How Professional Traders Spend Their Times and Talents
The two decades of research on the Cycle of Excellence has shown that top performers are not born but made, and that spending a long time on a subject alone is not enough for mastery.
One major question we often receive is “How do the most profitable traders spend their time which is different from amateurs, which results in such vastly different outcomes of profitability?” Professionals were not obviously experts from the beginning, yet they somehow managed their time and talents differently. This is an important topic that we will look at this short video.
Is Spending a Long Time on any Profession Enough for Success?
The result of research by Malcolm Gladwell, known as the "Rule of 10,000 Hours", shows that professionals spend many dedicated hours to develop their skills over an extended period of time.
- One needs to be extremely dedicated to become an expert in any field
- Becoming an expert takes an extended period of time, which is on average approximately 10,000 hours or about 5 to 10 years
- If this is so, then why do many aspiring traders that spend countless hours studying trading do not become successful and profitable?
How do Most Traders Spend their Time and Talents?
Most profitable traders have a schedule and training plan for the time they spend learning, researching, and implementing a winning trading plan. The chart below summarizes a study done by Jigsaw Trading and presented by Peter Davies in this video, which highlights the effectiveness of different activities that traders spend their valuable time on.
In the section which highlights the effectiveness of time amateurs traders spent to become a successful, none of activities which are listed below are very effective. In fact, their effectiveness ranges from only 10% - 50%:
- Buying and selling randomly, without any rules
- Arguing on the internet with other amateurs
- Reading lots of published trading books
- Searching for a new "holy grail" method
How Traders Spend Their Time Ineffectively
Is Spending Time Studying Books and Taking Online Advice Beneficial?
Some people may ask "Isn't spending hours studying books and taking online advice beneficial to become a successful trader?" Not quite. To a certain extent, it can build a basic knowledge of the trading terminologies, facts, and building blocks of strategies. But more often than not, the unrelated, sporadic information received from forums and the media creates a tangled web of unrelated information in a new learner's mind.
It creates a vast ocean of knowledge, with shallow depth, which is not useful for building a winning trading system and mastering it! And as you can read further here, skill matters for mastery in trading and not just knowledge!
The Relationship Between the Knowledge and Practical Skills of Trading
It is not surprising to see that the more knowledge of trading is acquired by traders to become successful, the less profitable they become in real market, if they don't combine the knowledge with proper trading practice and experience.
In the book Talent is Overrated by Geoff Colvin, it highlights the fact that when people do the same task over and over again, they will gain experience of that task over a time period. However, these type of experiences will be the same and will not grow a talented person to their full potential and give them mastery of that skill.
- To become a top performer, one must continuously improve by exposing themselves to new experiences with deliberate practice
- Learning practical skills, analyzing the results, and learning from mistakes is the best way for traders to truly learn and become consistently profitable
- Without practical skills, too much knowledge and analysis can lead to paralysis and costly mistakes. Most profitable traders know this, and incorporate deliberate practice into their daily routines for day trading success
How Professionals Spend their Time for Day Trading Success
Professionals spend their time wisely by:
- Deliberately practicing smart drills
- Receiving feedback and implementing constructive criticism
- Working under the best coaching system developed by experts
As we can see from the studies above, the most effective use of the time traders spend comes from doing the right practice on a trading system that is profitable. Those concepts and learning processes can be learnt effectively by Deliberate Practice under safe simulated environment in the form of drills.
The Best Way to Master the Knowledge of Trading
Why do so many aspiring traders self-study and not work with mentors? What is really the best method of training to master trading skills? We will answer these common questions by looking at the three main domains of knowledge and their impact on mastering trading skills on the blog post "Deliberate Practice in Trading."
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