Gifted and Talented Traders

Discussion in 'Psychology' started by NoDoji, May 19, 2011.

  1. NoDoji


    I see these terms used a lot. Usually "gifted" and "talented" refer to abilities that express themselves early in life and result in rapid progress to a very advanced level with seemingly little effort.

    What are the "gifts" or "talents" a trader needs to attain rapid progress to a very advanced level?

    1. The ability to follow basic rules that someone else provides with full trust in the outcome based on probabilities.

    2. The ability to dedicate the majority of one's time every day to market research, definition of setups that place odds in one's favor, ability to recognize those setups as the form, definition of rules for trading those setups, and, finally, #1 above.

    I worked with a trader last year and once I explained my standard setups, he immediately understood the concept and was able to trade it beautifully. His "gift" was that he could trust a set of basic rules and follow them.

    I fall into category #2. I spent 50-60 hours a week for over 2 1/2 years learning to trade, and currently spend around 45 hours a week continually evolving as a trader. I have a 360-page trading journal (started in April 2008, only 6 weeks from my first trade ever) and over 100 spreadsheets (started in June last year) mastering basic and advanced trading tactics to cope with various market environments (volatile/calm, trending/ranging, up or down).

    I met a piano player in college who was a prodigy. He had perfect pitch and perfect recall (innate "gifts") and began playing extensively starting at age two. By the time he was in college, he was truly amazing.

    I met a guitar player in college who didn't begin playing until he was in high school, didn't have perfect pitch or strong recall of anything he heard, but mastered the craft of reading music and playing with technical precision that could "wow!" anyone.

    Whether traders have certain innate "gifts" or whether they hone their craft through sheer persistence, in the end their P/L's look every bit as green on a consistent basis.
  2. Hi NoDoji, I am interested in your posts as they note "high probability setups". Honest question: how do you generate an estimate of the probability of the outcome from a setup? For myself, I can get estimates of probabilities from running backtests. I'll skip the discussion on TA/backtesting issues, or whatever is better, that's covered in other threads. I'm more interested in your approach to the concept.

    Is there a possibility we use "high probability" differently? For me, probability is a value between 0 and 1, is only an estimate, and can change over time, most likely because I had a bad technique for getting the estimate in the first place. Plus, by running coded tests, I can get a replicable count. Do you have a probability value, or is your probability a more abstract concept?
  3. Interesting subject.

    I would like to see statistics on the % of profitable traders that participated in gifted and talented programs in early education and if there is a correlation between the two.

    In the early 80's I was labeled gifted and talented and participated in the gt program at my elementary school. I was chosen due to consistently scoring in the top 5% or greater on the standardized progress tests that were given in each grade. To be honest I don't remember much about the program other than we were taught how to program in logo using apple computers and we would convene in small groups and constantly brainstorm. This was my first introduction to using pc's. I do remember the teacher went above and beyond to challenge our critical thinking skills and I would sometimes get into trouble for being lazy since I was used to being bored in regular class.
  4. It's a well known fact that there are different types of traders that use the phrase "high probability".

    * Traders that determine probabilities or reliabilities...have perform backtesting via computer codes or manually via objective rules.

    * Traders that use real trading results

    * Traders that does both of the above.

    The phrase "high probability" is an old phrase from the dot come trading days that got popularized in the 90's amongst us retail traders. In contrast, today it's more commonly to meet traders that uses phrases like "edge". Yeah, that too has different meanings to different traders. :D

  5. My story exactly, except my graduating class was 1983. Always top of class, always finished first with tests, seldom studied, always bored with what I considered school work to be as "menial tasks".

    If I had any "gift" per se it was to memorize patterns. My strong suit was language (english) which is basically pattern memorization. What ends with w-eight, sl-eight versus wait and slight, etc is all pure memorization of patterns.

    Same with math. Multiplication, division, addition and subtraction tables in your head are just pattern recognition. So I was able to process my world in categories and compartments and patterns.

    That said, the road to success in trading still required and continues to require massive amounts of research, study and work. I actually think my early progress was hindered from a sense of "this is easy like school was" when in fact trading is arguably one of the most demanding professions on earth.

