You do not "need" to know to be profitable. This is the distinction that so many in this thread fail to grasp. Its a 10,000 hours to master. Not 10,000 hours to profit.
If you are teaching classes and writing books on trading, CNBC is calling you for guest appearances, everyone you know calls you for advice, or you trade large amounts of other peoples money then you might need or want to be a master. You might need to have extensive knowledge and experience in all sorts of market conditions and all sorts of instruments. You might need or want to be intimately familiar with all sorts of theories and strategies. Both good and bad.
If you were a master you might know many many things which are not necessary be a profitable trader. Profitable enough to call it your profession and have it be your primary source of income. This does not take, or should not take 10,000 hours. My guess would be 500 to 1500 hours. This include all reading, studying, and practice.
That will not make you a master, but you don't need to be.
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To me, a master trader is one that has very long periods of profitability with very small drawdowns. It has nothing to do with anything else other than the results. Let's say that in my mind, a master has been profitable more than 95% of the weeks over the past 3 years and has had a maximum drawdown of 5%. That indeed would take time to achieve.
Just look at Market Wizards - most of them were really good at one thing and they just pressed the same button over and over and over. Most of them were trend-followers, but others were scalpers, and they didn't care about what other people were doing. They were mastering their style of trading, and are only considered market wizards because of their results and results alone.
I'll give you an example: I know someone from a very prominent mutual fund who doesn't actually trade or make investment decisions. In fact, he's really bad at it. However, he's a people's person and has gray hair, so that people trust him with their money. He takes their money and gives it to the actual decision makers. He is consistently invited to CNBC and Bloomberg TV to speak about his view on the markets. That's not a master to me, even though he knows more about the US economy and the investment business than 99% of successful traders.
Last edited by squ1d; March 8th, 2013 at 02:25 PM.
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I started part-time trade 2009. Been consistently profitable trader since mid of 2012.
In the beginning I was looking for the holy grail and changing my charts all the time, this is the biggest mistake a trader can do, second is to trade under capitalized, but this is not what this thread is about...
Stick with one chart temple/workspace at least a couple of months and focus on a few setups.
I think one year is enough if you from the beginning understand the importance to stick with one chart template. My opinion is, if you constitutions changing your charts, you will probably never be a profitable trader.
So, my 2 cents... If you want to experience a long learning curve or not, is up to you!
"insanity is doing the same thing over and over again and expecting different results." - Albert Einstein
one can always briefly search engine for something and only then have an opinion.
i am not a profitable trader just yet so i won't comment on that particular endeavor, but i'm knowledgeable in the subject of high performance.
it's scientific, it's fairly new and there are reputable experts on this field of knowledge. gladwell became famous for divulging the work of the field's founders, but he is actually very poor at communicating the key points there are. k anders ericsson and others have been developing this branch of knowledge for 20 something years now. ericsson recently put out the Cambridge Handbook of Expertise and Expert Performance which is not easy to get but a great read. and then, don't go to gladwell, go to tony schwartz to get a good panorama on the matter. schwartz founded a company called the energy project and has a great column on the harvard business review. he has worked with ericsson and other experts and has himself been teaching and implementing high performance in a multitude of areas. about 5 articles in the hbr sum up a lot of his positions: Six Keys to Being Excellent at Anything, Six Keys to Changing Almost Anything, The Magic of Doing One Thing at a Time, Manage Your Energy, Not Your Time, etc.
i have a blog on high performance, can't post the link, but you can easily find it searching for marcosagg. there two of schwartz's conferences can be found, and i won't waste time and energy typing what you can listen to in the two lectures, but the insight is great.
at the close of one of those conferences, schwartz explains ericsson's most famous experiment. the Berlin Academy of Music experiment, which first rendered the 10,000 hours of deliberate practice number and which states that talent does not exist in itself: anyone who presently has an ease or mastery at any task achieved it necessarily through past hard work. there are no "naturals", it's winning habits, proper rest, enough work in deliberate practice and appropriate coaching that take anyone to the top. the number holds for basketball players, olympic atheletes, engineers, designers, writers, comedians, musicians, and any world-class public performer.
an interesting series can be found in youtube, called Million Dollar Traders. a trading room of 15-odd complete novices was set up in london's financial city with one million dollars available to trade in 2009. they were filmed for reality tv. not every single apprentice got to the finish line or turned a profit, but the room outperformed the industry's average and placed near the top over a period of a couple of months.
this is the part about deliberate trading. it's not spending 10,000 hours doing just whatever, people who do get to the top spend those hours in activities that are conducive to developing and furthering specific skills. fruitful, challenging work, which renders measurable results and is directed by someone with superior knowledge.
you need to get a very good outline of how markets work and how money can be made, then, experience different market modes and seasons in person, try and err for a while, get a massive edge and execute it consistently. that would be a rough outline of a learning curve for profitable trading according to me. and there has to be gradual progress along the way, it's not like once over a particular threshold of hours devoted to trading you can't place a bad trade anymore.
there might be people that can get there pretty much on their own, others might rely in getting appropriately coached. but yeah, there's solid research to back up the fact that anyone can learn anything someone else does within reasonable parameters.
this makes a lot of sense to me. here what i would say is that common sense is also huge and not everyone has it from the time they start trading. through what i read in the news and financial sites and in spite of the alluring spin they always try, i firmly knew that the "buy and hold" strategy, (the only way to make money off the market in the minds of most), would absolutely not work to make money from 2007 onwards. only after attending a trading conference did i learn of selling a stock short of having it and then realized money can be made in the market nowadays (hugely complicated and risky, but possible against all odds still).
with that same common sense i presume i can discard snake oil remedies for trading, but also take some indicators and strategies that seem valuable to me.
the 10,000 hours stuff is legit, scientific and solid. doctors, researchers and prestigious universities stand behind it. probably more so than a lot of trading methods in themselves which can be more art than science.
but yeah, you have to be making gradual progress and learning from those that already are where you want to get to. and in the end, the number of hours devoted into learning to trade is not that important, it's the quality and direction of what you are doing, and the bottom line of limited time and money to devote to trading will also put those who aren't making enough progress out of the market as well, sooner or later.
absolutely agree. but then, the hours developing an eye and finding common sense were obligatory and not wasted by any measure.
one other thing i would point out to is that one of the great difficulties of being an independent trader is actually in being independent itself. i work in management consulting, and for a couple years now have been going the freelance and independent route. self motivation is something that most people struggle with, and the self discipline required too work on your own is huge too. i witnessed many cases of people who had all the technical knowledge and experience required to contribute to projects i worked in but that wouldn't hang on for long because they couldn't manage themselves. that's why most companies have office spaces and fixed working hours, because the vast majority of people perform far better when given structure and direction.
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