Two Trading Hacks to Make You Better, Faster

Exceling at anything is hard.

And it’s even harder when the task at hand scares you.

Public speaking was always one of my worst fears. The thought of being a lone voice on stage would fill me with dread. I would do whatever I could to get out of it.

But a date with an audience was unavoidable.

The first time I had to step up was during my graduate year at Bankers Trust. With my boss out of town, I had to take on his role at the weekly dealing room strategy meeting.

As if the thought of addressing a large group wasn’t bad enough, I also had to deliver my analysis of the financial markets to about 100 of the country’s best traders.

Thankfully, I had a few weeks’ notice. This at least gave me time to reign in my fears.

By chance, another graduate was filling in for her boss the week before me. She was smart and confident. I was sure she’d set the bar high, which made me even more nervous.

I’ll always remember how it went…

One by one, the head of each trading desk stood to present their views. It was then my fellow graduate’s turn to take to the floor.

From her first words, it was clear she was struggling. Her usual confident voice was now soft and tense. She was also reading from a script. It wasn’t what I was expecting.

But what I remember most was the fidgeting. I can still see her foot quickly tapping the floor as she spoke. It was a tell-tale sign she didn’t want to be there.

I felt terrible for her. I was also relieved. Knowing it wasn’t just me made my own situation a little easier. I began to understand that public speaking was tough for many people.

I’ve become a fairly good public speaker over the years. It’s still not my favourite task, but I can now confidently engage a large gathering.

So, how did I turn dread into success?

Well, it all came down to practice. It was about speaking publicly over and over again.

The other thing I did was study how other people spoke. I’d then copy what worked and avoid what didn’t. This helped to hone my skills and develop a style that works for me.

While I didn’t know it at the time, I was using a formula that breeds success.

What it takes to excel in trading stocks

I read a fascinating book a while back called Bounce. The author, Matthew Syed, is an Olympian and award-winning journalist.

Syed does a brilliant job of explaining what it takes to excel. He says a key driver is something called ‘purposeful practice’. And he has lots of research to back him up.

So what’s the difference between purposeful practice and regular practice?

Well, quite a bit…

You see, purposeful practice is quality practice.

Top performers use this type of training with the sole aim of getting better. It engages the mind and body completely, and pushes the outer limits of their ability.

This was certainly my experience with public speaking. I actively engaged strategies to improve my skills. The fear of freezing up on stage was a powerful motivator.

My early development as a trader was no different.

I remember studying price charts for hours on end. The goal was to find recurring patterns that I could use to make money. This was intense learning. It was purposeful practice.

Champion golfer Jack Nicklaus explains it like this:

Nobody, but nobody, has ever become really proficient at golf without practice, without doing a lot of thinking and then hitting a lot of shots. It isn’t so much a lack of talent; it’s a lack of being able to repeat good shots consistently that frustrates most players. And the only answer to this is practice.’

Just change a few words and this is all about trading — or anything else, for that matter.

How about this: It’s a lack of being able to repeat winning trades that frustrates most traders.

Many people will relate to this. Repeating an earlier success is often hard. It can be that much harder if you’re not practicing effectively.

The key is to fully commit to whatever you’re doing.

You then need to practice with purpose. That’s how you become really good.

So just how much high-quality practice do you need?

Brace yourself for this, it’s a big number.

The magic figure is about 10 years.

It doesn’t matter if you’re a chess grandmaster, a sportsperson, a musician or a trader. The findings are the same. It takes roughly 10 years of purposeful practice to be your best.

There’s another excellent book I recommend: Outlines by Malcolm Gladwell.

Gladwell refines the 10 years to a 10,000-hour rule. He says it takes at least 10,000 hours — or 1,000 hours per year — to become an expert at any complex task.

Yes, that’s a lot of purposeful practice.

It also helps explain why there’s no such thing as an overnight success.

But there is a way to potentially speed up the process…

Your shortcut to becoming an expert trader

I believe there are two ways to accelerate parts of the 10,000-hour rule. These techniques are largely how I got through my early years as a trader.

You see, my boss back in those days was a man called Carlos. He was in his mid-40s, and he’d made the bank a lot of money over the years.

Carlos was always telling me to read about successful traders. He said this was a way to fast track my learning. The experiences of others can be a great teacher.

And do you know what?

Carlos was right. Studying these people had a huge influence on my career.

Over the past six weeks, I’ve told you how some of the best traders operate. Following their lead could give you a big head-start on someone relying on trial and error.

But reading will only get you so far.

At some point, you have to get your hands dirty. This is where a trading system could help.

You see, a system is a ready-made set of rules. It acts as your step-by-step guide for buying and selling shares. This can help focus your attention and sharpen your skills.

Another advantage is that a system helps on the emotional side. It does this by removing the guesswork and inconsistencies that plague so many traders.

You could say that a trading system is like having a coach. Not only does it tell you what to do, it could also help you reach your goal faster.

The alternative is 10,000-hours of blood, sweat and tears.

Which method wins the day for you?

Until next week,

Jason McIntosh,
Editor, Quant Trader

PS: If you manage your own money or simply want to learn the most effective strategies to both grow and protect your wealth, this free report is for you. Click here for details.


Money Morning is Australia’s most outspoken financial news service. Your Money Morning editorial team are not afraid to tell it like it is. From calling out politicians to taking on the housing industry, our aim is to cut through the hype and BS to help you make sense of the stories that make a difference to your wealth. Whether you agree with us or not, you’ll find our common-sense, thought provoking arguments well worth a read.

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