Trader mentoring that helps you trade professionally (or lose miserably)

Let me offer a sneak peak into a conversation we had on our trading desk yesterday about mentoring a developing trader the right way.  We did this virtually as almost our entire desk is remote due to Covid.  Getting this mentoring right can make all the difference in the career of a trader.

A senior trader pinged me for advice on how best to mentor an intern developing on our desk.  If you do not know, we hire junior interns, while they are in college, and then the best are hired to be senior interns.  The best of the senior interns are offered invitations to join our desk.  As interns progress through both of these internships with us they have questions of trading challenges to solve.  They are working on improving their trading game.  Giving them the best mentoring is essential for their development.

Dangerously, good mentoring can be underrated by some in the trading community.  You often here the refrain: all I need to do to get better as a trader is trade.  Unwise.  Untrue.  This has not been our experience.  In fact, a developing trader developed incorrectly can ruin a trading career.  That same developing trader developed correctly can become an elite trader.  We have seen it.

Our senior trader in charge of the development of our interns reached out asking an important question in search of helping an intern.  It teaches an important lesson to the trading community.  It is one of those things you have to get right to have a chance to become a successful trader.

That senior mentor GChatted:

I have a brief question for you. I just had a weekly check in call with (name redacted) and we set a goal a few weeks ago for his trading to focus on holding more of his winning trader longer, really making it give him a Reason2Sell… his results (the metrics we agreed on was to look  at the p/l per share) have improved, and he asked if he should start to press his size more. My response was that I think that is a big and very important step, but that its a different one than focusing on holding his winners until they gave him a good Reason2Sell and encouraged him to earn the right to increase his size through showing more consistency. 

My question for you is simply, do you feel it’s important to encourage traders to push size in A+ set ups or more important to be sure they are working towards the goals they set out for themselves? 

This is a terrific question from a terrific mentor.  Imagine being in college, interning at a substantial proprietary trading firm, and having access to quality mentoring.  That could literally be the difference between you having a career as a professional trader versus you flailing around as an underperforming independent trader.

I responded:

Gr8 question.

So easy to get this wrong.

And a very clear and important answer.

He is working on holding longer. Trader needs to work on that. He needs to compile stats on that. He needs to win this goal.

And then when he can prove through his stats that he won this goal, he can turn his attention to a new goal.

After some back and forth, I summarized my main message:

Consistency first.

Build your PlayBook first.

Show edge in trades first.

Win each goal first.

For the independent trader at home, the takeaway should be clear: win the goal in front of  you.  Dig in deep to find the solution to this goal.  Win it.  And then, and only then, move on to the next challenge- your next goal.

Important disclosures

Mike Bellafiore is the Co-Founder of SMB Capital, a proprietary trading desk, and SMB Training, which provides trading education in stocks, options, and futures. Bella is the author of One Good Trade and The PlayBook. He welcomes your trading questions at [email protected]