I have a close family member that is out of college and is expressing interest in learning how to trade my method. Problem is I have no idea if they can do it or not and I'm hesitant of giving it out because I don't know how dedicated they will be. I don't want to show them my method only to have them give up later on (because trading is hard and it's a skill) and then now I risk them telling other people. I trust them, but it's still a risk. For me to reveal how I trade, I need them to prove that they are serious. So my ideal is to charge them for the secret and mentorship. $5000 in $500 increment every 4 months. Like a classroom. If they pass each 4 months on what I want them to do then they can continue. If not then I just let it go. I won't give up the details until a year into it. At first I'll only give the materials from books and ideas that forms the basic theories to my strategy. It's homework and I want to see if they'll do what it takes first and if they'll work hard. My assumption is that paying to learn will give them more motivation. But if later on they decide that it's not what they want to do then they it'll be just a $500 loss so hopefully no resentment. How does my idea sound? And has anyone tried mentoring a relative before? How did it go?
I would advise caution at mentoring relatives. In my experience, most seekers think traders have some kind of magic secret and once they find it out, they will be rich too with little effort. It is a very similar expectation to socialism - I am equal (or better) to the trader and thus will make more money or I deserve equal to the trader but shouldn't have to do the supporting foundation work. That is, some pain is necessary to be successful as a trader IMO. I have in past given fundamental principles and methods to about 8 people in 30 years and not one of the people who asked me sincerely have put the effort in to apply them and use them. (You give them magic beans and they tell you months later when you see them, I will make soup with these beans one day.) Now, I just don't waste my time. It answered the question from my past of why trading mentors were so difficult for me to find when I looked for them. When I went to university, I was astounded to find out in my final year that the fairy rings of fellow students were working on homework as a group rather than each working on their own. I spent almost every waking hour studying and doing the work. I couldn't understand how most could keep up. I learned it by doing, they copied and learned some things by doing. Did that work out for them? 35 years later, I am healthy wealthy and wise, retired at 50 and they are .... Where are they exactly. Many washed out and were never heard from again. Some are bureaucrats and some even did pretty well overall. Not putting the work in is like the Jack and the magic bean stock story - a fairytale. One of my engineering professors lamented to me about his poor teaching remarks during a student evaluation. I didn't mind how he taught but there was a lot of information and one had to pay attention and it was a challenge to keep up. He told me that due to the watering down of standards then (1974), in his opinion, only about 15 students (including me he said) of our 65 class actually belonged in engineering. I often think about this conversation when I look at what society has become. I often wonder if he was an optimist when I see how low some entrance standards have dropped to let in people who normally wouldn't qualify. After, somebody has to work on the problems, we can't all rely on government largesse.
Same experience here. I used to just give the magic beans away and no one planted them. So I decided later to give "homework" that would lead the person to find their own magic beans. No one did the homework; they just want the magic beans. It's a waste of time, IMHO. Everyone needs to forge their own path.
There is a psychological phenomenon called I'm Only Trying To Help You. This is often/generally accompanied by a phenomenon called Yes, But . . .. If one wants for whatever reason to guide others, it is imperative that he determine what is the absolute minimum to convey, stir gently, then wait patiently to see what develops. If the intended isn't curious enough even to complete that simple minimum, then everybody saves a lot of time and a lot of angst (and a corollary, Why Don't You/Yes,But). If the intended does show enough curiosity, then the parties can go on from there. If someone sincerely wants to lose, then he will lose, and there's not a thing you can do about it except perhaps provide good wishes.
In my experience - don't bother with the mentoring. If they are asking you for the "shortcuts" already most likely they are not prepared to put in the hard yards. I speak from experience. 2 examples. 1) My brother - has seen me trade successfully over the years and started dabbling in forex by himself a few years ago with no success. Came to me asking for advice. I showed him how I trade - all the setups - the triggers I look for etc., my risk management, told him you can call me anytime for help etc. Result : not interested in trading my system because it is too short term, takes too much time - still trades unsuccessfully on his own 2) My neighbour and friend. Sick of his day job and wants to work like me. Once again - taught him my setups, triggers etc Result : wants to give me money to trade for him - doesn't want to do the work - just wants the rewards. Told him I'm not a fund manager and to find his own way. My feeling is that a lot of people want just the money without the work that is required. One good gauge of how serious someone is in making trading work for them is to give them the books you read that helped you on your trading pathway - if they don't even read it or don't take it in, and just keep pestering you for the magic beans, then don't even bother.
The main problem I have with mentoring is that there's more to trading then just giving out the magic beans. There's also emotional and mental training that need to be done. As I've said before trading is a skill that needs hours of training to master. The hardest part was in developing a system which I've already done. But there's still a lot of practice and training that'll take time. For example. Tiger Woods can give you lessons on golfing. But there's no guarantee that'll it make you into a professional if it's even possible. My method is easy. It's a few simple rules. But to execute it require good discipline. That's what I'm unsure about. Whether they have what it takes to be a trader and/or if they'll even work hard at it.
Dont do it. As Linda Bradford Raschke states in "The new Market Wizards" if you have a valid system, it means you have a valid system that works for yourself. Simply put, teaching it to a relative doesnt mean the method will work with him/her... And when push comes to shove, it'll be your fault... So find a nice excuse and save your a.... (I've been there) Best, Victor