In this article, we will layout exactly what "real" trading mentorship is and what you should avoid. For those who are looking to learn to trade they usually go three routes in this process:
Starting off with trading paper accounts and testing strategies to see what fits them before trading real money.
Joining an online community or forum in learning from those they perceive to be good traders and taking bits and pieces in applying it to their own trading method.
Understanding they need outside professional help and then they turn to professional mentorship in learning how to trade.
We're going to talk about the third choice as this is the industry we know and can speak to what real mentorship is.
WHAT ARE THE MAIN CATEGORIES IN ONLINE TRADING MENTORSHIP:
When looking at the competitive field of who teaches what, and what you get exactly when you pay for trading education it boils down to a few categories.
Paid chat rooms/copying trades:
This is probably the most prolific in the online trading community and the business model is pretty straightforward. In this subscription model, you pay a monthly fee to piggyback off of a head traders setups. Now they usually will say before the market opens what they're going to get long and short and you basically just copy their trades in entry/exit. Pricing on this model depending on the market the head trader speculates in can range from $50-$300 a month. Sometimes more, but the online average is about this pricing. I talk about the pros and cons of this model below and if this is the right approach for you or not.
Paid courses/mentorship:
This model relies on the student to really put in effort in learning how price action works, how to find correct levels to enter into positions, and working with a group of full-time traders in going over curriculum and giving students feedback. This is obviously more time intensive vs. just copying a trade from someone else but it too has its benefits and cons which will be discussed below. Now pricing on this approach in learning to trade can cost several thousand and there is a reason for that which is mainly due to the attention level someone receives in learning this business.
WHAT ARE THE PROS AND CONS OF EACH MODEL:
We get emails every day where potential students come to us and ask can I just copy your trades and not pay for the mentorship? And this question really speaks to how you see trading and what time you really want to put in learning.
Trade Copying Model Pros:
All you do is copy the head trader and log in every morning to see what trades he/she is taking and you do likewise.
Cost is much less than professional mentorship due to the fact you're just copying trades and you're not really interested in how the trade setups work.
Potential to make good money if you just find the right trader and they continue to perform.
Not much time needed to dedicate to the market or find setups because it's outsourced for you.
Trade Copying Model Cons:
You get what you pay for. If you're paying for a $ 50-month service then chances are that trader may not be as good as advertised.
The trader can (and will have bad weeks, like everyone) and that means you will have bad weeks.
You're reliant on someone else's ideas to feed you trading setups. And usually, you're trading one or two markets like penny stocks or futures and nothing else.
Your account balance does not match his/hers so they may be able to take larger losses and still be in the game vs. your account size.
They usually won't give away their "method" which is an add-on service. They give you trades you execute. Plain and simple.
Paid Courses/Mentorship Pros:
Cost is more because you're actually working alongside a trader in a one-on-one fashion either online or in person to show you how markets and trading works. Similar if you took a job at a hedge fund as a trainee.
You eventually learn how to trade markets outside of just a few asset classes and eventually generate your own ideas in trading real money.
You're not reliant on someone else after a certain time and you don't usually have to pay an ongoing monthly subscription fee.
Feedback and help from professionals for those who learn similar to university relying on a set curriculum and course overview.
Paid Courses/Mentorship Cons:
Time! If you have no interest in learning the curriculum or spending on average 5-10 hours a week applying what you're taught with your mentor, then this model won't work for you.
Costs are higher usually
It can be frustrating getting into a set routine like the university in staying on top of curriculum and attending online mentorship classes.
WHO ARE THE BAD ACTORS AND WHAT TO AVOID:
Now that you have an idea on which course of action you plan on taking in outside help in learning to trade, its time to know what/who to avoid.
Those who stated they worked at a hedge fund when they really have not:
This is most common in the online community, you will have a YT banner ad of some random person saying they worked at a hedge fund and will teach you their method on how to trade the markets. The fact is there are two roles in a hedge fund. One is called a "controlled function", the other is called a "supportive function". They're very two distinct functions in that the former actually place trades and manages the fund book, while the other is in the back office spectrum or gets the coffee for the desks.
This is very easy to find out if they have worked at a fund because it's all public information. If they say they have worked at a fund ask them a simple question: Do you have a reference at the fund or can I see you Reg D offering where you're listed as a PM or officer of the fund. Chances are they won't deliver.
Those who have little to no track record but turned an arbitrary number into a larger number and touts that as their main advertisement in getting people signed up. Now, this we see all over the internet, some person will say I turned $1,000 into $100,000 so let me show you how YOU TOO can do this. Most of the time those traders either have a terrible risk-adjusted return in that equity curve, they bought a cheap penny stock or asset and it shot to the moon making that trade their bedrock for advertisement, or simply they had two accounts and went long in one and short in the other showcasing the best performer.
The lifestyle trader: These guys are the funniest of all. They will create a false narrative about how successful they're by surrounding themselves with rented cars, Air Bnb's mansions and even movie prop money and blasting it online on social media. The truth is this class feeds off of subscription models and affiliate marketing in order to fund their life. They do very little trading in the markets and usually are short-lived when it comes to generating profits.
All the types listed above can be discovered if people who want to learn to trade do a little research. If they say they have professional fund or finance experience ITS ALL PUBLIC INFORMATION!
IN SUMMATION:
If you're still looking to trade either part-time or for extra income then first you need to decide what time and dedication you want to put into this. For some, learning trading like you're in school again is not for everyone as they have a busy life. There is no problem with this. But at the end of the day education varies just like college and if you go to a community college it will be cheaper than say going to an ivy league university. When it comes to trading, you get what you pay for and more importantly what you're willing to put in on the effort.
