Thursday, April 05, 2018

How You Learn Determines How Much You'll Earn

So now the secret of my working with traders gets's the Brooklyn Brown Ale after the market close!

Mike Bellafiore at SMB recently released a video about our upcoming free webinar on maximizing your learning process as a trader.  The webinar is hosted by Wealth365 and will be held this coming Wednesday (April 11th) at 5:00 PM Eastern time.  Mike's video captures a number of the topics we'll be covering; here is the link to register for the event.

What I find in working with traders is that their progress--and, specifically, their ability to adapt to changing market conditions--are highly dependent upon the quality of their learning processes.  In a nutshell, traders often do not process market-relevant information in a manner that is consistent with their cognitive strengths.  This holds back their learning, and that holds back their profitability.

I first encountered this dynamic when I ran a counseling service for medical students in Syracuse.  Many students sought the service because of "academic stress":  they were not doing well in their courses and were worried about failing courses, not getting a good residency, etc.

The traditional approach to helping these students was to provide "stress management" techniques.  These were helpful in managing the symptoms, I found, but did not address the cause of the problems.  The medical students were good students--they got into med school for a reason--but they had very distinctive and different learning strengths.  

Some students were great at taking notes and learning from those.  Others learned best in groups, discussing the material.  Still others had to rework the lectures and readings and create their own charts and diagrams to assimilate the information.

And the students who performed best had multiple ways of processing the information from lectures and clinical rounds.  Encountering the information in many modalities--hearing it, writing it, discussing it, visualizing it--helped the students retain the information.  Just as important, processing the information in multiple ways allowed them to better access the information when it was tested in different ways:  through multiple choice questions, essay questions, clinical presentations, etc.

This is key; please pay attention:  Because each market day is different, it tests us in different ways.  Sometimes it asks a multiple choice question; sometimes it asks for a lengthy essay.  If we only process information in one way, we will only be prepared if markets pull for information in that particular way.  We lose flexibility.  It is in active, varied processing that we learn faster, deeper, and more flexibly.

This idea, which we don't typically encounter in the trading psychology world, is a total game changer.  It's not just about trading your plan, listening to your emotions, staying focused, etc.  Those are all necessary for success, but not sufficient.  If you're not immersing yourself in market information in ways that are aligned with your cognitive processing strengths, you will always be underprepared relative to your potential.  

In my segment of the webinar, I will discuss specific strategies for improving our processing of market information and supercharging our learning.  Look forward to seeing you there!