    To reach our goals and stay there we need to work hard, harder and hardest yet thru the course of time. Trading is not easy money and definitely not lazy money... which I'm afraid gifted and talented people might assume it should be.
  6. Interesting thread. One of my biggest concerns as a struggling trader is that as I look back on my successes in life ALL of them were pretty quick and easy. I've been in business since my teens and have had my share of failures as well but the successes I have had have all fallen into place very fast -- sometimes profitable within 90 days -- and two of them went on to exceed my expectations by huge margins. In one I had single months where I earned as much as I thought the business would earn in a year. The losers I cut short and moved on.

    Trading, unlike anything I have experienced before, leaves me in the strange position of feeling that the more I learn the less I seem to know in relation to what I consider the "critical mass". Or, to put it another way, for ever 10 pounds of knowledge I pry out of the markets my guesstimate of the weight it takes to do this job consistently well goes up by 20 pounds. Frankly, I've been quite lucky in some of my prior successes. I entered businesses at the right moment as much or even more by chance as analysis and my boat rose with tide. That is not to say I am not proud of the accomplishments but it is to say that it is just so damn much easier to grow a business that stats off as a money maker than one that takes years to be profitable. This running in place (or running and losing ground) feeling that seems to be an essential stage in trading is disconcerting to me. Yet I realize from my reading and conversations with those that have fought their way to success that it is a common feeling. Maybe even more common among those who have excelled in other areas.

    FYI ... I trade ES using PA. My introduction to price action was Al Brooks' book, Bar by Bar. Please spare me the PA vs whatever debate or the Al can't write a sentence in English (I don't disagree with the writing comments). I will rise or fall on price action methods. It is the one and only approach that makes sense to me. And I am grateful to Al for sharing his knowledge. It is a a tough read but an essential one for anyone with an interest in PA.

    One thing I know for sure: Trading success will not be a function of luck. No matter how smart you think you are this one gets earned ... no way to just step in it. That said, I sometimes wonder if it in some fundamental way "trading reality" is a whole lot simpler than I am currently capable of perceiving. Part of me believes that once I reach that critical mass I will look back and wonder why I did not see the light much faster. Does being in the remedial class build character? I sure hope not because that type of time I simply don't have ... lol.

  7. Arjun1


    Talent is a biological predisposition required for success.

    Pro athletes have the genes required to be pro athletes.
    The genes alone are not enough, but the genes provide a foot in a door that will always be closed to 95% of the people.

    There is a part of the brain that regulates emotion and inhibits impulsive.
    In traders that have been successful for 10+ years, I bet this part of the brain is far more active than it is for the other 95% of traders.
    Through fear/greed emotional responses markets are constantly seducing traders to be more aggressive when losing and less aggressive when winning.
    The markets also are constantly seducing traders to take "shortcuts" to success by breaking rules "occasionally".
    Real long term success in trading is all about resisting these temptations and you have to have a talent for regulating emotions and inhibiting impulses.
  8. To me, "gifted" and "talented" in a trading context doesn't actually refer to the person's mental acuity, quantitative skills or anything like that. It's just that certain people are blessed with a temperament that makes them innately suitable for the job. Doesn't mean that they're the only people who can achieve success, but it does mean that for them it's marginally easier.
  9. minmike


    I'm not so sure temperament in the way people have been using it in this thread is all that important. I know that for me to go to the next level, I really need to take my self and my temperament out of the equation. All of a sudden when I started automating and making rules for my trading, it became "I lost money because the market didn't do what my system needed to be profitable," not :I'm stupid/great/dumb, ect.

    That realization took a ton of preassure off of me and allowed me to drastically increase trading size and profit.
  10. #1 for me, but only because of automation. I've known how to trade for years and years, but I just can't make it happen manually. I don't know if it's a discipline thing or what, but I've pretty much given up on it. :( For now, anyways.

    My computer (because of a brilliant colleague/ programmer) not only kicks my ass, but it's profitable and I am not.

    Your guidance has been invaluable Donna. But the raw unfortunate fact is that some can make it happen, and some can't. I am in the latter category.

    I just wouldn't be around if the computer wasn't making the decisions for me. Sad but true.

    EDIT: She wasn't talking about me in her original post. I only wish I could trade her setups beautifully.
    #10     May 20, 2011