finding the right mentor as well.  Building a solid foundation on which to base your trading is of the utmost importance to survival in this industry. That is what I focus on when I am mentoring traders. As a mentor I educate traders in the proper way to trade stocks in today's market by helping them build a solid foundation which can ultimately lead to consistent profits. To put it simply I help new traders connect the dots.  

If you examine any successful trader, they typically have one thing in common: a mentor. Nearly every successful person in history had someone who they could confide in and learn from when times were tough. To be successful in life it is very important to have a mentor, a coach, or someone with more experience than you. You need someone who has been where you are and is in a position in life that you desire to be in the future. Most people underestimate the value of a mentor and this is the biggest reasons for failure in any endeavor, especially stock trading. A mentor offers valuable insight to things that only experience can teach as well as a host of other things.  A mentor is a brain to pick, an ear to listen, and a push in the right direction.  A mentor can help to shorten your learning curve and open your mind to new ideas and possibilities.  

Learning from a good mentor or trading coach is one of the best investments you can make for your long term success.  You invest in yourself with workout trainers or lessons from golf pros.  Why not invest in your financial future with someone who can help you use the knowledge you have and help you connect it to the skills to make money in the stock market for years to come?  Most people never get to live off of their trading because they never learn how to apply the knowledge and skills with the rules of the game and play it well.   Why set yourself up for failure?  Trading mentoring programs help transfer knowledge from the experienced traders to those who are just beginning. You get to see the way they interpret market movement and how they play the game. You’ll also understand the strategic trade-offs that they consider before making a trading decision.

Mentoring can be done in two different ways: one-on-one or small group sessions. One-on-one private sessions will obviously cost more, but, with a good mentor, can be tailored to your specific skills, problems, and goals.  On the other hand, a small group session allows for collaboration and discussion that can stimulate the mind and lead to other types of trading techniques that might have otherwise gone untouched.  The most important thing to think about when choosing a trading mentor is whether he or she can teach you something you’re comfortable with, not just what they want to teach.  Bad mentors are usually one-trick ponies who only know a couple of things and try to make money off of unsuspecting amateur traders.  

Now, do you even have to ask yourself if you need a mentor?  I hope not.  This blog should help you realize the importance of mentoring in the success of your trading career.   To sum it up, a mentor can give you the benefit of his or her perspective and experience which is vital in developing your trading identity.  A mentor can help you look at situations in new ways. He or she can ask hard questions and help you solve problems.  A mentor can help you define your trading and ensure that you don’t lose focus and continue down that road even when you become distracted by day-to-day pressures.  A mentor who knows you well can be a strong champion of your positive attributes and an ally during any bumpy spots in your career.  A mentor whose trading you admire can be a strong inspiration. With the help of a good mentor, you can trade more effectively with a clearer view of the goals you are trying to reach.  Having a mentor is not just a great idea, it is a proven concept.

The Anatomy of Making a Trade

As a fellow trader who teaches and mentors new traders, one of the most common questions I get is related to the actual process of planning and making a trade. They understand the setup they want to trade and they know what it looks like on a still chart after the fact, but they have a hard time planning and initiating a trade beforehand so they never enter or enter a trade at the wrong times.  I believe the answer lies in developing a process to your trading.

As a professional educator and engineer, I firmly believe in the process approach to trading.  I can safely say that this is a big secret to my success.  My trading process looks like this:
 Morning Routine
 Develop Watch list
 Build a trade plan
 Initiate the trade according to plan
 Execute the trade according to plan
 Reflection
This process is slightly modified when I switch to my reversal scans after the morning session. Intraday I eliminate my morning routine and my watch list becomes the reversal scan.

The first question I get when I start presenting this is, “Does HOW you do things actually matter”? Think about something significant you do.  Then think of how it can best be done. Now, consider how you do it currently. This is a great thought process for traders to have. When you take a trade, you need to ensure that you are focused on the right things prior to entering it as well as during the trade. Creating a system for this thought process will take away most of the emotional hang-ups traders experience when looking to enter into a trade as well as managing it while they are in it.

The first thing we must do is develop a perspective of what matters.  This will come from education and practice.  Once a trader has the perspective of what matters, they can proceed to identify the specific processes on which to focus. In each of the steps in my process, there are key leverage points that often make the difference between me having a successful trade or an unsuccessful trade.  The key to success in most full time traders and, often not sufficiently focused upon by beginning traders, is the planning process that enables a trader to focus the important elements of a trade which maximizes their chances of success.

