Learning: Why, What, and Who

Control and manage your perpetual learning journey as a trader: WHY? Because learning plays a major role in your success. WHAT? Because knowing ‘what to learn’ is essential to achieving success. WHO? Because who we learn from and with is key.

In this article we’ll focus on three areas of your learning journey as a trader:

WHY? Because learning plays a major role in your success as a trader,

WHAT? Because knowing ‘what to learn’ is essential to achieving success as a trader,

WHO? Because who we learn from and with (teachers, trainers, educators, men- tors, and members of your learning support team) is key to advancing our learning process as a trader.

The WHY – because learning plays such a major role in our success as a trader, or, said another way WHY should I learn? Well, there are countless reasons and I’ll expand on several here:

First, if you value independence you’ll need to learn HOW, not What, to think as a trader.

Case in point, as Mark Douglas says in his book, Trading in the Zone, most successful traders think differently than the majority of average and unsuccessful traders. He talks about traders who are successful as probability thinkers who develop, live, and trade their belief systems coupled with a winner’s attitude. He also says, based on his experience, most traders go through three stages in learning HOW to think as a trader: mechanical, subjective, and intuitive.

Second, if you want to succeed as a trader, and I mean really succeed as in becoming an expert, you’ll have to start with truly learning about yourself and capitalizing on the uniqueness of you.

Next, you’ll need to learn about and truly understand others and their behavior as part of the process of learning more about yourself – what you both aspire to be and not be. This includes understanding individual strengths and weaknesses, values systems and beliefs, desires and motivations, learning and decision styles, communication and behaviors, and countless others – including what really works and what usually doesn’t work. In my opinion the primary self-learning resources for understanding this are Brett Steenbarger’s books: The Psychology of Trading, Enhancing Trader Performance, and The Daily Trading Coach.

Third, change is a predominant constant and is consistently adjusting our conditions and environment as we assess the markets.

An example: The current employment reports show that in the United States a large percentage of the unemployed have been out of work for years—not just months. The problem confronting many of them rests in the fact that their knowledge and skill levels have fallen and continue to fall behind the requirements needed in today’s dynamic business climate.

For traders, this happens when a specific methodology or approach is foundational to the trader’s career and, due to changing conditions, becomes less in demand or obsolete. I have seen this first-hand with numerous traders who were extremely skilled at making money as floor traders but found the transition to screen trading almost impossible.

Now don’t think this just happens with floor traders making the transition to the screen, because here’s a situation I saw happen with a very close friend (a screen trader) who was taught to trade one set pattern for trading stocks in a bull market. He was taught to watch a ‘basket’ of stocks and when any of the stocks retraced to a specific Fibonacci level, he was to buy. He was also taught that stops were for amateurs and he didn’t need them because he was being taught how to trade like a professional. Well, even though you know the out- come already, this individual lost well over $400,000 because he didn’t:

Take responsibility for his learning process,

Expand his knowledge and understanding beyond one specific pull-back pattern for gong long, and

Understand the importance of risk and money management and how to incorporate it in his trading.

Fourth, learning exercises and keeps the mind active just as physical exercise helps us maintain fitness and wellness.

There have been a number of books published in the past few years that address this subject based on firm research that proves how individuals who are constantly learning expand their natural abilities, enhance their innate talents, and enjoy a more stimulating lifestyle. Two of my favorites are:

Brain Rules by John Medina who is the Director of the Brain Center for Applied Learning at Seattle Pacific University. In his book he talks about twelve, scientifically proven ways to enhance our brain’s capabilities and benefit from these enhanced capabilities. Suggestion, especially read his rule #7 – Sleep well, think well and the section on the ‘benefits’ of napping.

The Playful Brain by Richard Restak (who also wrote ‘Mozart’s Brain and the Fighter Pilot’ – another very worthwhile read) and Scott Kim (a puzzle designer). Their book focuses on how puzzles play a significant role in brain enhancement even while we’re having fun solving puzzles. One chapter that can help us as traders expand our perception about our trading performance is their chapter on ‘Emotions and Thinking’ and especially how certain words directly impact our learning process.

And fifth, in concluding this first part on the WHY of learning, I will share the essence of a conversation I recently had with Eric (my partner and lead developer of WindoTraderBLUE).

This conversation was focused on education and how we both have observed how few people today read books on a consistent basis and, in our opinion, how the lack of consistent reading and ongoing learning quantifiably affects an individual’s ability to think—especially whole-brain think.

