Monday, October 30, 2006

What Traders Most Need

Rarely does a week go by without my receiving a solicitation to provide online "education" for traders. My response is generally the same:

Traders don't need education. What traders most need is training.

Look at all the websites, blogs, and books devoted to trading. If success were a function of education, surely we'd see a helluva lot more profitable traders.

No, giving a struggling trader blog columns and newsletter articles is like giving a starving man a menu.

That's not to say that education is unimportant. Look at successful training programs--in medicine, music academies, the military, sports--and you'll see evidence of hands-on teaching. But no one pretends that you will make a surgeon, violinist, fighter pilot, or quarterback by conducting seminars and providing written material.

Training builds upon education by providing structured opportunities to learn by doing. The psychotherapist in training sees role-played clients--and then real ones--while being observed by a mentor/supervisor. The surgeon trains with a senior physician: see one, do one, teach one is the motto. A violinist is assigned pieces by a teacher and executes these many times in practice and in lessons before performing at recital. New fighter pilots spend many hours in simulated aircraft and then in the cockpit with an experienced pilot before being given their own jet. The quarterback not only sees plays diagrammed, but runs these time and time again in practice under the watchful eye of the coach prior to using those plays in a game.

Trading, like those other fields, is a performance skill--not merely a body of knowledge. Education informs; training develops skill. If skill were a matter of explicit knowledge and learning, the most informed athlete or trader would also be the best one; we could give IQ tests and predict performance.

In the near future, building upon the release of my book on trading performance, I will be incorporating more training features into this blog and and into my personal site. The morning sessions with the Doc (the next scheduled for tomorrow) are but the first step. Intensive daily review of trading patterns/setups to train your eye for opportunity are another step.

Ultimately, however, what traders most need is to be observed--in real time--as they trade, with immediate feedback and instruction. That's the training doctors, athletes, and pilots get. How to provide such training economically is a thorny logistical problem I'm working on. It's a lot easier to write articles and offer seminars and pretend that those, by themselves, will enhance trader performance. But the success rate among new traders bears eloquent witness to the limitations of such a strategy.