So why do I feel that developing a process important in trading? It is important because it describes how a trade will be put together, provides the focus for executing and managing them, and after the trade, provide a tool for reflecting on to determine if there is something that you missed or could improve on for the next time.

I start my trading process by following the same routine when I get up in the morning.  Trading cannot be looked at as a hobby.  You have to approach trading seriously and as such I wake up, go work out, take a shower, get dressed, and eat breakfast prior to firing up my trading station.  I am awake, alert, and motivated when I start building my watch list.  This morning routine has helped my mental preparation coming into the market tremendously.  So whatever you do, starting the morning out the same way will pay invaluable dividends.   However, rolling out of bed and throwing water on your face 30 minutes prior to open just doesn’t give you enough time to get prepared for the market open.  Sitting at your computer in your pj’s or underwear does not put you in the right mindset to attack the market.  I know because I have experienced all of these scenarios.

My watch list comes from a specific scan that I use every morning.  I will not look anywhere else because I am confident that the stocks on that scanner will have the best opportunity to setup for me to trade.  I will vet each stock the same way using a checklist I have to determine if it is actually tradeable for me.  My watch list is built by 9am and I will not add anything to it after that time.  This allows me to watch the tickers on my watch list for the 30 minutes into the open.  This actually leads into the next step in my process.

During the 30 minutes prior to open I am watching the tickers on my watch list and developing trade plans for them based on the price action I am seeing.  This helped me with that deer in the headlight look I used to get when the opening bell rung and all of the lights started flashing on my charts. When the bell rings I’ll have my plans in place written on note cards because it is too easy to forget what you saw on each ticker coming into the open.  What is my plan if it sets up to the long side? What’s my plan if it sets up to the short side?  What setup do I want to see? What are my profit targets? Where will my stop be? Is the profit window large enough for the trade to make sense? Just asking yourself questions like these when you are planning your trades will give you a big advantage because you can then go in with a battle plan and stick to it.  If it is written down in my face I can easily refer to it and that eliminates the anxiety that I used to feel when that bell rang.  All I’m doing at the open is looking for my signal and trigger to enter the trade.

Once the stock sets up, signals, and triggers an entry, I will enter without question, well that is the plan anyway.  Sometimes I may second guess myself, but not often.  I have my profit targets written out on my trade plan and well as the technical level that I am basing my stops on, so after entry I am just concentrating on hitting my marks and booking profit.  There are some that say that knowing when to exit is the hardest part of the trade.  It can be extremely tough to not exit the trade too early if you do not have a pre-set plan. So if you have a plan ahead of time and you stick to it, you will have a better chance of letting your winning trades work and cutting your losses off quickly instead of the other way around.  This will also help with managing your emotions while in the trade.  Last week I talked to our Warrior Pro students about filtering out the noise.  This strategy goes a long way to help do that so that you can focus on the trade.

Once the trade is done I will reflect on how well my plan worked and how well I stuck to what I had written.  Most of the reflection on my trades will come in the evening when I review and recap my trades from the day.   I believe one of the key things forgotten is reflection. “What did I do right?”, “What did I do wrong?”, “Should I have sold earlier?”, etc. are all extremely important for the development of your trading. Just because you made good profits doesn’t mean you are a perfect trader. How you play both sides of the table are extremely important.  Write down or do a video recap of the trade and everything that comes to mind lesson wise. Then, file it away with other past lessons and use them as a reference for the future. Some lessons hit harder than others, but be confident that with time you will only get better. It only takes one time of getting your hand slammed in a door to figure out to be more careful, but may take two or three times to learn to turn on the lights before walking around your house at night.

Why are processes in trading important? They are important because they describe how things are done to prepare for a trade and then provides the focus for executing them.  It helps filter out the emotional social noise giving you a better chance for a more successful winning trade.  It provides you with a tool to go back and reflect on your trades and make you a better trader.   If you focus on the right processes, in the right way, you can design your way to trading success.

