Training for Trading Success

Many aspiring traders asked me how one can train to be a successful trader. To answer that question, let's consider other performance activities such as professional dance, theater, chess, athletics, and elite police (SWAT) and military (Special Forces) training. All of these fields, I maintain, have several common features:

* A high ratio of time spent in practice/rehearsal relative to actual performance;
* A structured, demanding program of realistic practice/rehearsal;
* A teacher/coach/trainer who guides practice/rehearsal by creating demands sufficient to challenge the performer, but not so overwhelming as to create frustration and failure;
* Rapid, comprehensive feedback to allow performers to learn from their practice/rehearsal and incorporate changes in future performances;
* Structured preparation for specific performances, including review of one's competition, creation of a performance plan, and active rehearsal of this plan;
* Structured review of recently completed performances to guide learning and subsequent practice;
* Recognition for superior performers and performances.

Laying out the shared features of training programs makes clear that these are technologies for accelerated learning. Combining intensive rehearsal with mentoring and feedback creates a feedback loop in which successes are reinforced and shortcomings are quickly identified and addressed.

In my previous article, I mentioned the principle of SAID: Specific Adaptation to Imposed Demands. The role of training programs is to provide the right kind of demands in the right amounts, so as to channel the specific adaptations of performers. Invariably, we define limits for ourselves that fall well short of our capabilities. The mentor's job in the rehearsal process is to push us to our real limits--again and again--until what had been extraordinary now becomes routine.

What do traders typically do to become better performers?

* They read articles, newspapers, magazines, and books.
* They attend conferences.
* They keep journals to review their trading days.
* They participate in chat rooms and bulletin boards.
* They buy new equipment: hardware and software.

What do traders typically not do to become better performers?

* They do not spend a high ratio of time in practice/rehearsal relative to actual performance;
* They do not have a structured demanding program of realistic practice/rehearsal;
* They do not have a teacher/coach/trainer who guides practice/rehearsal by creating proper demands for the trader;
* They do not have rapid, comprehensive feedback to guide learning from practice/rehearsal;
* They do not have structured preparation for specific days, including review of the markets, creation of a trading plan, and active rehearsal of this plan.

In short, traders lack a structure for generating SAID, those adaptations to imposed demands. Facing few imposed demands, they develop few adaptations.

When I came on board at a professional trading firm, I made sure the new traders had a realistic platform for simulated trading, a program to track their trading successes and failures, meetings each day to review performance, and structured, daily teaching and goal-setting. Even with all that, success was difficult to attain for all traders, impossible for some. If you are to truly succeed as a trader, you'll need at least as much as I provided my students, and you'll need at minimum many months of serious, effortful training with a mentor possessing documented qualifications and experience in your particular market.

I don't say these things to attract business; in fact, I don't provide commercial services for traders. I say these things because they're true and because it's unlikely you'll hear them from the many snake oil peddlers and self-anointed gurus who populate the industry. If you're not meant for trading, you'll find my words discouraging. If trading is for you, you'll read in my words a challenge and a call to become what you truly can be.

* This article is re-published with permission from Dr. Brett Steenbarger.

Brett N. Steenbarger, Ph.D. is Associate Clinical Professor of Psychiatry and Behavioral Sciences at SUNY Upstate Medical University in Syracuse, NY and author of The Psychology of Trading (Wiley, 2003). As Director of Trader Development for Kingstree Trading, LLC in Chicago, he has mentored numerous professional traders and coordinated a training program for traders. An active trader of the stock indexes, Brett utilizes statistically-based pattern recognition for intraday trading. Brett does not offer commercial services to traders, but maintains an archive of articles and a trading blog at www.brettsteenbarger.com.