Friday, December 11, 2009

What Would An Ideal Training Program Look Like?

What would be an ideal training program for new traders?

It would have to teach the market basics: what a market is, how a market operates, how trends form and change, why markets become more and less volatile, how markets are interconnected, how and why news can move markets.

It would have to teach the trading basics: how to use trading software, how to define and manage risk, how markets move during and across days.

It would have to illustrate patterns that evolve from market operation and then help new traders identify those patterns for themselves: first on paper, then in simulation mode.

It would have to show new traders how traders exploit those patterns as setups: defining risk/reward; entering positions, managing positions, exiting positions.

It would have to help traders tackle those patterns for themselves, first in simulation mode, then in actual trading.

It would have to offer mentorship and coaching: supervision from experienced traders to review performance, correct the mistakes of new traders, and focus the learning process in a goal-oriented way.

It would have to offer these services from actual market professionals who have "been there and done that" successfully.

It would have to be so concentrated as a learning experience that the normal "ten year rule" of developing expertise could be greatly condensed, but it couldn't be so brief that it offers information only without focused skill building.

Developing such a curriculum is no simple task. Implementing such a curriculum is labor intensive--and yet it needs to be reasonably affordable for new traders.

How can this be accomplished? I will be blogging ideas going forward, in the hopes of moving toward such a program in 2010.

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5 comments:

Arthur said...

Dr Brett.

Whatever the awesome program would be, I hope it would be provided as long distance online learning as well.

That's because your followers are actually distributed around the world.

Hope the coursework outline would be out soon.

Art

Adam said...

Brett ~

Your excursions intro this topic are always interesting.

When one designs a course of study, at some point a decision gets made: "Who is this for?" Deciding on one's target audience is always part of formulating a new product, service or brand.

Part of the audience-building process is deciding what the product or service will not be. It's as important as deciding what it will be. Coca Cola doesn't sell cigarettes. Twitter doesn't sell coffee.
What a thing is not can be an equally potent ingredient in determining one's audience as what a thing is.

For instance, nowhere in any of your descriptions of an ideal trading program does one read about mathematics instruction. It's a fact that trading successfully requires a certain facility with mathematics.

Backtesting a strategy, calculating stop losses, parsing the yield curve, etc, all demand some knowledge of mathematics, the absence of which cannot be masked by having hopefuls fill in Excel templates.

The probabilistic thinking demanded by trading ~ an enterprise in which actions are entirely based on perceived probability and outcomes determined by actual probability (hope vs. reality) ~ only has a firm foundation if it is resting on some mathematical ability.

The patterns many traders often talk about recognizing are merely imperfect, derivative visual representations of underlying probabilities. How helpful is it to an aspiring trader to be taught to recognize a hoped-for probability but not be able to calculate the actual one?

As mathematics ability ought to be acquired outside your ideal trading education program, my comments are, in a sense, contrary to your philosophy and practice of opening the field to as many aspiring participants as possible.

I'm adding the idea of hurdles: the idea that successful participants may well have already shown the temperament and grit to deal with bodies of complex knowledge in demanding fields.

Of course, my comments are founded on making an assumption based on observation of a pattern imperfectly derived from an underlying probability.

Yet, I would be willing to place a bet that a correlation between traits and outcomes could be calculated, indexed and then even traded. Maybe as an ETF?

Adam.

JimRI said...

Dr. Brett,

I see such a program as you outline would be useful to many. It sure would have been to me in lieu of my bumbling around method. Of course I am reminded of an entrapeneur who during an interview said if I knew enough to know what I was getting into, I would not have started any of my busiensses.

While I thought I understood all the patterns etc. I now realize that I don't. So I am back to working on method.

I find that the videos on StockTwits.tv where pros go over their charts explaining their thought processes while interpreting the data to be very useful. I learn what they are seeing in the charts, what they consider important and how the use that information to make specific trades and how it worked out and how they exited. You include a lot of this in your blog. The live video on live markets for me increases the effectiveness.

Similarly, the blogs from SMB Capital where traders explain their trades in detail and I can then follow it on my own charts and figure out how they came to their decisions is very helpful to me.

Matt Fahmie said...

Where do I sign up?

SeekMocha said...

I've been telling novice traders that becoming a profitible trader requires the educational equivalent of a bachelors degree. But I haven't had any school to point them towards. I have "graduated" from several "academies," but can't recommend them to others. I'll be following your description of the school you have in mind, hoping it's one I can recommed to others.