Trading and performance

Those who have been trading for a while know that trading is a high performance profession. If you are not performing then you are most likely not making any money and if you do that enough times to deplete all of your trading capital then you are out of the game. It’s as simple as that. In the faceless world of the trading arena, nobody could care less that there is one less trader in this world. That’s the stark and harsh reality of what trading failure means. So what can a trader do to ensure that they stay on the right side of the ledger? Well I did say that trading is a high performance profession. So what are the things that a trader should do to achieve consistently high performance?

It’s a good question and something that I’ve given a great deal of thought after having being provoked through the reading of the book “Talent is overrated” by Geoff Colvin. I’m half way through it but essentially the message of the book is that great performers are made not born and it provides research and anecdotal evidence to support the author’s claim. For example did you know that both Mozart and Tiger Woods received expert tuition in their chosen fields from an incredibly early age? (Tiger got his first putter at age 7 months). More importantly the book also aims to describe the things that give rise to great performers/performance based on the research. It’s compelling reading because it dispels the myth that certain people will never be good at certain things (aspiring successful traders take note here – myself included!) and provides some really good insight for what needs to happen for great performance to occur. One should really read the book to do it justice but I’m going to list a few of the points that I feel are worth mentioning and then apply them from a trading point of view.

Great performance:
1. Requires a lot of hard work (I suppose you knew this one already). There is the concept of the ten-year rule out there, where it says that to be an expert at something, takes about 2 hours of practice every day for at least 10 years. Hopefully it won’t take me this long but I do know that I’ve been spending at least 2 hours a day for the past 6 years learning, reading, thinking and doing trading (clicking away on my trading platform).
2. Requires “deliberate practice”. Now this is an interesting term and it forms the main content in the book. It’s a concept used to explain why some people who work hard over a long period of time at something never get any better whilst some other folk are able to become masters of it. Well what is it? Deliberate practice is specifically designed training to improve performance. It can be repeated a lot, feedback on results is continually available, it’s highly demanding mentally and it isn’t much fun. One of the key words mentioned here is designed. For traders struggling to make money how the heck do you know what you should be doing to get better? I mean how does one design something to specifically improve performance if they are not performing at all (making money). I.e. you don’t know what you don’t know do you? Well this is where the role of a mentor or coach comes in. Notice that in other high performance fields like sports, you have coaches for everything. Why? Because coaches can provide knowledge of the techniques, strategies and specific training required to be successful. They have the experience and background. Lots of successful retired players who go on to become great coaches are able to because they have been there and done that. Furthermore coaches and mentors can also provide you with the feedback and perspective necessary for improvement (it’s why I enlisted the services of Option Pit for mentoring). So there’s one tip for you unsuccessful traders out there. Find someone who is successful to give you some advice and feedback. Better yet get them to be your mentor! Hmmm…..I’m going to leave it there for the time being seeing as this post is already more than one page in length. I am writing a blog post and not a book after all! Stay tuned though for part two of this story.