The Power of Being Broke

I am constantly asked about why I wire out my account every month.  My first response is always, I'm not comfortable with my money being off shore, but the reality is Suretrader has a bank here in the US that they service their US clients with, so that reason is a little weak.  My fear of not having enough money to pay my taxes is another reason but if I lose it all, I wouldn't have to pay taxes on it anyway so that argument is also weak.  I also say that I want to protect my gains, which is true.  I like the feeling of having my gains safe from the chance of me giving it back.  Am I a coward?  Do I not have the true mindset of a day trader?  These are the questions that I get asked, and I also ask myself at times.  The truth is, for some reason I didn't realize until this weekend, I am more comfortable and successful trading with a smaller account.  My trading strategy was and is based around growing a small account.  What is it about trading with that mindset that makes me comfortable and more focused everyday in the market?  I never really had an answer until now.  One book I read over this weekend unlocked the mystery of why my strategy works.

You see for a few weeks I tried trading with a larger account well over the PDT rule.  I felt this was my time to take off and not look back.  It was an epic failure.  I only lost about $1500 over a period of 6 weeks because I did have my risk management strategies in tact.  It was like I forgot who I was overnight.  I couldn't see my setups like I used to.  I found myself trying to follow larger traders.  I felt I had to trade like them since I was where they were.  My whole mindset toward trading was different.  I spent too many days watching the market in a daze, not knowing what to do.  I was completely lost, just like I was when I first started trading.  Toward the end of this trial I began getting some professional help from a retired hedge fund manager.  I felt that I needed to get some guidance from someone who was used to trading with larger sums of money.  I got good advice, but that wasn't my problem.  I had lost my identity as a trader.

After this experience ended, I refunded my Suretrader account and almost immediately regained my identity.  I felt that maybe this was as far as I would be able to go.  I mean I almost made 100k for the year trading with my smaller account.  I truly believe I would have hit my goal if I had not tried to trade larger.  But at this point I had accepted the fact that I did not have what it took to trade larger, or that I just wasn't ready yet.  I decided to increase my base account size I started every month off with from 5k to 7.5k at the beginning of 2016 to see how I did with it.  It has worked out great.  At the beginning of the month my share sizes are smaller and I gradually build up my size as the month progresses, providing I am making a profit and my buying power is increasing.   Why does this work so well with me?  I mean for this month of February, I started with 8k and I am up 13,688.89 for the month. Just by employing the same strategies and increasing position sizing as my buying power grows.  I just couldn't understand why I can do it with Suretrader, but when I made the switch I folded up like an envelope.

I mentioned earlier that I read a book over the weekend that unlocked everything for me about how I am able to trade better with a small account versus a larger account.  The book is titled, "The Power of Broke", by Daymond John, the creator of the clothing brand FUBU, and more famously known as one of the sharks from the hit TV show "Shark Tank".  It talks about when you are broke, how having not a whole lot to lose and everything to gain drives you to dig deeper and work harder to get it.  That "sometimes having your back against the wall, leveraging your last dollar, and having no place to go but up; because if you have to succeed to survive, you will."

This is exactly the mentality that had driven me for the past 2 years.  I never knew it had a name.  It is what kept me up until 2 am studying charts of my trades, other traders trades and trying to identify setups.  It is what woke me up at 6 am every morning to get ready for the market before I had to go to work.  It is the Power of Broke that still drives me everyday to work harder and smarter than the next guy.  That 90% failure rate of new traders may just be a little low.  It may be a little higher.  I can tell you about 2 traders, one being myself, out of 25 who started this journey into trading together, that are still in the game.  We worked harder and longer than everyone else.  We were driven to succeed.  You see we were older, had small kids, wanted to spend more time with our families, wanted make sure we could provide the educational opportunities our children would need to make it in this world, and were essentially broke.  We had tried for years to make it the traditional way.  Working a 9 to 5, trying to save $ and provide a comfortable life for our families.  To put it simply, we had our backs against the wall.  We had no other option other than to do what it took to succeed.  This was the mindset that we have.  The Power of Broke.

I know everyone has seen the "Rocky" movies but I want to specifically refer to "Rocky 3".  When Rocky got his block knocked off by Klubber Lang at the beginning of the movie, he had lost something.  The money and fame caused him to lose his hunger.  His will and desire to win at all costs.  You see, he wasn't broke any more.  He wasn't hungry.  He wasn't hurting for anything.  He didn't have that fire deep down inside that burned because he had to win to survive.  All of it was gone the minute he experienced the success of being a champion.  Apollo Creed described it best. "You lost your edge...... You didn't look hungry. No, when we fought, you had the eye of the tiger man.  The edge.  And now you got to get it back.  And the way to get it back is to go back to the beginning".  He had to find that hunger again to get that edge back.

