There is a widespread assumption in the world of trading that a successful trader must automatically be a good coach. This view is based on the idea that only those who make high profits themselves are able to teach others how to trade profitably. But is this assumption really true? In this blog post I would like to explain why an excellent trading coach does not necessarily have to be a successful trader and which scientific approaches support this.

1. Different competencies: theory vs. practice

There is a fundamental difference between theoretical knowledge and practical application. A successful trader is characterized above all by his practical skills, by successfully applying strategies and trading profitably. But that does not mean that he can also impart these skills. The ability to impart knowledge requires a deep didactic competence that not every profitable trader has. Studies in pedagogy show that specialist knowledge alone is not enough to teach successfully. A good teacher, or in our case a coach, must be able to explain complex concepts in an understandable way, be patient and encourage the learning progress of his students.

2. The role of metacognition in the learning process

Metacognition, or awareness of one's own thinking and learning, is a crucial factor in the learning process. A good coach understands not only the "how" of trading, but also the "why". They can help their students to reflect on their own learning processes and adapt their strategies accordingly. This ability for metacognition is often more pronounced in people who have studied the theory of a topic intensively rather than just applying it practically. Research has shown that metacognition plays a crucial role in successful learning and teachers with a high level of metacognitive understanding teach more effectively.

3. The Dunning-Kruger effect and overconfidence

Another interesting phenomenon to consider in this context is the Dunning-Kruger effect. This states that people with less expertise tend to overestimate their abilities, while experts often underestimate their own abilities. A successful trader could fall into a trap of overestimating himself due to his own successes and believe that his methods are universally applicable. A good coach, on the other hand, is aware of the diversity of learning needs and knows that what works for him does not necessarily apply to everyone else. The ability to recognize one's own limitations and adapt to the needs of the student is a key skill of a successful coach.

4. Psychological safety and trust

Another important aspect is psychological safety. A good coach creates a learning environment where students feel safe to ask questions and make mistakes. This promotes confidence and a willingness to learn. A trader who is highly focused on their own successes may be less inclined to create such an environment, as they may have less understanding of their students' mistakes and insecurities. Studies have shown that psychological safety is a critical factor in effective learning and that teachers who provide this safety achieve more successful learning outcomes.

So

A successful trading coach does not necessarily have to be a profitable trader.

Rather, it is didactic skills, metacognitive understanding and the ability to create a psychologically safe learning environment that characterize a good coach. A coach who is able to explain complex content in an understandable way and motivate his students to develop strategies independently can be far more valuable than a trader who simply points to his own successes. Ultimately, coaching is about accompanying the student on his individual learning path and giving him the tools he needs to become successful himself.