Dr. Andrew Menaker knows on a personal level as a trader, and in his work with other traders including some of the top traders and PMs in the world, that improving trading performance involves a type of internal work that is not typically anticipated, leaving many traders with unmet expectations and increasing frustration. For many, the market represents a challenge, a battleground or a competition; and for many traders the challenge or battle is also occurring within, as thoughts and beliefs combine with unacknowledged and unmanaged emotions that drive behavior, resulting in the trader not being able to act in their own best interest. Coaching helps a trader develop their own mental edge so they can make better decisions in emotionally charged situations.

>Read what some of Andrew’s clients have to say.<

Why is it so difficult to improve trading performance?

Some of the common problems that traders cite are discipline, expectations, ego involvement, and emotional management. Many traders have heard the market cliché that beliefs and emotions such as fear, greed, hope, etc drive the market up and down, and some traders know that their own beliefs and emotions have a huge impact on their discipline and trading success. But many traders, for a wide variety of reasons, are unable to change their beliefs or manage their emotions, and are not profitable or trading at peak levels. Even traders with past trading success or success in a previous career or in other areas of their lives often have difficulties.

Performance improvement requires much more than positive thinking. It requires self-management and dealing with discomfort and internal conflict, including subconscious conflict. Andrew’s services are unique, reflecting the fact that positive thinking is necessary but not sufficient by itself. Many people have listened to subliminal CDs and/or recited affirmations and possibly begun a meditation practice but have not improved, proving this point.

The field of behavioral finance (BF) explains many trading problems as “mistakes in thinking”, but the problem is that behavior is not just a product of thinking, our emotions, including subconscious emotions are involved. Although the mental traps described by BF may be common, the internal experience of each trader is unique. Therefore, behavior change takes more than knowledge of generic behavior finance concepts.

Dr. Menaker is a contributing author in a Behavioral Finance book, “Investor Behavior – The Psychology of Financial Planning and Investing” – part of the Wiley Finance series. In his section, Andrew discusses the surprising real world of trader psychology using the example of one of his long-term coaching clients, an award winning global macro hedge fund manager.

Some traders attempt self-coaching, which can be difficult. Guidance from a professional can save time, money and energy. A good professional coach with the right background and intentions will assess a potential client and may even decide, for a number of reasons, to not take someone on as a client.

Many traders have internal obstacles that not only affects their behavior as a trader, but can also act as blind spots when functioning as their own coach and trying to self-evaluate. Can you provide yourself with honest, objective feedback? Are you completely honest with yourself? Are you knowledgeable about psychology and various tools? Self-coaching can work, but it comes with a caveat and an added layer of work. The caveat is the danger of letting the self-coaching process undermine your confidence as a trader. The self-coaching process needs to be as objective as possible with no ego involvement; that can be difficult if ego issues are present in your trading. Setting goals is a critical part of coaching, and the trader who is self-coaching must create goals in a way that will not undermine confidence or motivation. Finally, if you decide to self-coach, you will serve yourself best by developing and objectively evaluating your coaching skills.

A good coach will expedite the learning process and behavior change by guiding the trader in the proper direction and providing objective feedback and support as the trader is developing their mental edge ™. Andrew’s ultimate goal goes beyond improving trading performance, he teaches traders to develop their own internal resources and continue to function as their own coach. Similar to the old adage, “give a person a fish and they’ll eat for a day, teach a person to fish and they’ll eat for a lifetime”. Andrew’s coaching clients not only improve their trading, they often have improvement in other non-trading areas of their life.

Seeking outside assistance can be a challenge for the ego.

Its important to know that seeking help is not a sign of weakness, rather it is a sign of great inner strength and determination to ask for help. There is an old saying among Samurai warriors, “The true warrior is one who conquers the self first”. Hundreds of years ago these warriors approached Zen priests asking for assistance in managing their inner life so they could have better physical control.

If you are truly determined to improve as a trader, why would you not allow yourself access to help? Ego issues and the fear of being wrong are often cited as a common problem affecting trading performance. Are you going to let your ego and/or your stubbornness block you from doing all that you can do to attain the trading success you desire? It’s relatively easy for traders to rationalize spending money and time on new indicators, more market research and such, but many traders are unwilling to spend time or money on him or herself, even if they realize that trading performance is significantly connected to mental and emotional dynamics. It’s no wonder why most traders are not consistently profitable.

Over half of Andrew’s clients are professional traders. There’s a reason for this. Elite performers in sports, business, and entertainment frequently seek guidance from others, and are increasingly turning to professional ‘coaches’. Elite athletes may have highly developed skills, but often what separates champions from the rest is the mental game, and athletes are increasingly turning to sports psychology consultants, sometimes known as “mental toughness coaches” for inner conditioning, to augment their physical conditioning. Some of the most successful traders and money managers use coaches to help them stimulate thinking and creativity, manage stress, and improve performance.

Most traders agree that trading involves a lot of psychology, but many traders spend very little time, if any, on the psychology aspect.

Likewise, golfers will say that golfing involves a lot of psychology, but the majority of golfers spend most of their time working on the mechanics of the game such as their swing. The relatively small numbers of elite performers at the top of their game, whether it is trading, golfing, or something else, are doing whatever it takes to improve their inner game. It is up to you whether you think it is merely a good idea, or you actually do something about it.

A trading coach is not simply an educator and motivator, but can also provide you with an emotional outlet during difficult times. Everyone, including traders, needs an emotional outlet, a person they can talk to who understands what they are going through. Releasing emotional pressure helps one to manage stress, think clearly, and act appropriately.

People, who don’t trade, including coaches who don’t actively trade, usually don’t fully comprehend or understand what a trader’s internal experience is like and have a difficult time relating or offering practical and effective suggestions. Talking to a non-trading spouse or friend about your trading struggles may allow you to vent but will fall short of providing you with constructive feedback and practical strategies. Talking to a friend who is a trader can be helpful, but typically there is a limit to their knowledge of psychology and how to assess underlying problems and determine the right set of mental strategies.

Traders looking to improve their performance sometimes turn to one or more of the many trading psychology books available that enumerate the common issues that traders face. Some of the books are very illuminating, but after reading them traders often continue with their same problem behaviors.

There also exists a broad spectrum of coaches, most of whom either do not trade or lack advanced education in psychology. Trading is a unique endeavor with its own peculiarities, if a trader seeks psychological coaching; it is best if the coach is both an experienced trader and an expert in psychology. Choose wisely.

Often the one-size-fits-all approach of a book, or that of a particular coach with a limited number of tools or lacking comprehensive psychological knowledge, is not enough to bring about lasting behavior change. Not everyone responds the same way to the same techniques. Developing and maintaining a profitable trading mind-set requires long-lasting behavior change. Many traders have read trading psychology books, and even worked with coaches, but are still struggling. Does this describe you? In order to embrace a mental strategy, you must have a personal connection with it. Successful coaching usually involves a set of personalized techniques the client can truly resonate with.

Individualized assessment is a critical first step in the coaching process and helps to determine the right goals and strategies moving forward.

Please see the section on Coaching Process for more details.