4 Questions for John Lee, Trading Coach Extraordinaire

John Lee and I knew we were going to be friends before we ever even met.

We have a similar sense of humor, a love of the market, and most importantly, we both share a raging inner desire to improve ourselves and help others in the process. If you haven’t heard of John Lee, he tweets under the handle @WeeklyTA and runs ChartsGoneWild.com. He is also hands-down the most driven and dedicated stock trading teacher in the United States. He is doing something for his students right now that is so unique, exciting and courageous that you just have to hear about it from the man himself.

I asked John 4 questions over the weekend…

1. What are the core tenets of the John Lee Method? Can you give us a synopsis of a student’s very first lesson?

The way I train is designed to give the student an unquestionable solid foundation in equities trading. This foundation consists of Knowledge (Technicals), Discipline/Psychology, Risk/Money Management, and Experience/Intuition.

Many new traders are misguided or lost when they ask for my assistance and normally, these traders are at a crossroads in trying to figure out if trading is right for them. I believe that all traders should be adept in equities prior to moving on to options or futures. Even if they join one of the hundreds, perhaps thousands, of trading services out there, most traders fail. Why? The individual running the service is likely more focused on subscriptions and the vast majority of ‘coaches’ refuse to give extra time to students to assist them during market and non-market hours, and even on the weekends. I am available to students and subs via e-mail, IM, and I even give out my personal cell phone number to them (how many coaches do that?) and have daily chat room and weekly phone consultations with them at no charge. If I travel, all students and subs are invited to meet with me in-person, again, at no charge. The training program is divided up into categories:

Each component is complementary and a trader cannot succeed without mastery in all. A deficiency in one area will have a material impact on the others. To clarify, “students” refers to private coaching students who pay to spend two 12-hour days of training with me face-to-face and at the trainee’s home and “subscribers” refers to individuals to sign up for the $99/month Charts Gone Wild premium service offered on the StockTwits network.

a) Knowledge – beginner/intermediate/advanced candlestick patterns & strategies, price/volume analysis, reading the chart, market cycles, pattern recognition, indicators, gaps, time frames, full integrations, and strategies I developed over time including, blank box estimations, long spikers/short parabolics, gap strategies, earnings trading, etc. Without knowledge, no one can proceed. this segment also including teaching how to scan and create watch lists, learning about high-probability setups, etc. All persons are also highly encouraged to read multiple trading books per month. I even go on audio to read entire chapters out of books out loud to my group. This is to set an example and to demonstrate that I am willing to read to people even if they refuse to do so themselves.

b) Discipline/Psychology – I am one of few coaches who come from a multi-year military background. I graduated 3rd in my class at Valley Forge Military College. I’ve been in the Active, Reserve, and Guard components in the Army from 2002-2007 (Inactive RR present) and commanded infantry units during this time. Naturally, my experiences over the years have and continue to spill over into trading, more specifically, training and handling my students and subscribers. Discipline is a critical element to survival in an unstructured environment (stock market) and some examples of discipline include making every student/sub create trading plans and have them e-mailed to me, have daily trade reports with annotated charts e-mailed to me for my inspection, send monthly performance reports, and the enforcement of trading rules. I use audio (livestream) to give weekly lessons that reinforce the necessities of always remaining in control of one’s self (person), the trade (action), and the situation (environment). Discipline is an inner strength, one that is developed over time. However, the process becomes much faster if I oversee this area of development on a daily basis. Psychology is simply about understand one’s self and who they are. Each trader develops as a primary scalper, day, swing, or positional trader and acquires skills in other styles of trading over time. I have the responsibility of helping traders find what style of trading fits best with their overall psychological make-up. Emotional control, attitude changes, self-awareness, and other components are also essential skills that are also learned and acquired. A ‘hard approach’ is often necessary to keep students in line if the make continuous mistakes or don’t follow simple instructions. Any disciplinary action is for the greater good of the trader and my first goal is to keep traders safe by preventing the trading ‘death spiral’ and any account ‘blow ups’. If traders have been accustomed to incorrect ways trading or exhibit regular patterns of making horrible decisions, then I have to ‘re-wire’ the trader to start with a clean slate in order to build a foundation.

c) Risk/Money Management – Students are instructed to not take double-digit losses or any sized consecutive losses. The usual method of starting off is for the trader to paper trade until consistent profitability is achieved (which would demonstrate the application of knowledge and development of strategies). Then, they move on to small accounts and trade live to gain experience and to develop certain tolerances to the market. In order for the trader to take on larger positions, the trader mind has to be conditioned to handle additional amounts of risk, and that starts with a smaller account and small positions until consistent profitability is achieved (this demonstrates the application of knowledge, development of strategies, basic risk/money management, emotional control, risk tolerance and other skills). Later, students can trade with larger accounts and positions and demonstrate a high level of proficiency in all areas. Finally, the ultimate goal is to have to student trade on his/her own without my assistance and students/subs are encouraged to leave and trade on their own. Students learn to set stops using patterns, candles, indicators, and other technicals. Students are taught to size positions according to how much risk is needed to be taken. Students are directed to take only the highest probable trades to automatically reduce unnecessary risk. The psychological aspect of being ‘self-aware’ is critical here it demands that students constantly pay attention to their total equity risk.

