The Best Trader Education Tool I have Used

And I found it by accident

I have been in this industry for 31 years and I have taught traders or delivered some form of trading education for around 30 of those. I was first asked to deliver training sessions to my fellow market makers when I was 20, trading warrants for a Japanese Investment Bank. I was consistently outperforming my peers and so I was asked to share what I was doing with my colleagues. I found that I really enjoyed teaching. And so begun my dual career as trader and trading teacher.

I delivered education at every Investment Bank that I worked at and always enjoyed doing so.

The format of training has been diverse and mainly dependent on who and where I was teaching. I have delivered training to groups both large and small; over several hours and over many days. I have trained people over weeks and sometimes months; both in person and via the internet. And I have trained professionals and more recently, retail traders.

How Valuable is Personal Tuition?

I can vividly recall a conversation with my assistant one morning as I was pricing my book of Japanese warrants (1991). He had been with me for a few months and had sat through this morning process every day. He had been my ears to the market and had been involved in some way or another with many of my thousands of trades for the past few months. I thought it was time to see what he had learned.

I was testing his skills to price the warrants but decided to lead him gently, as it could be quite daunting. This was his chance to prove that he might soon be able to trade his own book. So, I picked a warrant and made a number of leading or suggestive comments about market positioning, my position etc that I thought would lead him easily to the correct answer. His answer was completely wrong. It seemed like months of work was for nothing (he soon left the industry to become an architect).

I saw similar situations over the years with other traders and at other banks. Spending 12-14 hours a day next to an experienced trader didn’t seem to improve the learning outcome for many traders.

Watching Others

This experience led me to consider my own learning journey and I thought long and hard about how I had learned to trade.

I realised that many of my best skills had been designed through watching other traders, particularly the mistakes they made. While of course, I made my own mistakes and learned from them, on a trading desk I had the opportunity to see and learn from others.

Going forward, I would always suggest to my assistants that they watch other traders too, even struggling ones. They could only learn so much from just watching my trading.

One of the biggest advantages of trading at a bank or in the pits (which I did for 15 years) was the opportunity it provided to watch and learn from hundreds of traders.

Forum and Discord ‘Experts’

While researching my books, I had to spend time on trading forums and chat rooms. Typically I don’t visit them and I’ll say here there is only one where I could vouch for the moderator being a true professional trader. Most of these sites could be described as the blind leading the dumb.

It is in these forums and chat rooms where many retail traders go to learn from more experienced traders. Yet I would say that the vast majority of what I read on these sites was just typical retail trading junk.

‘Traders’ hiding behind fake names claiming to be expert or experienced traders seemingly just because they had posted 10,000 comments on the site.

I sincerely believe that there is very little of value in these sites.

How do we learn sports?

When learning to play golf do we watch just one player?

Is it enough to just read what other amateurs say they are doing?

Even though all pros employ the same basic principles to a golf swing, they all have subtle nuances. Further, we listen to commentary from other pros who tell what the pros and cons of a certain style are. We use all of this information when we build our own golf game.

Same goes when we watch baseball and other sports.

Watching others is an integral way we learn concepts that can be hard to explain such as a golf swing or pitching a curve-ball.

The caveat here is that if we watch amateurs it is essential that we have an expert explain what is good or bad. The amateur himself will be unlikely to offer such insight and if we just copied him we could just be copying his mistakes.

The Accidental Exchange

When retail traders approach me for tuition, they typically ask to see my trading videos. I completely understand this.

In my Red Jacket course at the Norden Method I include some of my videos to help to reinforce certain techniques or points. But I always point out that students should not be trying to trade like me. This can be a danger with following just one trader, no matter their experience. We all have to find our own way.

When I taught traders privately, I would watch and critique their trading videos and encourage them to watch them too.

The Norden Method website provided an opportunity to push this further.

Almost by accident, quite late in the planning for the site, we added a subscriber section called The Exchange. The original intention was to create some extra content and set up monthly meetings where I could answer questions etc from my students.

But we then hit upon an idea that we called Grade my Trade. Students could send in their trading videos or trading statistics and I would go over them, narrate them and post for all to see. This was to be a way that students could have their trading assessed by me.

But is has also become a way for students to watch and learn from others’ mistakes and successes.

Importantly, all videos are from traders using the Norden Method technique so have been verified as genuine.

Unlike chat rooms, subscribers do not read what other people say they are doing, they get to see what they are really doing; and they see and hear the thoughts and suggestions of the teacher.

On this last point, I have received many videos over the past year where the trader tells me he thinks he has done X when in fact that wasn’t the case. As well as the known bullsh*t in chat rooms, sometimes people are genuinely mistaken on what they have done or the context around their trade. It takes a third party to dissect what really happened.

A Year Later

The first videos sent in by students were generally quite poor in terms of trading quality. But this was to be expected given that the Norden Method is a very different style of trading and usually takes several months to master. But I had no problem with publishing them for all to see complete with my, at times, harsh comments.

Over time though we got to follow some traders on their journey as they sent in multiple videos over several months. We got to see them improve as they listened to my feedback. We did this in real time, not with hindsight.

I also discovered mistakes and biases that I had never seen before and was able to alert students both in my narration and at the monthly meetings. So, I was learning too. And my course content can improve as I learn about mistakes and ideas that I never previously knew of.

We were all able to watch and learn from many traders, not just ourselves.

Now The Exchange has dozens of videos from a number of traders trading different contracts.

The standard of videos that I am now receiving are in general, significantly better than a year ago. Learning from others is bringing benefits to all.

I have never said that I know everything that can be done with my style of trading. While I think the style itself is quite unique (certainly when compared to typical retail trading techniques), there is always more to learn. The Exchange is where this is happening.

The improvement isn’t just from existing students. A few weeks ago I received a video from someone who only bought my course the week before. His first video was far better than I would usually expect from someone starting out. Far better than those that were sent in by new students a year ago. As a subscriber to The Exchange, he had embraced the opportunity to watch the videos and learn from others before he started to trade. I believe this was key. It’s almost like getting months worth of experience without having to trade.

Light at the end of the tunnel

The Norden Method is a more difficult style of trading for retail traders to grasp and typically requires months of practice. It is not based on simple indicators or easily found ‘levels’.

So, it can be quite daunting for new students when starting out. The journey will be quite long and progress is small and incremental.

Watching other students via the videos in The Exchange though, also offers hope. While not all students will become successful (that would be impossible), traders can see the progress of others and realise that success can be achieved. I think this is also helpful.

It is perhaps more important to see the journey rather than just the outcome.

The downside of one mentor

Whoever you are learning to trade from, I hope that the ideas I have presented in this newsletter show you the limitations of relying on just one person.

We learn better in an environment where we see many practitioners. Note the word ‘see’; not ‘hear from’ or ‘read about’; we have to watch unedited sessions that are expertly assessed. Sessions that contain the good and the bad.

If your mentor isn’t already doing this, ask them to start.

The best tool

This week, one of the students that we have been following in The Exchange and whose trading has improved considerably, submitted a video where he even narrates his own trading. I couldn’t add to his narration, it was excellent.

He told me that ‘The Exchange is the best tool I have ever seen’.

I have to say that I agree.

Keep Grinding

Gary