Sunday, June 27, 2010

Trading and Poker: Reaching the Next Level of Success

Well, that's another way poker might be like trading: It's easy to participate, difficult to sustain success. Many just play for the thrills of winning and losing; relatively few systematically learn from experience and build skills over time.

One reason online poker is particularly promising is that players can play so many hands at one time. This allows for the possibility of accelerated learning; the online poker participant can gain years of live tournament experience in a matter of weeks. But this is only possible if the experience is structured in such a way as to generate frequent, timely feedback and goal-focused efforts at improvement.

Imagine a training program for traders in which there is daily observation of leading traders making decisions, frequent interaction with those traders to understand what they are doing and why, and supervision of students' trading decisions by those traders. It would be like having world-class poker champions sitting behind your shoulder as you play, offering immediate observations and coaching. Expertise development that normally might require many years of effort could now occur in a fraction of that time.

That is the vision.

The key is recognizing that it is the structure--and not just the content--of a learning experience that accounts for its success. Most learning efforts fail because there are too few cycles of performance-feedback-goal setting-corrective effort per unit of time and no clear curricular progression guiding the content of those cycles.

Interested in reading more about enhanced learning and developing elite trading skills? Here are a few sources worth checking out:

* Enhancing Trader Performance - This is the book that I wrote to capture the progression of successful traders from novice status to competence to expertise.

* The Talent Code - Dan Coyle's book nicely draws upon research to show that elite levels of performance are as much a function of training as inborn ability.

* Talent is Overrated - Excellent book by Geoff Colvin that documents how the structure of practice is a major contributor to successful performance.

The core concept is that, whether you are a poker player, trader, or something else, you can become much better at what you do by creating more and better learning cycles. For the real champions, nothing less will suffice.


RivTrader said...

Hi Dr. Brett,

Nice to see you drop a little bit of post. Just read your previous post, wish not only poker players shall have the opportunity to participate about the trading program you brought up, how about those individual who are learning by themselves, maybe they can participate too!

Jonathan said...

Hi Dr. Brett,

You might want to make a post on the Two Plus Two poker forum. It is without question the best forum on the web. I'm not affiliated with the site, but used it extensively when I was learning No Hold 'Em. Hope you're doing well.


E said...

Dr. Brett,

Valuable insight from you as usual.

I believe the crawl-walk-run approach as typically followed is the norm because it allows for a structurally sound foundation.

There are shortcuts and ways to shorten the learning curve I believe, as you suggest, but nothing takes the place of being "seasoned" in the crucible of fire.

A child who touches a hot stove learns the lesson as meaningfully as any "no" spoken from a loving parent.

Having enough capital, having the courage to lose small, and having the patience and discipline to wait for the higher odds trades is significantly important.

The devil is in the details, so the real key..."will we do it?" is still something that must be won in the battle between our own ears.

No guru, market expert, or savvy trader can transfer that skill to another.

Our choice alone.

Hope all is well with your new endeavor.

Y said...

Hi Dr,

The question is whether not ANYBODY who go through such a rigorous training, with such a commitment from the trainer, will not succeed, regardless if he is a poker player or not.
The question is what the individual done in his life that demonstrate consistency and stamina (like someone who has been working full time for years, army veterans, graduates from tough and demanding degrees etc). Anyway, if you need such individuals to be in the "control" group of your experiment I’m willing to take the chance…

David said...

Hi Dr. Brett - can you recommend a structured program for traders - I am looking for a program that allows for that cycle of perf-goal setting-feedback-corrective effort that you constantly refer to. Is there a good source you can refer me to?

Brett Steenbarger, Ph.D. said...

Hi David,

You're asking a great question. I know that SMB incorporated some of these elements into their program when they developed it. Some training programs at investment banks that I've encountered have also drawn on performance principles. Overall, however, I have found few such structured training initiatives in the trading world: most "training" is really didactic education.


BirdMan said...

Great to see the blog active! Having no particular insight.... my feeling is the succesful live poker player is like a trader in the pit - and the electronic poker player is like the trader working in an office. So I am thinking the people I see on tv probably would not make great screen traders... If you can - keep us updated on how the project shakes out.

shodson said...

I don't agree that poker players get accelerated learning because they get more "hands". The way I see it, every new bar on a chart, for me, is a new hand, new information about the market, and I have to make a decision on wheter I want to act or not (fold).