Sunday, March 08, 2009

The After Action Review: A Powerful Tool for Coaching Traders

In recent posts, I described the coaching of traders as a supervisory process and offered a model of coaching and mentoring that differs from both traditional educational efforts and from common individual and group meetings. (For more background, check out the recent coaching linkfest).

The important implication of coaching as a training and supervisory process is that it is embedded within the actual practice of trading. Instead of discussing trading results and issues in a weekly format, the supervision occurs during and immediately after trading to build on strengths and correct weaknesses.

The U.S. Army describes this process as one of after action review, and it's a learning tool that has found a home in business and civilian groups as well as the military. According to the Army, several factors are necessary for successful conduct of after action reviews:

* Active Participation - Everyone learns from each other;
* Focused Discussion - The focus is on the immediate performance;
* Follow Up - The discussion emphasizes solutions that can be put into practice promptly.

According to the Army handbook A Leader's Guide to After Action Reviews: “An after action review (AAR) is a professional discussion of an event focused on performance standards that enables soldiers to discover for themselves what happened why it happened and how to sustain strengths and improve on weaknesses. It is a tool leaders and units can use to get maximum benefit from every mission or task."

The key idea here is that the reviews are event-focused, focused on performance standards, and focused on concrete actions to be taken to improve performance.

At British Petroleum, the after action review was boiled down to four key questions:
  • What was supposed to happen?
  • What actually happened?
  • Why were there differences?
  • What did we learn?
Notice that the goal of the review is both insight and action: why expectations did or did not play out and what can be learned and done differently in the future. The after action review is not a supervisory critique; rather, it turns away from judging success or failure toward learning from various positive and negative outcomes. Because the reviews are typically conducted in team settings, they facilitate observational learning: each participant is both student and teacher.

Perhaps the most powerful aspect of after action reviews is that they are conducted during performance, not at the end as a post-mortem. For example, intraday traders might conduct a review with a coach at midday and make corrections for afternoon performance, much as an Army team might review a day's operations before proceeding with an overall battle plan.

With the use of reviews, each day--or each segment of a day--becomes a learning experience. Might it be the case that the years of learning typically required to develop expertise in any performance field could be meaningfully reduced if every day's efforts were leveraged into learning through structured review? I can think of no more important challenge at the intersection of psychology and trading.