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Learning to Trade

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Daytrading Education for Stocks Options Forex FuturesEducation is a fundamental tenet of modern civilized society. It allows us in our relatively short time on Earth to benefit from and hopefully leverage the knowledge of those who have come before us. From multiplication tables to piano mastery and grammar to plumbing, education allows us to become competent and ultimately master many skills in life. Trading is no different. However, there are a number of issues which perhaps are magnified with trading. First off, how does someone with no prior experience of a skill, judge how good a teacher/educator is? That’s potentially a very difficult question to answer. In other fields, it’s often a trial and error process as the student becomes better aware of what it might take to climb further up the ladder. The problem is with learning to trade, you need to pay someone else money which often comes out of the same pot as your trading capital. So clearly it’s important to find the right people sooner rather than later. The next issue is that people assume that if a teacher can make money trading, why wouldn’t they just do that instead of teach? The answer is that for a good educator they do make money trading but also enjoy teaching. A great college professor for example will often work for/with a commercial organization in addition to teaching. But of course, just as there are the good there are also the bad and that’s what we want to avoid.

So what’s a good education really about?

Teaching

The quality of an education is not only about the material, but also about how easy it is to understand. Then it becomes a matter of how effective the teacher is – how well they understand and convey the material, their own broader wisdom and whether they have the ability to inspire and motivate their students.

Testing

Determining the level of understanding a student has is a critical part of the learning process. Through testing what has been learnt, it can be determined whether their knowledge is complete and then if not, appropriate action can be taken.

Practice

Once the level of understanding of a student is up to scratch, practice is needed so it’s automatically applied at all times without needing to think too much. Knowing what to do in the heat of battle and doing it is very different to understanding what to do in principle.

Feedback

By critically appraising performance with the benefit of no emotional bias, it’s much easier for a student and teacher to pinpoint where efforts need to be focused. By using this as a coaching tool, each time the student engages in the activity, they’re able to specifically target areas where they need to practice. Also times change and what works now may not be the best thing to do in the future. So by habitually studying performance a student is better equipped to adapt later down the line.

Further Development

There comes a stage in any student’s development where they’ve become competent. Beyond this they will continue to learn but also they will want to express their own personality. If there’s a strong structure and environment to help them analyze, theorize and apply their ideas, they may go from strength to strength and ultimately become an expert in their own right. Otherwise the information might be wasted and whilst becoming more knowledgeable they could fail to become much wiser. Knowledge and wisdom aren’t necessarily correlated.

Education is in a large part about coaching a way of thinking. The logic and structure needed to become successful at anything can be leveraged from others’ experience, thus creating an accelerated process of knowledge and experience building. Understanding what the key principles at work in any endeavor are without prior experience is usually far from straight forward and without guidance, a student can get stuck in a loop of poor performance.

In any walk of life education is an important thing. Just because some are intelligent enough to think for themselves, it doesn’t mean that they should necessarily go down the self-taught road. Would you trust a self-taught electrician or pilot for example? Learning to trade is a much trodden path and there are others out there who are more than ready to help. Some of the most intelligent people of past and present are those who reached greatness by “standing on the shoulders of giants”. But finding the right education is as much about what fits for the individual as the ability of the teacher and methodology. So assessing things like personal time constraints, psychology and capital for example will have a huge impact on whether a certain course will be suitable for a particular individual. Then it comes down to the quality of the course, the support given and the ability/experience of those teaching it. So if you’re thinking of getting a trading education, make sure you give it time and effort, you do your homework and you ask the right questions.

Trade well.

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