I reference Eric because he is the epitome of a perpetual learner and someone who continually challenges both himself and pushes the envelope when it comes to learning new things about both his field of expertise as well as unrelated fields. He also is someone who continually challenges me to learn sub- jects beyond my usual areas of interest (business, trading, and individual growth and performance) such as physics, the universe (we just went to a Stephen Hawkins lecture on ‘The Origin of the Universe’) and time and space.

One subject I am currently learning about, based on Eric’s prodding, is combinatorial mathematics and its present and potential applications to technology including neural networks and artificial intelligence (you’ll recall this subject was referenced in ‘Good Will Hunting’ with Matt Damon).

‘Only when one is committed to and diligently on a journey of perpetual learn- ing does one begin to know, understand, and appreciate how much he or she really doesn’t know and how much more he or she truly needs to learn in or- der to be everything one is capable of being.’

The WHAT – because by knowing ‘what to learn’ is essential to achieving success as a trader. There is almost universal congruence among trading educators, trainers, and mentors that the two most important areas for a trader to focus his or her learning efforts on are:

One, market understanding encapsulating everything from how markets work to the tools traders use to trade the markets. Using that statement as a guide coupled with my experience and the experience of hundreds of clients over the years, I believe some of the most important areas of learning related to market and trading knowledge for traders are understanding how and why:

the market’s dynamic, evolving, two-way auction process works and how it generates market information on which trading decisions are made and actions are taken.

the trading timeframes of different traders, i.e., day traders, short-term, and long-term, interact with each other both congruently and incongruently.

certain key levels are determined as to their probability for containing a directional move in the market or a place where continuation has a higher probability of occurring.

patterns, shapes, and structure develop and their meaning in the present tense and potential impact in the future tense.

tools such as Bar charts, Candlestick charts, Market Profile charts indicators, and oscillators require enhanced interpretation skills in order to extract ‘important’ information to facilitate the trader’s ability to make high- er probability, informed decisions.

defining his or her own methodology, i.e., the one that ‘best fits’ is so important in both initiating and maintaining a ongoing learning process and solidifying the process that best capitalizes on the trader’s gifts, talents, education, experience, and passion.

diligent preparation, observation, execution, and post-trading session work is foundational to becoming a competent, proficient, and consistently profitable trader.

Bottomline, the above (plus countless others from a market knowledge perspective) when understood and owned by the trader, provide an ‘edge’—an ‘edge’ that can potentially help you make high probability decisions related to initiating a position, quantifying the risk / reward of a position, adjusting a position, and/or exiting a position.

Two, self-Understanding focusing on the beliefs, behaviors, and performance of traders and investors and how the results achieved or not achieved . For example, I believe some of the most important areas related to ‘individuals’ (self and others) encompass an understanding of how and why:

our past experiences have an influence or impact on our beliefs, actions, and performance.

fear and greed drive many of our trading actions.

we know what to do yet don’t do what we know to do (cognitive dissonance).

we don’t use the tools we have to their maximum potential or seek the support of others to help us advance our progress or achievement.

how and why we choose to avoid learning about what makes us ‘tick’ and ways we can truly change negative behavior to positive behavior and, in turn, significantly alter the results of our performance.

NOTE: Because most traders believe that the area of self- understanding is a key factor in their achievement of their trading goals, I again refer you to the works of both Brett Steenbarger and Mark Douglas as well as others including Ari Kiev who wrote ‘Trading to Win’.

The WHO – because who we learn from and with (Teachers, trainers, educators, mentors, and members of your learning support team) is key to advancing our learning process as traders.

Teachers, trainers, educators, mentors, and members of your learning support team are invaluable resources a trader can have on his or her trading support team. Why? Because they significantly impact, both directly and indirectly, the subjects we learn as well as our beliefs, perspectives, and opinions related to the subject. This happens because each learning support team member brings both objectivity and subjectivity to his or her contribution to us as learners. Being aware of this helps us understand why we as learners must take responsibility for our own learning process, including its structure and design, implementation, and, above all, dynamic management and refinement due to the continuously changing internal and external factors.

Let me give you an example of what I’m saying. To market my business I developed a process of giving presentations to groups hosted by clients of mine in areas around the country. The mix of the groups I talked with ranged from 25% existing clients to 90% existing clients depending on the area and time of year. The non- clients included individuals who had heard me speak before to first-timers.

Now my clients knew me and understood the way I lived my life and did business – the non-clients, for the most part didn’t.

My objectives for giving these presentations, in addition to acquiring new clients, was to help my clients adjust what they were currently doing based on the changes that were occurring and what I had observed and learned over the past year or so. Interesting to me was how many times someone would say to me “Terry, just last year you said ‘A-B-C’ about data interpretation (or some other topic) and today you said ‘X-Y-Z’. Why the inconsistency?”