d) Experience/Intuition – Intuitive trading is the highest level of trading. In my blog post, ‘Four Stages of Learning’, I note that Stage 4 – Unconscious Competence is the highest level achieved and this results from a mastery in all areas of development. A trader who is taught the right way, controls his/her risk, plays high-probability setups, and stays in control will gain an incalculable amount of experience on a daily basis and will become the intuitive trader. My responsibility here is to make sure that major mistakes are still not made while minor mistakes are kept at a minimum. Prior lessons on other areas are also reinforced. Discipline is maintained.

2. How much time do you spend each market day on teaching students versus trading for yourself?

Since a few years ago, trading no longer makes up the majority of my income. I no longer depend on trading to live, however, I do trade because it is my most enjoyable activity. I trade on a near daily basis, but my students and subs trade more often than I do and I can attest to the fact that I spend more time training students than trading for myself. I also run other businesses which limit my time, but I have former coaching students that join my room to assist me in teaching others and answer questions. They are all volunteers and I’m grateful that they are so willing to give back to others.

Because I am free from necessity, I’m able to unbiasedly and completely help others without ungrounded personal opinions getting in the way. In fact, when I started trading at 17, I had no mentor at all and had to learn by myself. As far as subscribers, most ‘free-trialers’ sign up to follow trades and there are significant flaws to this:

a) if you have a lack of knowledge and experience, you are automatically at a major disadvantage

b) you will develop a habit of depending on people and not yourself

c) you are unaware of the intentions of the trader you are following

d) exact moments of entry and exit is significantly difficult to achieve

e) risk and position sizing considerations are largely ignored

Among other reasons, you are destined to fail if you keep this up. Some people spend decades developing this bad habit until they finally figure out that this is not the way to go. Those people that are looking to be spoonfed trades are encouraged to leave; I kick them out to keep the integrity and unified goals of my group intact. Those who join to genuinely learn and to make a positive change for themselves and consider trading as a possible career will have my full unconditional support.

3. I spent about 7 hours with you last Monday afternoon/evening, I’m pretty sure there wasn’t even a second during which you weren’t smiling from ear to ear – how important is the ability to be positive and upbeat for traders?

A positive attitude is important for everything in life! In trading, it is all too easy to get discouraged when taking a loss, but my students/subs know that taking losses is an essential ‘fact of life’ when it comes to trading and necessary and required to advance in learning.

Some people may equate a positive attitude with delusions of grandeur. This is not the case – not only does everyone have to be positive, but they have to be realistic. Having a positive attitude is about well-being and having confidence in yourself. Fortunately, this can be developed in every person. As a trading coach, it is important for me to provide a positive learning atmosphere for all people and to foster growth through a large support network. To further this cause, I personally offer to call my students and subs every single week in case they want to talk to me about anything one-on-one. You can’t find that kind of support anywhere for the price that is offered.

Recently, I encouraged all traders to workout/exercise and personally gave them my own workout/consumption plan. I run a minimum of 5 miles everyday and weight train once per day, putting me in the gym 2x per day with one ‘rest day’ per week. Working out puts you in a good mood, you feel great, look great, and you get all the benefits that come with all of this. This is important for traders because most traders spend an above average amount of time, sedentary, and sitting front of a computer all day long with minimal activity. This can be a contributing physical factor to a decrease in mood. Making money from trades and becoming excited about them is not a long-term solution to an overall non-positive attitude/mood. Many of my subs are now working out and I can’t wait to see the results.

Being a trading coach for me is not just about trading, it’s about the person itself. How many trading coaches do you know actually give workout plans to their group and motivate them to execute it?

4. Who are your favorite coach and teacher characters from the movies? Mine are Joe Clark from Lean on Me and Tom Hanks from A League of Their Own.

Here are a handful:

-All the coaches in sports motivation movies, like Rudy, Coach Carter (Samuel L. Jackson), Any Given Sunday, etc.

-Bruce Willis (Tears of the Sun) as the SEAL Team LT leading his men and objectives out of a hostile area and demonstrating qualities that are necessary for traders. He also taught the indigenous Africans survival skills from scratch.

-Will Smith (The Pursuit of Happyness) learning everything on his own and defeating his mounting struggles along the way. Shows the potential of a human being and what people can overcome to do what they want to do.

-The Karate Kid

-Yoda and Obi-Wan Kenobi, Master Jedi. They trained thousands of Jedi then in the original/latter and finally Star Wars, Yoda & Obi-Wan had only a single student (Luke), but still faithfully trained him to defeat the Galactic Empire.

-The Great Debaters (Denzel Washington)

***

Thanks John!

Contact John Lee below:

http://about.me/johnclee

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