That is exactly what happened to my mind when I switched to a larger account.  When I looked at over 200k buying power after being used to looking at 30k to 60k, I felt I had made it.  I felt like I didn't need to be who I was, that I could be that guy that I always saw as a successful trader.  Suddenly I didn't feel like my back was against the wall.  I'm here to tell you it makes a difference.  I needed that hunger to drive me.  I needed that hunger to keep me moving forward.  That's why the minute I switched back and I was back to square one, where I started, everything fell back in to place.  I needed that lesson. I needed to understand how I worked and what I needed to be aware of as I progressed in this industry.  I am very thankful that I had this lesson when I did.  Now, when the opportunity presents itself again, I will be ready.

I feel that I have finally unlocked the secret of my success as a trader.  The Power of Broke only works for you if you tap into it and put it to work.  You don't have to be broke financially to use this power.  The Power of Broke is a mindset.  There is tremendous power in it.  The more you need to succeed, the more likely it is that you will succeed.  The more you've invested, not a financial investment but an emotional and personal investment, the more you will get back in return.  This is the fuel that will power your passion.  The fuel that keeps you driving forward when everything around you says quit.  Tap into it.  It is there for anyone that wants it.

So what have I learned.  I need to keep the Power of Broke mindset throughout my career.  It is what drives me.  It is what drives my trading strategy.  It doesn't matter how much I make or how much I keep in my trading account, I will always keep that hunger, that desire to grow, that desire to get better.  I will have a goal every day.  I will do my homework everyday.  I will bring my passion to the market every day.  I will remember I am "The Average Joe Trader".  And I will always remember the ways of the shark.  Even when a shark is sleeping, he is still swimming, still moving forward, still ready to attack when an opportunity presents itself.  You see if a shark stops swimming, he will die.  In order to succeed in this industry, you have to live the ways of the shark.  You can find out more about the SHARK mindset here:  "The Power of Broke", by Daymond John  and download the shark points.  I know this book is written more for entrepreneurs  looking to start a business but if you think about it, as traders that's exactly what we are trying to do.

My Thoughts on Suretrader

When I decided to get into day trading I made sure I did my research.  How day trading worked, what tools I would need, what the minimum investment I would need to get started, as well as the tax and legal codes I would run in to.  I am a big fan of the TV show American Greed, and it showcased some of the most prolific violators of the SEC laws so I was more concerned with those laws than most.  Upon reviewing them, I came across the Pattern Day Trader (PDT) rule.  I was crushed.  How am I supposed to be able to make it when I can’t day trade due to the fact that I had less than 25k to put in a brokerage account?  I began searching for answers.  At the time the only conclusion I came to was to open multiple accounts, but with my limited funds, that wasn’t feasible. 

I don’t remember how but I came across Suretrader.  As usual, I did my due diligence and found some conflicting and concerning results.  I knew from experience that you could not trust everything that you read but I was very concerned about using an off shore broker.  There was something about not being in closer contact with my money.  Maybe if they offered debit cards or something like that I would have felt better but, at that point, I did not have any other choice so I decided to open an account with them.  This blog will share my experiences that I have had with Suretrader from the beginning of my time with them.

Let me first start by saying that I would not be here right now without Suretrader.  There is no way I could have started day trading without them.  I am a true “Average Joe” blue collar American who had to work and struggle for every penny I made so this decision was not made lightly.  So thus begins my journey with Suretrader.

I had a pretty easy time opening an account with them.  The application process was a little different but once I had the application completed I received an email a few days later saying that my account was ready to fund.  The only extra form US citizens have to fill out now is a W9 tax form.  They asked for professional references and bank references but they never contacted them.

I opened a bank account specifically for funding and withdrawing from Suretrader, again just being careful because of the off shore deal, and ordered a debit/credit card for that account.  I funded my account using my credit card and the money was available for trading the next business day.  I have read many negative posts about people having issues opening an account with Suretrader but I can honestly say that everyone I personally know that opened an account did not have any issues opening and funding their account.  There have been some changes in funding since I opened my account back in 2014 but everything for the most part is the same.  Funding with a credit/debit card is the fastest, but it costs 3.5% for it.  The only way this fee adds up and becomes a problem is if you constantly blow up your account and you have to keep adding back.  It’s free to fund via bank wire transfer but it takes longer for the money to be credited to your account.