That question, plus others over the years, helped me understand and appreciate the number of individuals who:

want definite how-to’s or ‘the answer’,

expect things to stay the same, and

are comfortable in being passive versus pro-active in their learning and growth.

My answer was, and to this day, “Over the course of the past year I have read no less than 50 books, the Wall Street Journal six days a week, read my subscriptions to Forbes, Fast Company, Wired, Motor Trend, Reader’s Digest, etc., attended a dozen or so presentations, worked with and learned about 25 to 30 new clients, interacted with numerous existing clients, met and talked with many individuals at presentations like these, and, last but not least, interacted and worked with the accountants, lawyers, financial planners, investment advisors, and ‘life coaches’ of my clients. That being said – How could I have anything but a different perspective knowing how different the international, domestic, and financial environments are today versus a year ago?”

My point is we live in a dynamic environment that is always changing, shifting, and moving both forward and backward and, this being the case, we have no option but to be the directors of our own individual learning process.

Okay, back to the topic at hand, teachers, trainers, educators, mentors, and members of your learning support team.

Having experienced the role of student for over 65 years and an educator in one form or another for over 50 years, I know beyond any shadow of doubt the value of others in helping one learn. When I say learn I talking about gain knowledge and understanding in order to advance one’s life – not pass a test, get a good grade, or acquire a degree. While I do believe those things are important in many respects, the value of learning rests in how it supports the learner in increasing his or her ability to think, decide, plan, and act.

From my observations, I believe traders make their decisions related to who can teach them something to advance their trading based on (1) cost, (2) convenience, the marketing of the program or course. While I’ll agree these are factors to consider, I don’t believe they are the primary factors to consider in determining the best program or course to attend.

Two factors I believe are paramount in making a decision as to who (which trainer, teacher, or educator) or what (programs or courses) will advance you on your learning journey are:

First, designing and managing your personal and professional learning plan by:

Quantifying your beliefs and values regarding learning and education. In other words, what principles are foundational to your learning? For example, compatible with your learning style, one-to-one or group, one-time or a series, strategic or tactical, contextual or detailed, etc.. NOTE: This also includes defining specifically what you want and expect from your potential teachers, trainers, educators, mentors, and members of your learning support team.

Defining your goals and objectives for learning, such as to be a consistently profitable futures trader or stock trader, to become a fund manager or institutional trader, to become an independent spread or options trader, to become a trading educator, etc..

Understanding where you are now in relation to your goals and objectives including your strengths and weaknesses, talents, experiences, past training and education, etc..

Discovering the countless options available to you that will help you reach your goals and objectives, such as publications including books and videos, computer-based training aids, online courses, friends and contacts who are active in your areas of interest, resident courses such as through local colleges and universities, etc..

Deciding what best fits you, your learning process, as well as other factors in your life that impact your decision such as your age, your family, your financial situation, your wants and needs, your desire and passion for trading and your ability to commit to the learning journey.

Second, by being knowledgeable about and understanding the teacher’s, trainer’s, educator’s, mentor’s perspective on learning, approaches, methodologies, and offerings such as his, her, or their:

values, beliefs, and actions regarding learning, education, markets, behavior, motivation, goal achievement, planning, study, deliberate practice, trading, investing, and helping others advance.

interest in and commitment to truly supporting students through during their learning process.

interest in working with you to determine if and how the menu of offerings they provide really are applicable to you based on your beliefs, goals, expectations, and objectives.

knowledge, education, training, experience, and expertise in the areas you’re interested in and desire to become proficient in.

availability, accessibility, and responsiveness to supporting their students requests, questions, additional help, and introductions to other resources.

overall commitment to delivering educational support services of the highest quality.

uniqueness of offerings versus providing ‘one-size-fits-all’ support. In other words, are the offerings customizable to your wants, needs, and requirements?

willingness to go the ‘extra mile’ and/or offered support motivation to help their students achieve success.

In addition to the foregoing, there are obviously countless other factors that need to be considered, but the point here is to help you appreciate just some of what is required to take responsibility for your learning journey.

Once you’ve decided on why you want to learn, what you want to learn, and who you want to support your learning process, there are several more steps to the process such as how to work effectively with your learning support team, including the drafting of your ‘learning agreement’ with those you’ve selected to be on your learning support team, implementing your learning plans, refining them as time passes, and dealing with breakdowns or ‘bumps-in-the-road’ as you progress on your learning journey.

And remember—YOU’RE RESPONSIBLE—because nobody cares as much about your money and plans as you.

Until next time . . .