BarroMetrics Views: Deliberative Practice II

We now come to the heart of the learning process - using Deliberative Practice to ‘learn how to trade’.  The three areas of trading expertise, Mind, Money and Method, all have their component elements. The aspiring trader has to:

  • identify his goal for the practice,
  • break down each into its component elements,
  • gather information about his strengths and weaknesses in the application of the elements,
  • obtain feedback on the results of his efforts,
  • note the gap between the results of his actions and his outcome
  • adjust his behaviour to close the gap
  • continue the process until the gap is closed.

Let me illustrate with an example. A friend and coachee is a profitable position trader, but an unsuccessful day-trader. His outcome is to master the day-trading game. A traits evaluation suggests he has what it take to become profitable at day trading.

Information phase: Examining his journal, we find that he triggers his fight, flight or freeze response whenever he sees his market move into hyperdrive. There is something about the frenetic tic activity that ignites his reptilian brain. As a result, off goes the head and on comes the pumpkin.

Goal phase: Develop strategies to maintain equilibrium and prevent the 3Fs from hijacking his emotions.

Possible Strategies: 1) Confirm that the cue is the ‘frenetic activity’ by observing his behaviour during ‘quiet’ periods and ‘hyper-active’ periods.

2) Assuming the hypothesis is confirmed, adopt certain actions: e.g.

a) prepare for his responses to hyper-periods by imagining his responses e.g. focusing on the plan he imagined he would adopt.

b) dry run the responses using a simulator

c) take small positions and adopt the actions

d) if all goes well with a) to c), adopt normal positions and observe the results of his preventive actions.

e) Loop if necessary, using different responses.

This practice is what separates champions from also-rans.

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