Trading is just like any competitive sport, you need to build your skill to a level that is required of the markets.
If not we would all be millionaires, right?
One way to reduce your learning curve is to attend a trading course, so experience traders can guide you along.
However it is difficult to gauge a trader’s performance as trading is not a physical but a mental sport. This then leads you to wonder whether the trading course you are paying for is worth your money.
So what can you do?
The best way to go about it is to look at your mentor’s trading performance on a month by month basis, for at least 12 months.
If you are trading Forex, my myfxbook is a free 3rd party platform that allows you to gauge a trader’s performance through numbers and statistics. Simply request your mentor to connect his account to myfxbook and you can see it for yourself. It’s free by the way.
If you are trading Stocks or CFDs, unfortunately I do not know of any 3rd party platform that tracks a trader’s performance. However you can ask your mentor to show his brokerage statements over the last 12 months on a month by month basis to gauge his performance.
Why month by month basis?
By tracking his performance on a month by month basis, it allows you to
1) Understand the draw downs – You will know what is the draw down of his trading strategy and whether it is within your risk tolerance. If it is not within your risk tolerance, then you need to reduce your risk per trade.
2) Consistency – It gives you an idea how consistent your mentor is. Is he likely to be profitable every month, every quarter or every year? That depends on the time frame he is trading and his approach to the markets.
Basically you don’t want him to make an average of 1 – 3% a month and suddenly lose 27% in a single month. That tells you he is probably averaging into losses and is a recipe for disaster.
3) Managing expectations – By knowing his returns on average, you have an idea of what you can possibly achieve if you were to employ his trading strategy. Before buying a product you want to know what benefits it can bring right?
What if he can’t produce?
The first question you need to ask him is why?
Because hedge funds managing millions of dollars readily publicize their track record, what more of a trader selling courses?
Instead if your mentor shows you his trading performance through Microsoft excel, word, power point, his website, testimonials, screenshots of his profits etc.
Then you must know that such data can be easily manipulated.
Looking for a trading course is the same as buying a car. You want to know whether the benefit it brings justify the cost.
A really easy way to gauge your mentor’s trading performance is to request for his track record on a month by month basis for at least 12 months.
This way you can make a better informed decision whether to pay for his trading course or not.
So, how do you tell whether a trading course is taught by a ‘real’ trader?