|
When people hear
that I am an active trader and a professional psychologist, they
naturally want to hear about techniques for mastering emotions in
trading. That is an important topic to be sure, and later in this
article I will even have a few things to say about it. But there is
much more to psychology and trading than “trading psychology”, and
that is the ground I hope to cover here. Specifically, I would like to
address a surprisingly neglected question: How does one gain expertise
as a trader?
It turns out that
there are two broad answers to this question, focusing upon
quantitative and qualitative insights into the markets. We can dub
these research expertise and pattern-recognition expertise,
respectively. These perspectives are much more than academic,
theoretical issues. How we view knowledge and learning in the markets
will shape the strategies we employ and—quite likely—the results we
will obtain. In this article, I will summarize these two positions and
then offer a third, unique perspective that draws upon recent research
in the psychology of learning. I believe this third perspective, based
on implicit learning, has important, practical implications for our
development as traders.
Developing
Expertise Through Research
The research
answer to our question says that we gain trading expertise by
performing superior research. We collect a database of market behavior
and then we research variables (or combinations of variables) that are
significantly associated with future price trends. This is the way of
mechanical trading systems, as in the trading strategies developed
with Trade Station. We become expert, the mechanical system trader would argue, by
building a better mousetrap: finding the system with the lowest
drawdown, least risk, greatest profit, etc.
Download:
Right Click on the PDF image below to then click "Save
Target As..." from the drop-down menu.
|
