“The 10,000 hour rule has become cliche” according to Jonah Lehrer.
That is, the notion popularized by books like Outliers by Malcolm Gladwell, that to become an expert in any domain one needs to put in at least 10,000 hours of deliberate practice. This idea is most often applied to the realm of sports, but can be applied to any other performance-focused endeaveor.
Mike Bellafiore at SMB Training notes how this notion applies to trading as well. In his experience a great number of people coming out of college want to get into trading. However they do not have put in the time necessary to become competent traders. He asks:
Why do Newbs try and pick up our game without any experience, without any trading skills, right after college?…Trading is skill based. You must develop a playbook of trading patterns that makes the most sense to you. To become great at these set ups takes experience, practice and a love for your craft.
Maybe the most important advice he gives is tucked away at the end of his post. Writing about how “future trading stars” should spend their time:
During the summers they should study at trading education schools. They should dabble in different products and markets. They should intern at prop firms and institutional banks. Most importantly, they should develop a track record.
While deliberate practice is important, Bellafiore’s line about “dabbling in different products and markets” takes on a whole new importance when viewed in light of some recent research.
The aforementioned Jonah Lehrer at The Frontal Cortex blog has a post up that adds an important addendum onto the idea that “deliberate practice” is the road to competence, if not superstardom. Lehrer highlights some research that shows a disproportionate number of professional athletes come not from major urban areas, but rather from smaller communities.
Lehrer notes that there are number of plausible explanations for this observation. In short, “the important advantage of small towns may be that they’re actually less competitive, thus allowing kids to sample and explore many different sports.” It is this exposure to the challenges of different sports at an early age helps build up the psychological capital needed to persevere in the face of adversity. Lehrer writes:
While deliberate practice remains absolutely crucial, it’s important to remember that the most important skills we develop at an early age are not domain specific. (In other words, Tiger Woods is not using the same golf swing he relied on as a 5 year old.) Instead, the real importance of early childhood has to do with the development of general cognitive and non-cognitive traits, such as self-control, patience, grit, and the willingness to practice.
The application of this idea to trading seems clear-cut. Our guess is that few of the great traders trading today are trading with the methods and markets in which they first started. A healthy exposure to a number of markets and trading methodologies could well serve novice traders in their development. While deliberate practice may be a necessary part of sustained trading success it seems to not be sufficient.