'Why on earth would I employ a coach for my traders?'


 'Why on earth would I employ a coach for my traders?'

That was the retort from the head of trading of a fixed income unit of one of the world's leading investment banks. -He added, 'We have some of the best traders in the financial markets, these are the last guys in the world who need coaching'.

Imagine how would it sound if the head of major sports franchise took the same attitude to their top talent.' : 'Guys, we've spent millions bringing you in, the next game is on Sunday, just turn up and do your best'.

Sports franchises and clubs spend millions on coaching their top talent, getting the best out of them, physically, mentally, psychologically, strategically. The military does the same, their special forces fighters receive more training, coaching and development than any other part of the armed forces. In business, most senior executives in the world's leading corporations receive high powered executive coaching, the world's top executives coaches, such as Marshall Goldsmith can charge seven figure fees to work with CEO's, COO, and senior executives, and still they are queuing up to work with him. Meanwhile in the medical profession, medical practitioners spend thousands every year continually updating their professional capabilities. - So how come the 'Trading Profession, where individuals who daily trade notional sizes in the trillions of dollars, seem to think they alone do not need to develop, hone and improve their skills and capabilities? 

What can Trader Performance Coaching Do?

First it would be helpful to try and understand what professional trader coaching is and what it can do. - Coaching, at the level we are discussing is akin to a professional sports coach, where the coach facilitates the performers or team to be at their best and to achieve their best to meet the competitive challenge they face. Novak Djokovic does not employ a coach because he needs to learn how to play tennis, nor does he need to be pandered to about how be could be a better player. Rather he has coaching to help him refine his game, to keep himself sharp, to work on enhancing his edges, and to have someone who can challenge him, cajole him, and keep him motivated. A coach is someone who can help a person improve in all areas and aspects of their performance, working with them to help them become more self aware. Then helping them take that raised awareness and translate it into strong performance, and better outcomes. 

High quality performance coaching for traders works in a similar way, though it might be fairer to compare it to executive coaching. Executive Coaching is a facilitative one-to-one, mutually designed relationship between a professional coach and a key decision maker in an organization. The coaching is contracted for the benefit of the decision-maker who is accountable for highly complex decisions with have a deep impact on the performance of the firm.  

At Alpha R Cubed, we work with some of the financial market's top talent inside hedge funds, investment banks, and commodity trading firms. Our work aims to make traders and professional investors stronger as risk takers, helping them improve their decision-making around their work, helping them improve their resilience to stress and anxiety, and improving how they function in the highly uncertain, complex and extremely challenging world of financial markets. Our coaching aims to take people from 'good to great', and from 'great to outstanding'. The coaching helps people understand more about themselves, how their personality impacts their behaviour and what blind-spots they possess. We help them become more mindful and conscious of the blindnesses, which Daniel Kahneman stressed in his comment, 'We are all blind to our own blindnesses'. 

Trader Performance Coaching works with people to help them refine their own trading edges, develop their performance, improve their confidence, enhance their self-belief, improve how they cope with stress, and help better manage themselves and their emotional drivers which impact decision-making. We do not tell people how to trade, nor do we encourage them to change their approach, alter their style, nor adopt a different methodology. We work with people as they are, not how we think they should be. At the core of our work we are informed by the principals of 'behavioural finance. We also look to help them cultivate improved levels of risk intelligence a particular type of intelligence, distinct from intellectual and emotional intelligence, which people use for thinking about risk and uncertainty. Additionally the coaching looks to help  this we work with them to improve their emotional intelligence, develop greater resilience, and cultivate positive psychology in relation to how they engage with risk. - The coaching gives traders a chance to look at their process, practices, behaviours and attitudes, in a way they have never looked at them before. There are many areas of trading and investment performance that are ripe for refinement; analysis, risk management, money management, execution, trade management, portfolio management, position-taking, individual resilience, mindset, focus, attitude, beliefs, behavioural biases, ego management, team working and relationship management skills when working  with sales, quants, investors, the list could go on.  

At the root of coaching for traders, as in the case with many forms of coaching, it is about  working with the individual to be able to help them improve their decision-making in whatever challenges or environment they face. With traders, and investment professionals, it is ultimately about helping them to be able to make better decisions and choices in fast volatile and highly uncertain environments, where emotions can very easily throw people off track and effect their ability to make sound decisions at key moments.   

Examples of Trader Performance Coaching interventions:

It is not always easy to demonstrate the benefits or returns possible from coaching, often the results are not clearly quantifiable or easily determined. We have however attempted identified to capture some examples where we can demonstrate the returns. These examples are based on clients stating how much difference they think the coaching made. A previous article, The Extraordinary Returns from Investing in Coaching for Professional Traders and Portfolio Managers, highlights these examples. The table below summaries these. 

The exceptional returns on investment highlighted sometimes do appear ridiculously off the scale, however the client themselves expressed these as fair summations. Part of the reason for such exceptional returns, is the size of the notional values when people are trading in  financial markets, a small difference in actual performance, can translate into major gains in financial terms. One aspect not captured in these examples, is the difference the coaching made on non-measurable aspects. A client we have just finished working with, not included in these examples, has reported how he is seeing so many other improvements in all areas of his working (and non-working) life. This was reflected in his end of year review at his firm, a tier 2 investment bank with some 2000 employees in the trading business worldwide. Each employee has an end of year review whereby they are given a star rating, only a handful of employees receive a 5 star rating, even a 4 star rating is not readily given out. This year the individual was given a 5 star rating, as opposed to the 3 star rating he has always previously received. In addition, he is now being put into the firms management programme, something that was not even on the radar for him previously. It is worth pointing out that in terms of performance, he has just had his best ever trading year out of 15 years trading, more than doubling last year's performance. His story is not atypical by any means, we have received much feedback similar to this. 

Why on earth would I employ a coach for my traders?

In response to this statement made at the very beginning. I hope I have laid down a strong case why a firm should employ coaching for his traders. Whilst the case is strong alone based on performance alone, banks are under pressure to demonstrate steps they are taking to raise standards of professionalism within their trading businesses. In the UK, the Fair and Effective Markets Review (FEMR), demands this of banks. A more complete list of the many benefits of our work can be seen on our website at http://www.alpharcubed.com/coaching.

Steven Goldstein is a leading Performance Coach working with Traders, Banks and Hedge funds at AlphaRCubed Ltd: To know more about Alpha R Cubed, visit their website www.alpharcubed.com or email Steven at steven.goldstein@alpharcubed.com

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