What makes an expert? And how can traders develop their own expertise? Three elements:
1) “Measures of general basic capacities do not predict success in a domain”
Experts cannot be distinguished by superior intellects or other cognitive talents.2) “The superior performance of experts is often very domain specific and transfer outside their narrow area of expertise is surprisingly limited”
Being an expert in one domain does not predict expertise in others; a person can be a highly accomplished trader, but not expert in other areas. Think “niche” — the successful trader has found a particular sphere of success that expresses his skills and interests.
3) “Systematic differences between experts and less proficient individuals nearly always reflect attributes acquired by the experts during their lengthy training”
The expert is one who has undergone a structured, deliberate process of training that builds competencies, offers extensive feedback, and draws upon intensive effort over time to internalize knowledge and skills. (more…)
Archives of “skill development” tag
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What makes an expert? And how can traders develop their own expertise? Three elements:Learning From Mistakes
The ability to learn from mistakes is an important part of the skill development process. In addition, those who trade well tend to adopt a “perpetual student” mentality toward the markets which also helps keep their ego in check.
However, learning from mistakes you make is not as simple as it sounds. Equally important and challenging is figuring out which mistakes offer a lesson and which mistakes are just a routine part of trading. For example, sometimes I run into traders who think that in every losing trade there is a lesson to be learned and that’s simply not true unless you see a specific pattern repeated in other unsuccessful trades. As any experienced trader will tell you, a trader can make all of the right moves and their analysis may be 100% correct, but that doesn’t guarantee a successful and profitable trade. Perfection and trading well do not go hand in hand and not all unsuccessful trades offer a lesson to be learned. It is in the ready identification of patterns when making mistakes that you see within the more experienced and high performers.
Trading Expert
What makes an expert? And how can traders develop their own expertise? Three elements:
1) “Measures of general basic capacities do not predict success in a domain”
Experts cannot be distinguished by superior intellects or other cognitive talents.2) “The superior performance of experts is often very domain specific and transfer outside their narrow area of expertise is surprisingly limited”
Being an expert in one domain does not predict expertise in others; a person can be a highly accomplished trader, but not expert in other areas. Think “niche” — the successful trader has found a particular sphere of success that expresses his skills and interests.
3) “Systematic differences between experts and less proficient individuals nearly always reflect attributes acquired by the experts during their lengthy training”
The expert is one who has undergone a structured, deliberate process of training that builds competencies, offers extensive feedback, and draws upon intensive effort over time to internalize knowledge and skills.
So what might this mean? Here are the good conclusions:
1) The majority of traders are looking for expertise in all (more…)
What makes an expert? And how can traders develop their own expertise? Three elements:10 ways to Master the Trade
How do you know you’re making progress on the road to successful trading? There’s one obvious answer: Check your financial results. There is little doubt you’re doing well if you’re booking consistent profits. 
But raw capital production may not be the best way to judge your growth as a trader. The road to success has many detours where profitability isn’t the best measure of results. For example, we all go through phases in which introspection and skill development are more urgent than short-term profits. So let’s look at 10 ways to know you’re making solid progress on the road to market mastery:
1. Money management becomes your lifeline, and all your trading strategies start to revolve around its core. Risk control becomes a key aspect of every position you take. You accept that controlling losses has a far-greater impact on your bottom line than chasing gains.
2. You develop your own trading plans and strategies rather than relying on books, gurus or other people’s opinions. You notice how you’re finding more opportunities than you have time to trade while looking through your charts. You look forward to the trading day with a growing sense of confidence and empowerment.
3. You feel more like a student than a master. You learn new things every day and can’t wait to apply them to real-life trading scenarios. You listen closely to everything you hear, trying to pick up hints and concepts that will improve your performance. You expand your studies into everything market-related, including economics, fundamentals and balance sheets.
4. You stop visiting stock boards and chatrooms, because they don’t add anything to your trading goals. You realize that everyone in those places has ulterior motives. You develop a healthy skepticism about companies, market-makers and even other traders. You realize that no one is really interested in your success as a trader, except for you. (more…)
10 Trading Psychology Points
1) We are most likely to behave in inhibited or impulsive ways, violating trading rules and plans, when we perceive events to be threatening;
2) What we perceive to be threatening is a joint function of events themselves and how we think about those events;
3) A key to gaining control over trading and maintaining consistency is to be able to reduce the threat associated with market events and process adverse outcomes in normal, routine ways;
4) We can reduce the threat associated with adverse market events through proper money management (position sizing) and through proper risk management (limits on losses per position);
5) We can reduce the threat associated with adverse market events by training ourselves to respond calmly to adverse outcomes (exposure methods) and by restructuring how we think about those outcomes (cognitive methods);
6) Optimal skill development in trading will occur in non-threatening environments in which learners can sustain concentration, optimism, and motivation;
7) A proper mindset is therefore necessary to the development of trading skills, but does not substitute for such development;
8) The cultivation of trading expertise is a function of the amount of time and effort devoted to learning and the proper structuring of that time and effort;
9) Proper structuring of learning involves the setting of specific, doable, cumulative goals and the provision of rapid feedback and correction regarding the achievement of those goals;
10) Practice does not make perfect in trading or anything else; perfect practice makes perfect. Training must gradually build competencies and correct deficiencies in a manner that sustains a positive mindset and optimal concentration and motivation.
Ten Core Ideas of Trading Psychology
1) We are most likely to behave in inhibited or impulsive ways, violating trading rules and plans, when we perceive events to be threatening;
2) What we perceive to be threatening is a joint function of events themselves and how we think about those events;
3) A key to gaining control over trading and maintaining consistency is to be able to reduce the threat associated with market events and process adverse outcomes in normal, routine ways;
4) We can reduce the threat associated with adverse market events through proper money management (position sizing) and through proper risk management (limits on losses per position);
5) We can reduce the threat associated with adverse market events by training ourselves to respond calmly to adverse outcomes (exposure methods) and by restructuring how we think about those outcomes (cognitive methods);
6) Optimal skill development in trading will occur in non-threatening environments in which learners can sustain concentration, optimism, and motivation;
7) A proper mindset is therefore necessary to the development of trading skills, but does not substitute for such development;
8) The cultivation of trading expertise is a function of the amount of time and effort devoted to learning and the proper structuring of that time and effort;
9) Proper structuring of learning involves the setting of specific, doable, cumulative goals and the provision of rapid feedback and correction regarding the achievement of those goals;
10) Practice does not make perfect in trading or anything else; perfect practice makes perfect. Training must gradually build competencies and correct deficiencies in a manner that sustains a positive mindset and optimal concentration and motivation.