The only issue I had with withdrawing any money was the rule they had that your first withdrawal had to be done by the same method you funded with, and for no more money than what you originally funded with.  After that there were no restrictions.  To get your withdrawal through bank wire, you will pay a $40 fee.  You have to go through a bank verification process that takes about a week to complete.  Then there is another process to go through on the i-boss platform.  However, once you have done it one time it will be a lot easier.  I withdraw from my account every month using bank wire and the process in pretty painless.  The money is in my account within a few days.  Actually now the wires are cleared for US clients through Citibank in New York so that makes the processing quicker for us.

When I started I was budget minded so I opted to stick with the Active Web platform.  For day trading that platform is a handicap.  It’s only as reliable as your internet connection and in the 2 years I have been with them their server has been attacked numerous times.  Not that your information or account are compromised, but your ability to enter and exit trades would be.  Also, if you lose money during these crashes, Suretrader will not refund your money.  They have a risk disclaimer on their website that states that they are not responsible for losses incurred due to trading malfunctions or system disruptions.  I highly recommend getting the Suretrader Pro platform.  I have not experience any major problems with it.  All of my issues with the Pro platform have been due to my firewall.  I have the Suretrader Pro platform, $49, Market Depth Data Access $40, Regional Quotes (Basic Level 2) $15, and NASDAQ Total View (Book Depth) $20 for a total of $124 per month.  It is well worth the subscription costs.

Their customer service is good but it can get bad during crisis times for two reasons.  They do not have a lot of customer service reps and most of their client base are made up of new traders who do not have a clue what they are doing.  You can’t imagine how many people open up trading accounts who do not even know how to enter a buy or sell order.  The chat lines and phone lines are jammed all day with questions that are similar to that with things traders should learn through taking courses and paper trading prior to opening an account.  So I really don't bash them about their slow customer service. When these traders lose money, of course they blame Suretrader.  They never blame the shortcuts they took or the education they didn’t receive prior to trying to trade live.  Is Suretrader completely innocent?  Of course not.  If you are not careful and keep up with your account, you can “accidently” get double charged for commissions or platform fees.  It won’t happen to you often but it does.  They will refund it though.  You just have to stay on top of that.

Here’s the deal; Suretrader is a necessary evil if you have less than 25k to open a trading account with.    90% of their clients are brand new traders so they are a lot more at risk to lose their money in addition to money they don't have so Suretrader treats us like a high risk client the same way a bank would treat a high risk customer that doesn't have a good credit record.  Therefore they have a few more fees and rules than most.    

So what advice do I have to those who want to open accounts with Suretrader?  Well first, invest in your education.  Without it you are a mark and they will take every dime you send them.  The plan I recommend is laid out here:  http://www.warriortrading.com/getting-started/ Never open any brokerage account and start trading without the proper education.  Make sure you read all of the rules and understand all of the fee schedules.  They are not outrageous.  You just have to make sure you understand how to not make a mistake and incur these additional fees.  Open up a bank account specifically for funding and withdrawing from Suretrader.  Do not keep any more money than absolutely necessary in there.  This should give you peace of mind as it relates to your protecting your other money.  Do not over trade.  Over trading leads to increased fees and exposed risk in the market.  Get the Pro platform.  This will save you a lot of headaches and greatly reduce your risk of losing money due to execution issues.  Just because you can open an account with $500 and day trade doesn’t mean you need to trade.  I would not recommend trading with less than $2500.  I know I started with $1500 but I believe I was lucky to catch some major short squeezes when my account was very low.  Make sure you understand margin and how to use it correctly.  Margin can destroy an inexperienced trader before he even gets started good. 

SureTrader is actually one of the leading online brokers for day trading. With a multitude of features, advantages, and benefits, you should definitely giving them a shot. Just make sure you know their trading rules and regulations thoroughly.  They have good, but sometimes slow customer service but will answer any of your questions or concerns. If you’re under 25k and looking for a solid broker to day trade with, SureTrader has everything you need, so it’s worth checking them out!