We all know from experience that becoming a profitable trader is hard work. Malcolm Gladwell is known for his research on the “Rule of 10,000 Hours” where he shows that becoming an expert at a task takes approximately 10,000 hours. If you were to apply this to trading, that’s a lot of time spent dedicated to trading (especially if you’re working a day job), and when you’re just starting out, it’s risky to spend so much time in the real markets. Paper trading, backtesting, and forward testing are some of the tried and true methods for practicing trading risk-free. To become a top performer, you should continuously improve by exposing yourself to new experiences with deliberate practice. Deliberate practice is a term coined by Dr. Andres Ericsson from the Science of Expertise in cognitive psychology. It’s had an impact on improving the efficiencies of professionals such as top executives, physicians, musicians, and pilots. It basically explains that top performers are not born, but made. So just spending 10,000 hours on a subject isn’t enough for mastery - success relies on deliberate practice, focus, setting specific & realistic goals, getting out of your comfort zone, constant corrective feedback, and a supportive coaching system. It’s helpful to have constant evaluation through a coaching system, along with specific learning targets, such as learning how to draw upper range lines on price charts in different scenarios. Top performers know how to work hard, expect delayed rewards, and practice constantly to turn knowledge into skills. What was your story when you first started trading? Did you have a system in place or did you wing it? Did you use a mentor/course, or did you use online resources to learn and collaborate with others (like EliteTrader? ) If you want to learn more about what we discussed, check out some of our blog posts below: How Professional Traders Spend their Time and Talents Deliberate Practice in Trading
When I started out decades ago on stocks, totally clueless, no system, no method, using TA indicators, dumb software, no mentor, no intelligent trading forum. I read a huge amount of books, that didn't help much. The tunabout happened by chance when I was introduced to Amibroker by an anonymous poster on some forum which I later found. This guy became my friend in real life, went to his house numerous times and he introduced me to coding. Coding opened my eyes to see how trading markets was a systematic beast. Without coding it would be impossible for me to trade sucessfully. The way I see it, markets are orchestrated, like music, there is a rythm, it's not random as a whole. It moves in waves, maths can solve many uncertainties via probabilities.
Thanks themickey for sharing your experiences! It’s great that you’re using coding to trade successfully I have learned some basic coding a long time back and it helped me a lot to understand how the market is structured. I noticed how certain trend following indicators make money in trending markets and lose it back when the trend is over- exactly opposite to oscillators. Understanding this market rhythm as you said is key to applying the right setups to the right market structure in order to stay consistently profitable. That is the reason we created a 5-step Algo decision filter for PAAT to make sure traders are trading under a high probability market structure.
Ya, it's kind of weird to the place where my system arrived after many years of coding. It's half accident, half planned. My first coding foray was an attempt to fully automate using IB broker and SierraChart. That went horribly wrong as both those at the time were incompatible, IB being the biggest issue with its numerous bugs and constant forced logging out every 24 hours drove me insane. I was a huge bag of bad nerves. Then I created a Superalgo#1 on Amibroker which was a kind of algo which worked on every known trading principle I knew at the time, trends, MA200, other multi moving averages, volatility primarily. Huge algo which had from memory about 30 fields of results. It worked and was profitable but it looked at stuff which was too lagging. Then one day was experimenting with a pure maths idea idea which I discarded then tried again with, this became Superalgo#2. Initially it gave me huge losses at it was biased penny stocks. After licking my wounds I tried it again and made good money but it was a short term trading method, not quite how I wanted to trade. So after about 2 years of Superalgo#2, I created Superalgo#3 which was a longer term version. I've been running it about 3 months now with great success other than I have heavy gold exposure which has negatively impacted (dulled) the great returns from my non gold positions. I've decided gold is not worth the effort and I'm going to exit permanently this sector one day this year. None of Superalgo#2 & 3 works off conventional TA thinking like trends or MA's. During the day when I monitor it, I look at numbers, I don't look at charts, it's upside down from my earlier days of trading, but my bias has always been stonks only, longer term. So these days I run Superalgo#2 and #3 together, live data and delayed data simultaneously both technical and fundamentals, huge amount of number crunching goes on. I can understand it but for anyone else to grasp, there'd be a long learning curve.
This is quite interesting to share that I did my first trade around 2-3 years back with very little knowledge of the forex market. I don't even know how this forex works. My few friends used to trade and I have started learning from them as they were earning decent profits at that time. I realized that it’s a good time to start. I went through many losses in the initial days. I have learnt from there the things that we should avoid and updated myself with the current market trends which is very important. Although I am not a successful trader I feel but yes I have a few things in my bucket list which i will do as a successful forex trader such as, investments in bigger lots and try to multiply more and have a house on an island.
Thanks for sharing Dr_Trade! I learned about trading through my friends and it started out as a hobby. I agree on the importance of keeping updated on current market news and trends. Having a house on an island one day would be incredible