Flying and Trading-----What makes an expert?

Discussion in 'Psychology' started by LVMises, Aug 6, 2009.

  1. LVMises


    What Makes an Expert?

    By Jay Hopkins
    April 2009

    Most pilots like to think they do pretty well at the whole flying thing. In fact, surveys show that overall most people rate themselves as above average in performance. This is obviously impossible, as half of all pilots would have their performance rated as less than average. In his new book Outliers, Malcolm Gladwell looks at the top end of the performance scale to determine what makes someone an expert, the very top of their field. He found that experts obviously had a lot of innate talent. They also had typically received many "lucky breaks" of being in the right place at the right time. However, there were many very talented people who never rose to the level of being considered an expert. The final deciding factor was experience. From musicians to athletes to economists to chess players, those at the very top of their fields typically hit their prime after achieving at least 10,000 hours of practice and experience.

    Since the average person works about 2,000 hours in one year, it would take five years of dedicated eight hours a day, five days a week effort to reach 10,000 hours. Many of the experts Gladwell looks at achieved much more experience in a much shorter time. Mozart's father made him practice relentlessly from the time he was a young child. Gladwell says that by the time Mozart composed his first masterpiece at the age of 21, he had been composing concertos for 10 years. Early in their career, the Beatles got a job playing eight hours a night, seven nights a week, in Hamburg, Germany. By the time they achieved their first success, they had performed over 1,200 times. Gladwell points out that many bands don't perform that many times in their entire career. By the time Bill Gates dropped out of Harvard to start Microsoft, he had been programming practically nonstop for seven consecutive years, and had much more than 10,000 hours experience.

  2. LVMises


    I am a trader interested in flying, maybe purchasing a plane one day.

    I am curious if there are any pilots/traders on this board who can share their experience with the details pre-flight and in-flight psychology, and how this relates to trading.

    I envision the two being very similar but would love some analogies drawn between the two fields.

    Thanks in advance!
  3. rickf


    I haven't flown in years but I used to earlier in life for recreation.

    Trading and flying, in my view, are quite similar. The best example I can say is that a pilot knows how to a) fly the plane (practically and in theory) and b) use the instruments to plot course and altitude. However, for all that training and cockpit gadgetry, the mark of a pilot truly comfortable in a plane is when s/he encounters the patch of rough air, sudden storm, or whatever -- and thus they have no choice but to fly the airspace and route they encounter, not the one they "hope" to encounter. Level flight is one thing, but having to fly through sudden turbulence and such is quite another thing and requires not only nerves of steel but the ability to ADAPT your flying to the environment around you. Therein lies the value of time-in-command as a pilot, where you learn by experience. You also learn to "trust your instruments" (and not your instinct) when flying in adverse conditions to know your altitude, direction, and orientation. :)

    Trading is much like flying in the sense that for all the theory and tools you have at your disposal in your 'trading cockpit', the mark of a good trader is being comfortable "flying" in the market you're encountering, not the one you (or your system) "wants" to encounter. That means being able to read and adapt to the environment (ie price action) AT THAT MOMENT as needed. "Time-in-command" here can equate to tape reading, chart watching, or sim trading for hours, weeks, months on end so you get exposed to different market environments (trend-v-chop) and can learn how to adapt to them in a manner you're comfortable. Here, your "instruments", I posit, are not the various indicators you might use (RSI, MACD, etc) but rather the chart of the price itself....that gives you all the data you need as to "market conditions" for the contract you're trading and lets you plan how best to navigate it -- ie, which indicator you want to use, and in which "mode" to use it based on your assessment of the market.

    Bottom line, I think the flying-v-trading analogy is an accurate one. And I hope this post makes sense ... it's late and up waaaaaay past my bedtime for a worknight. :(

    For me, the ability to recognize market conditions and adapt to them appropriately is what separates the newbie from experienced trader, as is embracing the fact that sometimes you need to endure nasty weather[1] to arrive at your destination safely! IMHO the 'Holy Grail' everyone seeks isn't some indicator or system, it's the ability of the trader to judge conditions and trade accordingly. And yes, we all still make mistakes, for we are all human!!

    [1] For instance, it took me years of 'paying tuition' to learn that if I somehow got caught in market "chop" NOT to panic and exit immediately (ie, flail about) but rather to endure, watch, and wait for an opportunity to exit at an acceptable point (ie, breakeven) and perhaps re-enter once a trend is established somewhere. That watching during the chop can be nerve-wracking as hell, just like how you feel when flying through a surprise storm or patch of very rough air.
  4. lynx


    Rickf is spot on.

    Another parallel between flying and trading is patience.

    When landing, it's critical that you go around (abort and try again) if anything about your approach is not quite right.

    And in trading, you should only take trades that strictly meet your setup criteria.

    I used to fly real planes many years ago. Lately I have been learning to fly RC planes, which are more difficult to land well than real planes. Each time I tried to force a landing and crashed, I was reminded of jumping into a trade half-cocked and losing money.

    When I learned to appreciate the value of having patience to wait for the perfect approach, my flying and trading both improved.
  5. lynx


    Another similarity between the two is that people with very high intelligence, creativity and imagination tend not to do as well as people who are only a little above average in those areas.

    Also, people who are comfortable with having and following rules do better than rebellious rule-breakers.

    Flying, like trading, is boring 99% of the time but still requires strict discipline and attention to detail at all times.

    One of my favorite flying quotes is that it is "hours and hours of boredom punctuated by moments of sheer terror". :) Doesn't that sound a lot like trading?
  6. Nice comparison...
  7. A better analog for trading is that thousands of fighter pilots take into air in a one-to-rest dogfight and try to shoot down everyone else. :D
  8. lynx


    I like that one adadadog. :D

    They say about flying that learning is an ongoing process, something that you never stop doing.

    Otherwise, instead of being a pilot with 1,000 hours of experience, you might end up being a pilot with 1 hour of experience 1000 times.

    That's a nice reminder to keep your eyes open, to always be learning something new, and to constantly re-evaluate what you think you know.
  9. Mup


    By Crews sticking rigidly to SOP's( standard operating procedure) has lead to many aviation disasters....

    Flexibility and ability to throw the SOP book out the window highlighted some of the most remarkable displays of airmanship to avert disaster, getting through that 1% of shear terror...
  10. It is 6H:
    High stake, High risk, High thrill, High skill, High style, High fatality way of living.
    #10     Aug 8, 2009