Deliberate Practice and Trading Mastery

By Gabriel Grammatidis

October 24, 2019

Tennis was a very popular sport in Germany in the early 1980s so as an adolescent, one of my dreams was to become a professional tennis player. Back then, the most common form of practice was to play against other players on the court. This was a very tedious and slow way of learning, growing and improving. Luckily, I had an excellent coach and became an excellent tennis player. My coach taught me a lot about tennis, but as it turns out, he also taught me a lot about learning complex tasks. I still use those lessons many years later.

Levels of Progression

When anyone starts a new activity, they progress in skill level through certain stages. As an example, a newbie might initially think tennis is a fun game and easy to learn just by reading about or watching others play. Until that newbie stands on a court with balls flying at them in rapid succession, with spins from different angles, observing how the other player moves, and anticipating where they want the ball to go one or two swings ahead, only then can they really appreciate the technical complexity of tennis. It’s not the same learning from a magazine or from watching a match.

As players come to understand tennis and realize how little they know to play the game (Conscious Incompetence), they transition to becoming consciously aware that they need a proper training to reach the next level of progression at “Conscious Competence”. Generally, people can achieve this first stage fairly quickly through the accumulation of knowledge about the activity (see below)

The Competence Matrix: mastering a task requires the transitioning from Unconscious Incompetence to Unconscious Competence.

As with tennis, trading is a technically complicated activity strongly impacted by personal psychology. In trading, you can reach a level of Conscious Competence by attending trading workshops and maybe by reading some good trading books. Obviously, knowing the theory alone will not make you a good trader (or tennis player). Being able to leverage your knowledge into high performance is much more important — and it takes much longer too to reach the level of Unconscious Competence (stage 2). This is the Mastery level at which tennis players have accumulated a sufficient amount of experience that makes them feel in control, whatever happens on the court, while their moves and shots happen in a more automatic or even seamless way.

Progression Through Practice

In my early years as a tennis player, I trained with a coach for quite some time. His teaching approach was very systematic.

To give you a practical example: a forehand with topspin was a relatively new technique at that time. After going through all the theory of the shot, my coach then cut the entire series of movements down into individual parts of the shot. We went through each of the moves individually in slow motion with no ball by building one movement chunk upon the other. Each successive part was integrated into the prior part which I  had mastered already. We continued this practice until the whole complicated swing could be executed in an integrated way. Then my coach gave me homework to simulate that specific topspin shot over and over again: moving a certain number of steps to the right while keeping my hips, shoulders and arms at certain positions and angles during the swing. Note, this was pure simulation with only an imaginary ball. I had to do this in front of a mirror hundreds of times until the topsin forehand swing became second nature. Then the practice swings became more complicated with each exercise stretching my performance over the previous level: first performing the same movements on the court, then against the net to provide some counter pressure, then by hitting a ball that was dropped from above out of the hand, then a ball was thrown at a slow speed towards me, etc.

Once I mastered each learning task, my coach increased the difficulty level integrating the new task with the previous tasks which I had integrated. Obviously this kind of practice involves a lot of struggle and grinding effort to complete each task in a focused way. I learned that without struggle, there is no growth. Once there is growth, then the activity becomes really fun. This step-by-step approach allowed me to build mastery in the swing quickly by growing confidence that I could flawlessly execute the entire series of movements and master the shot. Mastery in any complex task might take years, but, can be accelerated greatly through a continuous process of purposeful “deliberate” practice.

What is Deliberate Practice?

At the time when I was learning the topspin forehand and other complicated techniques, my coach simply knew the fastest way to help his athletes reach the mastery level. There was no specific name for this kind of training, but today, it’s known as “Deliberate Practice”. The term refers to a special type of practice that is purposeful and systematic in nature. It requires focused attention and follows the same process pattern for improving performance:

  1. Break the overall process down into individual tasks,
  2. Define a goal for individual task achievement,
  3. Train the individual task,
  4. Get feedback on results,
  5. Identify your strengths, weaknesses and areas for improvement,
  6. Repeat the task until it is mastered and becomes second nature.

Once you master each individual task, integrate that into the overall process while slowly increasing the level of difficulty.

Typical Learning-to-Trade Approaches Are Ineffective

Often, traders trying to learn trading at home strive to improve on their own by investing a lot of time. Typically, they are not aware about Deliberate Practice or how to apply it. Without proper guidance, many new traders pass their trading day with a “mindless repetition” of trades to achieve the overall goal of making money, or at least (and an even worse goal), of not losing money. As you might imagine, and you might even have experienced this on your own, progress is very slow and nags on trader confidence.

Even proprietary Trading firms who recruit the best potential talent often apply a learning technique that proves inefficient — let’s call it Learning-by-Osmosis. After an initial and usually short training session, newbie traders are placed next to experienced traders to learn through observation how to trade in a similarly profitable way. All too often, this approach leads to failure. The newbie cannot discern all of the individual tasks the senior trader performs as well as their respective interdependencies. Trying to learn to do everything all at once, that they see the senior trader doing, is time-consuming and tends to be very ineffective. It can also be a very frustrating experience as most traders at prop funds don’t last very long. Luckily for committed and informed students, there is a better way to achieve mastery (see article: A Structured Approach to Trading Mastery).

To Learn A New System, Simulate First

I highly recommend that workshop attendees start trading the systems they just learned with simulation software. Such a safe and controlled environment voids much of the complexity of live trading. This allows to focus on individual tasks without making costly mistakes. Simulation helps establish and strengthen the neural pathways needed to become unconscious competent in executing the new system’s rules. Becoming able to execute the rules of a new system flawlessly in various charting conditions typically takes a good week of focused deliberate practice.

Once you have mastered the rules and have improved your trader efficiency (by decreasing mistakes), then I recommend moving to demo account trading. Here, you start trading the complex Live markets, but without risking your money — the focus is still on Learning. As I have mentored traders, I have learned that stepping from simulated environment to trading the Live markets can be too big of a step — complex and confusing for one progression. Some traders have finished their trading finding a frustrating dead end at this point. After you acquire additional skills and capabilities needed, then trade real-money equity in real time. This systematic progression allows you to handle the complexity of Live Trading Process step-by-step. You not only deepen your understanding about the system but you also increase your confidence in your new skills. (Also see article: A Good System Relies On A Robust Trading Process).

Through the application of Deliberate Practice, I have watched traders decrease considerably the time to become consistently profitable. This used to take years to achieve “in the old days”, however, when someone applies the concepts of Deliberate Practice, I have seen traders achieve profitability in much less time than a year.

The Rest of the Story

I did play in the highest national junior tennis league as a youth, but then decided to continue a traditional career path. During my university years, I enjoyed being able to share my knowledge as a tennis instructor and experience people grow in expertise. Now, many years later, I have come to appreciate how much my former tennis coach’s methods still influence how I teach traders to become successful.

Whether you want to become a professional tennis player or a profitable trader or to become simply the best you can at any complex task, follow the principles of Deliberate Practice to achieve mastery.

I’m looking forward meeting you soon in person!
Gabriel Grammatidis

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