Starting off with trading paper accounts and testing strategies to see what fits them before trading real money.
Joining an online community or forum in learning from those they perceive to be good traders and taking bits and pieces in applying it to their own trading method.
Understanding they need outside professional help and then they turn to professional mentorship in learning how to trade.
We're going to talk about the third choice as this is the industry we know and can speak to what real mentorship is.
WHAT ARE THE MAIN CATEGORIES IN ONLINE TRADING MENTORSHIP:
When looking at the competitive field of who teaches what, and what you get exactly when you pay for trading education it boils down to a few categories.
Paid chat rooms/copying trades:
This is probably the most prolific in the online trading community and the business model is pretty straightforward. In this subscription model, you pay a monthly fee to piggyback off of a head traders setups. Now they usually will say before the market opens what they're going to get long and short and you basically just copy their trades in entry/exit. Pricing on this model depending on the market the head trader speculates in can range from $50-$300 a month. Sometimes more, but the online average is about this pricing. I talk about the pros and cons of this model below and if this is the right approach for you or not.
Paid courses/mentorship:
This model relies on the student to really put in effort in learning how price action works, how to find correct levels to enter into positions, and working with a group of full-time traders in going over curriculum and giving students feedback. This is obviously more time intensive vs. just copying a trade from someone else but it too has its benefits and cons which will be discussed below. Now pricing on this approach in learning to trade can cost several thousand and there is a reason for that which is mainly due to the attention level someone receives in learning this business.
WHAT ARE THE PROS AND CONS OF EACH MODEL:
We get emails every day where potential students come to us and ask can I just copy your trades and not pay for the mentorship? And this question really speaks to how you see trading and what time you really want to put in learning.
Trade Copying Model Pros:
All you do is copy the head trader and log in every morning to see what trades he/she is taking and you do likewise.
Cost is much less than professional mentorship due to the fact you're just copying trades and you're not really interested in how the trade setups work.
Potential to make good money if you just find the right trader and they continue to perform.
Not much time needed to dedicate to the market or find setups because it's outsourced for you.
Trade Copying Model Cons:
You get what you pay for. If you're paying for a $ 50-month service then chances are that trader may not be as good as advertised.
The trader can (and will have bad weeks, like everyone) and that means you will have bad weeks.
You're reliant on someone else's ideas to feed you trading setups. And usually, you're trading one or two markets like penny stocks or futures and nothing else.
Your account balance does not match his/hers so they may be able to take larger losses and still be in the game vs. your account size.
They usually won't give away their "method" which is an add-on service. They give you trades you execute. Plain and simple.
Paid Courses/Mentorship Pros:
Cost is more because you're actually working alongside a trader in a one-on-one fashion either online or in person to show you how markets and trading works. Similar if you took a job at a hedge fund as a trainee.
You eventually learn how to trade markets outside of just a few asset classes and eventually generate your own ideas in trading real money.
You're not reliant on someone else after a certain time and you don't usually have to pay an ongoing monthly subscription fee.
Feedback and help from professionals for those who learn similar to university relying on a set curriculum and course overview.
Paid Courses/Mentorship Cons:
Time! If you have no interest in learning the curriculum or spending on average 5-10 hours a week applying what you're taught with your mentor, then this model won't work for you.
Costs are higher usually
It can be frustrating getting into a set routine like the university in staying on top of curriculum and attending online mentorship classes.
WHO ARE THE BAD ACTORS AND WHAT TO AVOID:
Now that you have an idea on which course of action you plan on taking in outside help in learning to trade, its time to know what/who to avoid.
Those who stated they worked at a hedge fund when they really have not:
This is most common in the online community, you will have a YT banner ad of some random person saying they worked at a hedge fund and will teach you their method on how to trade the markets. The fact is there are two roles in a hedge fund. One is called a "controlled function", the other is called a "supportive function". They're very two distinct functions in that the former actually place trades and manages the fund book, while the other is in the back office spectrum or gets the coffee for the desks.
This is very easy to find out if they have worked at a fund because it's all public information. If they say they have worked at a fund ask them a simple question: Do you have a reference at the fund or can I see you Reg D offering where you're listed as a PM or officer of the fund. Chances are they won't deliver.
Those who have little to no track record but turned an arbitrary number into a larger number and touts that as their main advertisement in getting people signed up. Now, this we see all over the internet, some person will say I turned $1,000 into $100,000 so let me show you how YOU TOO can do this. Most of the time those traders either have a terrible risk-adjusted return in that equity curve, they bought a cheap penny stock or asset and it shot to the moon making that trade their bedrock for advertisement, or simply they had two accounts and went long in one and short in the other showcasing the best performer.
The lifestyle trader: These guys are the funniest of all. They will create a false narrative about how successful they're by surrounding themselves with rented cars, Air Bnb's mansions and even movie prop money and blasting it online on social media. The truth is this class feeds off of subscription models and affiliate marketing in order to fund their life. They do very little trading in the markets and usually are short-lived when it comes to generating profits.
All the types listed above can be discovered if people who want to learn to trade do a little research. If they say they have professional fund or finance experience ITS ALL PUBLIC INFORMATION!
IN SUMMATION:
If you're still looking to trade either part-time or for extra income then first you need to decide what time and dedication you want to put into this. For some, learning trading like you're in school again is not for everyone as they have a busy life. There is no problem with this. But at the end of the day education varies just like college and if you go to a community college it will be cheaper than say going to an ivy league university. When it comes to trading, you get what you pay for and more importantly what you're willing to put in on the effort.
