Practice & exection

Deliberate Practice 

I read an article by self help guru James clear recently it’s called “The beginners guide so deliberate practice”. Deliberate practice is described as a “special type of practice that is purposeful and systematic “.

This really piqued my interest and I immediately set about thinking of how I can apply this to trading and the pursuit of trading excellence .

I want to take some of the things James says within this article apply them to trading. Hopefully they will make sense and help you with the learning process.

To quote James’s article, “while regular practice might include mindless repetitions, deliberate practice requires focused attention and is conducted within the specific goal of improving performance “.

The brain is programmed to transform repeated behaviour Into automatic habits. Remember when you learned to drive you have to really think about each individual process thought you would take. After many repetitive cycles, that process could be performed almost automatically. The more we do it the more “automatic “ it becomes. 

There is a second part to this “mindless activity “. James says that “mindless activity is the enemy of deliberate practice “. The danger of practicing the same thing over and over again is that process becomes assumed. 

We assume we are getting better, just because we are practicing the same thing over and over. The truth is we are just reinforcing our current bad habits and not actually improving them.

Not all practice was created equally. We need to find a way to apply “deliberate practice” and reinforce these good habits to make progress, and the best use of our time. 

I don’t want to get you bogged down with science but there is a specific reason that we can perform complex, repetitive tasks. It’s to do with how we learn. I think it’s relevant, if not a bit geeky! So please bear with me. 

The Production Line

I think back to my time on the production line in a car factory. Back in the 80s the training was not as sophisticated as it is now, but it was affective. You had around 90 seconds to complete a series of processes. These had to be completed on time, to the correct quality standard. This cycle was completed around 300 times during a shift. Every single vehicle had to meet the same standard. So perfect repetition was crucial both in terms of quality but also time. Going over the allotted time can cause huge problems on a production line. 

If you were to watch the trainer complete the required processes within those 90 seconds and then attempt to repeat this it would end badly and take many hundreds of hours of training to get close to the required standards. 

This will come as no surprise to you to learn that the way we learned these complex processes was to break them down into “bite sized chunks”. It is well-known technique when learning a new skill. So why is learning to trade any different? I know from experience that breaking the trading process down into bite sized chunks is seldom practiced. 

If we take a process and learn it practice it over and over, until it becomes comfortable. This seems a more reasonable approach. 

I think we have all heard of the four stages of learning 

  • unconscious incompetent 
  • unconscious competent 
  • conscious incompetent 
  • conscious competent 

So, going back to the production line. The way an assigned job was taught was to use the bite sized chunks method. Each individual process was practiced until the conscious competence level was reached. Then a new process was indroduced. When the second process had reached conscious competence level it was added to the first process. These two individual processes became a single process. This is continued until all of the assigned process is under the umbrella of a single operation. 

When it comes time to apply this skill to a task instead of your brain searching for each individual process, you can hot key a shortcut and the whole task actioned. I I believe this is considered open loop – closed loop in scientific circles. 

Here is another example of this technique. 

Learning a guitar scale A-C-D-E-G and play it as fast as possible.

As each chord is played the fingers sends a signal to the brain by way of feedback and tells the brain “I have completed this task as requested”. The brain then sends the next signal to the fingers to carry out the next note. This sequence carries on. there comes a point in this cycle when the feedback signal from fingers overlaps the signal from the brain to fingers requesting the next chord. That’s where it all falls apart and the maximum speed is reached.

By practicing at this point, it forces the brain devise a new plan. It will group together a series of operations under one trigger. So when we want to play this scale the brain will activate the sequence under one instruction. Only when all five chords have been played will the fingers feedback the “completed “ signal. This means a much higher level of speed can be achieved. 

Within this feedback loop the brain will make any required adjustments to ensure thought the correct quality is achieved.  

By breaking down each of the required processes within our trading regime. By learning them to the conscious competent level and then building a complete “trading plan”. we can achieve on much higher level of speed and competence. 

Part 1 – Execute the process

  • Breakdown each signal 
  • Practice identifying that signal 
  • Group signals together to understand market behaviour 
  • identify potential opening positions 
  • Manage your position monitor the signals 
  • Close your position based on signals /time 

Part 2 – Meaningful Practice

Scenario 1: 2 hours invested 

You rush in from work ignoring partner / children / dog. you boot up the PC and immediately trade the race which is a few seconds away from starting. As you do not have any focus and are flustered from your journey home and smarting from your partners displeasure at being ignored, the trade goes badly wrong resulting in a loss.

This starts a sequence of events that lasts the whole session. The result is loss of money, unhappy household, and in terms of gaining meaningful experience, a waste of time.

Scenario 2: 2 hours invested 

You get in from work looking forward to some quality learning. You greet your family and spend some time whilst eating your evening meal discussing the day’s events. it may be after this time there is no racing left to trade. That’s okay because you didn’t waste this time. There are over 12,000 races a year so plenty to go at. If you have any spare time you can use it reviewing previous trading sessions. This is time well invested.

Let’s assume that we have an hour of trading left. You feel relaxed and have no drama distracting your time at the screen. The first thing you do is hit the record button so that your activity can be reviewed. Depending on how far along you are on your trading journey you will either be practicing individual processes. Such as, understanding signals, Finding opening positions or looking for signals that will cause you to close your position. 

The first hour of your time has been spent watching or indeed actually trading markets. The second hour it’s just as if not more important. It’s now time to review what you have done, what you have not done, and what you have learned. 

Review the recorded. Record any observations you have. Record any questions that arise. Make notes that will enable you to learn from any mistakes that were made. It is also very important to celebrate any successes that you have had. if you have completed a really good trade, record your observations regarding that too and enjoy the moment. 

These actions will have reinforced you’re learning. 

This is a deliberate practice session as opposed to the frustrated, bad-tempered session that we looked up in scenario one. It wasted your time, damaged your confidence and even cost you money.