In our smallest office in our downtown\u00a0Manhattan\u00a0digs I was an actor in this conversation.<\/p>\n
“We make trading too hard,” said the new, gregarious trader.<\/p>\n
“I am not sure what you mean. \u00a0Trading is about learning set ups and then mastering the fifteen subsets of each play,” I replied.<\/p>\n
“See that is where I think I go wrong. \u00a0I think trading is that easy. \u00a0Just find the set up and then make the trade.”<\/p>\n
“But what about when you are 1 1\/2 points in the money, you see change on the tape and the stock comes all the way back to your start price and you are kicking yourself for not exiting when the tape changed? \u00a0What about when you get shaken out but then the stock offers you a chance to reenter before it explodes? \u00a0What about the set up that is not worth that much size trades against you but is not a bid deal because your loss was nominal? \u00a0What about that same set up where everything lines up and you should size up? ”<\/p>\n
And on and on I went with the different subsets of a set up that automatically illuminated in my mind.<\/p>\n
Trader training is inverted. \u00a0Most training is built around writing, lecturing and videos of people waxing poetic about trading that talk at you. \u00a0There is new data that suggests some entertaining educational videos watched by young children do not help their cognitive development. \u00a0There is no struggle in their learning, which is how your grow. \u00a0Most training programs feed you knowledge like a buffet at a Vegas casino. \u00a0The training goes something like this….If you just learn these simple charting set ups you will become successful. \u00a0This is unlike any other performance field. \u00a0Elite athletes, musicians, artists become great by obtaining knowledge, sustaining the energy to practice their craft, and building skill. \u00a0Watching a video is not sufficient. \u00a0Learning a charting set up is not sufficient.<\/p>\n
The failure rate in prop trading is way too high. Why? Partly because of insufficient training. \u00a0Specifically there is no skill building and way too much emphasis on knowledge. \u00a0Let’s say you learn an intraday trading pattern. \u00a0Awesome! \u00a0Good for you! \u00a0Now you have to practice and practice and practice trading this pattern so you develop the skill to make solid risk\/reward decisions in real time. \u00a0When Peyton Manning was preparing for the Super Bowl and found a play that would work against the Saints, do you think that was the entirety of his practice? \u00a0Or do you think he then went out and practiced and practiced and practiced this play with his offense against a defense?<\/p>\n
Simulation is a terrific way to build skill. \u00a0Let’s say that you trade a particular trading patten in real time. \u00a0That is one experience. \u00a0Keep detailed notes in a trading journal about this trade and now that is two experiences. \u00a0Watch video of the trade you made…. now three experiences. \u00a0Watch video in a group setting with experienced \u00a0mentors…and four. \u00a0Talk about this set up with others on your desk…and five. \u00a0Think about this set up after work….and six. \u00a0Visualize the best way to trade this set up…and seven. \u00a0Work on a simulator to retrade this set up……and eight and nine and ten. \u00a0You can turn one trading day into ten plus. \u00a0And this is how you build skill.<\/p>\n
Enjoy your weekend.<\/p>\n","protected":false},"excerpt":{"rendered":"