Thursday, February 26, 2009

From Education to Training: Developing the Success of Traders

The recent post on coaching traders as a supervisory process suggested that learning to read and respond to markets might be similar to the process that psychologists undergo when they learn how to read and respond to people in counseling. Readers of my book on trader performance will recognize that this is a process in which novices first learn to develop competence and later cultivate specialties and expertise.

It is significant that the training process in psychiatry is a four year sequence, not including any fellowships or sub-specialty training. Similarly, those with a Ph.D . in psychology typically train for four years after college, followed by a fifth year of full-time supervised internship.

The progression of the years takes the form of "see one, do one, teach one." Beginning students of psychology and psychiatry take courses and observe others doing therapy. Their initial attempts at working with others are conducted in courses through role play, minimizing the risks of making mistkes. Only in later training do student-therapists see their own clients in training clinics, under close supervision. Still later, they help to supervise beginners, sharing their competence and growing expertise with more junior peers.

No one in the mental health field would suggest that teaching, supervision, and the development of competence (much less expertise) could take place in a matter of days or weeks. We know from studies of expertise development--from sports to chess--that the cultivation of expertise typically takes years. It is no coincidence that Olympic contenders--themselves superior athletes--continue to receive coaching and mentoring years after they developed competence in their work.

Education--in trading as in other fields--is valuable, but it is different from coordinated curricula of training. Isolated seminars, workshops, and learning experiences cannot substitute for the "crawl, walk, run" training that moves students from "see one" to "do one" to "teach one".

We commonly hear that 80% or more traders fail at their pursuit. Might that be because they lack the training structures typically available to athletes, professional soldiers, and performing artists? Yet how could such training be offered in a way that is affordable and logistically feasible? I will be addressing these significant challenges in my next post in this series.



TTmarun said...

I'm all ears & salivating!!
Looking forward to the follow-up posts... JT

E-Mini Player said...

Proper education is severely lacking in the trading industry. Looking forward to your next post Doc!

Gangineni Dhananjhay said...

Mouthwatering for a student of trading and markets like me.Lack of proper curriculum for learning trading definitely one of the biggest obstacles for making a serious attempt.As a trader of Indian markets I am struggling to adapt the indicators and similar resources for traders.Every student of markets looks forward to Doc's posts .

Trader M said...

E-Mini has it exactly right. The state of "education" for traders is pitiable and most of it will cost you money directly and then after you start trying to implement the half-baked, wrong-headed ideas within it.

Brett, your blog is the closest thing to proper education out there, along with putting hours, days, weeks and months on a simulator until you can trade profitably.

Steve van Emmerik said...

Good point re the structure of trading education Brett!

I'm always amazed when I meet people who tell me they are traders/investors while they seemingly have hardly any relevant background or training. Their usual thinking on their expertise seems to derive from:
1. I've invested/traded before on some stocks and made money and I made some mistakes (in hindsight) so I'll probably eliminate those mistakes and get better and make easy money.
2. I have an interest in it
and I can trade (i.e use the interent to place trades) therefore I will trade.

A lot of guys have an interest in football and can play it but that doesn't mean they all sucessfully turn pro nor does it mean it's worth trying for 99% of them.

adan said...

re: " could such training be offered in a way that is affordable and logistically feasible...." -

looking very much fwd to them, thanks!

leon t said...

as you know, i recently sent the name of a former doctor who's been trading for 20 years. he does not sell anything nor is he interested in doing the circuit ala "trader's expo". what i learned by listening to him and reading his few articles, was that all the courses, indicators, and systems i had bought, were not necessary. i could use them, but it was a choice, not a need.
now, unfortunately, i had this epiphany after 10 years of looking. and paying for gurus at least three "wizzard" among them.

where you could help, would be in shortening the time spent looking at things which will not least not work for the person looking. i now know that a couple of simple (but not easy) concepts work for me. i also know that if i had been shown his work ten years ago. i might not have understood.
with so much misinformation out there. what a new person really needs is to be helped in finding what works for him.since i believe your intentions are good. this is where i believe your expertise may help. just a thought

markus said...

It just comes to my mind:
I guess the percentage of striving young athletes who fail to become professionals should be more than 80%.
Your ideas about training and coaching for traders are great, but even with proper education facilities the percentage of failing traders may not change.



NoSquigglyLines said...

I'm interested to read more. There are very significant challenges to providing such training for precisely the reasons you mention e.g. seminars and workshops can only do so much. IMO what is needed is ongoing dialogue and discussion between trader and trainer ... over a period of months in most cases.

How anyone would provide these (or would even want to provide them) in an affordable way to many people is the challenge. However altruistic the individual trainer(s) may be, there must be some sort of fee for this and therein lies the challenge. I guess one potential model would be offer this service as part of a brokerage e.g. reap some payment from commissions.

In any solution the trader has to put in the vast majority of the time (e.g. marking up charts, creating videos for review etc) otherwise it would not be logistically feasible.

I suspect you have an idea that you are building up to. I look forward to more on this.

. said...

Your idea for training is great although it sounds very ambitious (hard to implement because of time consideration and human resource, but I hope you manage to do it).
Your website has so much free, practical information and the additional training/education aspect to drill in concepts is wonderful - not to mention the opportunity to interact with likeminded individuals.

When you mentioned traderDNA software some time ago, I searched on the net. After some digging, I found that the author has a training school in the UK. His idea of across the board evaluation sounds interesting (a bit much tho) but the idea of knowing oneself (strengths weaknesses etc) through metrics is useful. I didn't much care for the market education aspect of their program from the descriptions but maybe the concept is worth looking at?