Saturday, July 21, 2007

Assessing the Learning Styles of Traders

My recent article examined the role of learning styles in trading, and I extended the discussion to trader performance on my personal site. Here's a further resource: the Index of Learning Styles (ILS) questionnaire. Unlike the VARK measure linked in my initial post, the ILS assesses learning styles across four bipolar dimensions:

* Active - Reflective
* Sensing - Intuitive
* Visual - Verbal
* Sequential - Global

You can take the questionnaire online free of charge. Here's an article about the background of the measure.

I came out to be very high in Reflective, Intutitive, Verbal, and (somewhat) Global. That strikes me as quite accurate. I'd love to see a more comprehensive assessment that evaluates how people sequence these various learning modes. For example, I tend to think quite a bit (Reflective) about the big picture in the market (Global) by reading and writing about the economy and various markets (Verbal), but then my actual entries and exits have a strong Intuitive component. I suspect other traders blend these learning modalities differently. The question is what works for each trader. I don't see a lot of attention placed on that in the trading world.

My best guess is that we would see meaningful differences in learning styles between mechanical systems traders and discretionary traders and between short-term traders and longer-term investors. Just as learning styles differ for people going into particular occupations, it's likely that they differ for people selecting different modes of money management.

Do traders approach decision making differently (from a learning style/information processing vantage point) when they're trading well vs. trading poorly? My own trading results are much poorer when I haven't done considerable preparation/research in advance of the market open. That makes sense, given my need for Verbal, Global, Reflective processing to support my Intuition. This strikes me as a fruitful area for research--and self-study.