By Bill ProvenzanoReturn to "Articles"
The Christian Trading Coach
In hard economic times like we are in now, more and more people are being drawn into the world of trading with the hopes of generating additional income or replacing an income that was lost. Some are approaching trading part time as a home based business. Others would like to trade full time.
Trading can indeed be a very lucrative and rewarding career. Unfortunately, though, too many people continue to jump headfirst into a business that, according to most statistics, has a 95% failure rate. The high rate of failure can in large part be attributed to the lack of research and education that new traders engage in before starting to trade. This is poor stewardship, plain and simple.
Not a day goes by where you do not see an infomercial touting the latest and greatest trading software that all but guarantees a life of luxury cars, mansions and endless smiles. But, like most purchases driven by emotion, this trading software ends up sitting in some corner of a computer's hard drive for lack of use much like a piece of exercise equipment sits in the corner of a basement collecting dust. The biggest difference is that you only pay once for the exercise equipment. Trading software can carry with it a much larger price tag in the form of trading losses.
All of the traders I have known traveled a similar path as I did. I started as a runner, a very entry-level job, on the floor of the Chicago Mercantile Exchange in 1987. I climbed the ranks, learned about the business, talked to traders, and grew in my understanding of the markets and their interplay with one another. After over two years of being steeped in the business day in and day out, I decided to venture out as a commodity trader.
The first year and a half of trading was a struggle. After that, my success was slow but certain and continued to grow over the past 20 years. The road that I traveled allowed for years of learning about the business, the markets and the habits of successful traders before I ever made a single trade. Unfortunately, this is no longer the usual path.
The proliferation of electronic trading has greatly reduced the barriers of entry to the world of trading. The path to becoming a trader used to be several years long. Now, anyone with a computer and some software can actively trade. However, not everyone with a computer and software is a trader.
Perhaps you are considering trading as a way to supplement or even replace your income. Maybe you have already downloaded trading software and have experienced the frustration of trading losses. I want to encourage you to continue to move forward. There is hope. Whether you are an experienced trader desiring to reach the next level of success or you are just getting started, consider the following steps:
Create a Trading Business Plan
"The plans of the diligent lead to profit as surely as haste leads to poverty"
(Proverbs 21:5).
Unfortunately, too many people let the emotional and spontaneous purchase of trading software drive their business plan. Instead, your business plan should drive the research and purchase of your trading software.
Your business plan should be simple but complete. A business plan will challenge you to consider everything from the chair you will sit in to the parameters under which you will execute your trades. Your trades should have clearly defined entry and exit points and have the optimal risk reward ratios. In your business plan you should also lay out the costs of any computer software and hardware, the amount of money required for your trading account, and any monthly fees for trading or charting services you might subscribe to. Knowing your costs is extremely important in trading as well as any business venture. "Suppose one of you wants to build a tower. Will he not first sit down and estimate the cost to see if he has enough money to complete it?" (Luke 14:28).
Take it seriously
"Whatever you do, work at it with all your heart, as working for the Lord, not for men, since you know that you will receive an inheritance from the Lord as a reward. It is the Lord Christ you are serving" (Colossians 3:23-24).
Too many people are lured into trading by the bathrobe or golf cart ideology. They are smitten by the notion that they can roll out of bed, stroll into their home office and then click their way to great profits while never leaving their pajamas. Or maybe they are in love with the idea that they can drive around the golf course all day with a laptop, chipping and putting as their trading account racks up untold riches. Nonsense! This is not a work ethic that honors God. Those depictions seen on infomercials are an outrage to those of us who take this job seriously.
I recall an encounter I had with another trader, "Steve". Steve could not stop complaining about how he was struggling and he couldn't get his mind into his trading. I asked him when he was going to start taking his trading seriously. "What do you mean?" he asked. Steve had recently moved off of the trading floor and into an office to trade on the computer. As he was no longer on the trading floor, he was free to wear whatever he chose to work. Instead of wearing the nice pants and a collared shirt that he used to wear, Steve now wore old Khaki shorts, a beat up T-shirt, and floppy sandals. "How can you take your job seriously and keep your head in the game when you're dressed like you're about to go to the beach?" I asked. I haven't seen Steve since.
Hire a successful trading coach
"Plans fail for lack of counsel, but with many advisers they succeed" (Proverbs 15:22).
As a new trader, you will benefit immediately from a trading coach who can move you quickly up the learning curve ultimately saving you many thousand of dollars.
If we were to rank traders on a scale of 1 to 10, "1" would represent those who are just investigating the business or have just purchased some trading software. "10" would represent a highly successful trader who makes all the right decisions, including getting out of losing trades easily without allowing a loss to negatively effect his mindset. The vast majority of traders drop out in the 2 to 5 range. From 2 to 5 is the range on the scale where the market extracts "tuition" payments.
The lessons of trading successfully can be expensive to those who have no background in the business. The cost of learning these lessons drives too many out of the business before they have a chance to succeed. A trading coach can educate you on the lessons of stages 2 through 5 that you would otherwise be forced to learn by trading the market. The cost of a coach will be a fraction of the cost of the losses that he will help you to avoid.
Desire greater profits for a greater purpose
"By your great skill in trading you have increased your wealth, and because of your wealth your heart has grown proud" (Ezekiel 28:5).
Of primary importance is a trader's motivation to succeed. Do you want success so that you can spend what you gain on yourself and impress others with your lifestyle? Then you should not expect to see your trading profits increase. "When you ask, you do not receive, because you ask with wrong motives, that you may spend what you get on your pleasures" (James 4:3).
While traders at levels 6 through 9 on the Scale of Success experience higher levels of success, there are other psychological and spiritual factors that come into play which hinder these traders' ability to achieve higher profits. It is not uncommon for traders to slip back into Trading Traps, the bad behaviors that sabotage trading profits. These traders will continue to have feelings of frustration, fear, and extreme disappointment that will cap their trading progress. A heart check is in order.
Trading can be a phenomenal career for many of the people who aspire to be traders. The profits generated can be used in fantastic ways to fund God's work. Unfortunately, far too many people are forced out of the business before they have a fighting chance to succeed. Failure to develop a proper business plan, unrealistic expectations and little to no training or experience all contribute to the early demise of the aspiring trader.
For those of us already in the business, we can gladly enjoy the blessings that God gives us. "Moreover, when God gives any man wealth and possessions, and enables him to enjoy them, to accept his lot and be happy in his work - this is a gift of God" (Ecclesiastes 5:19). At the same time, as our profits grow, we should honor God with an increasingly greater percentage of our profits. "But remember the Lord your God, for it is He who gives you the ability to produce wealth" (Deuteronomy 8:18a). Our motivation should always be to generate greater profits for a greater purpose.
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