Deliberate Practice; Overtrading

Trading is often about how to take the appropriate risk without exposing yourself to very human flaws.
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eightbo
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jamesg46 wrote:
Fri Sep 20, 2019 12:43 am
eightbo wrote:
Thu Sep 19, 2019 7:21 pm
jamesg46 wrote:
Thu Sep 19, 2019 6:10 pm
There is a section in Thinking, Fast & Slow that described how taxi drivers will sit & wait for fares all day long on hot sunny days but knock off early when its raining. When, like me you cant flip and flop through the markets it would make perfect sense to utilise the time elsewhere, either studying other sports to fill the gap or other strategies... I sat there like a gammon all day with no many fares to take. I suppose on the flip side, through reflection (not data) I'm starting to see which cards suit my style and which ones dont...
better than overtrading. taxi drivers don't learn anything when they're sat in 'available' status like you can and in the trading realm you can make money by sitting on your hands waiting for your best setups rather than getting involved in subpar shyte
Good point, suppose its human nature to be wanting to make it happen, sitting on hands is rather challenging for me, although I think I'm starting to learn my lesson.
It's hard for almost everyone coming from western culture as it contradicts the idea of more work in = more £ out.

It's something I'm working on atm as well, I'm taking 5 trades a day in uk/ire mkts yet watching the whole session then reviewing the trades I took + wanted to take. Something that seems to work well in minimising overtrading is engaging your brain in something else e.g. get deep into a podcast whilst you loosely monitor the mkts in the background until something interesting begins to set up. The clearer you can be on what "something interesting" is, the less energy you can put into monitoring the mkts. I view my trades as a set of 35 or less over the week & I've found framing it that way helps in terms of patience when on day-to-day / market-to-market basis as I know I'll end up with a good chunk of trades when the dust settles. Switching to prac. mode after I've hit my 5 a day satisfies my impatient nature & forces me to prune out 'good but not great' trades in future whilst not giving myself an opening to water down the quality of my trades or later feel guilty for breaking my rules.

Focusing on quality and upping size on those few trades a day is way harder for me than mindlessly chopping around all day taking 50+ discretionary trades but it's a form of purposeful/deliberate practice so you know if you're not at least a little outside your comfort zone you're just practicing naively (so you'd better be satisfied with the results your current skill set fetches you!).

I should add that what we're deliberately practicing needs to be the 'correct technique' i.e. something that's actually going to improve your trading — You can go through the discomfort of learning the precise motions of a bad tennis serve until you have it down cold but would that actually help your game? If it was the first serve you learned you'd probably even be net-disadvantaged for your efforts.

— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
* Read-Me's:
Key neuroscience behind Deliberate Practice:
Why Practice Actually Makes Perfect: How to Rewire Your Brain for Better Performance
Practice Makes Myelin, So Practice Carefully
Understanding the role of myelin means not only understanding why QUANTITY of practice is important to improving your skill (as it takes repetition of the same nerve impulses again and again to activate the two glial cells that myelinate axons) but also the QUALITY of the practice.
...
If we practice poorly and do not correct our mistakes, we will myelinate those axons, increasing the speed and strength of those signals – which does us no good.
Implementing Deliberate Practice in your trading:
How to Use Deliberate Practice to Reach the Top 1% of Your Field
Naive vs. Purposeful vs. Deliberate Practice
Deliberate practice is a method of practicing primarily aimed at rapid, continuous improvement. Its goal is to avoid getting trapped on learning plateaus and to keep progressing as effectively as you reasonably can.
...
Maneuver Around Plateaus
As you keep moving through the deliberate practice loop, you’ll get stuck at skill level plateaus. When these are encountered, you need to creatively maneuver around them instead of throwing more work at them. This is done by stressing your body and brain in new and different ways relative to the skill.
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ruthlessimon
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eightbo wrote:
Fri Sep 20, 2019 1:36 pm
Focusing on quality and upping size on those few trades a day is way harder for me than mindlessly chopping around all day taking 50+ discretionary trades but it's a form of purposeful/deliberate practice so you know if you're not at least a little outside your comfort zone you're just practicing naively (so you'd better be satisfied with the results your current skill set fetches you!).

I should add that what we're deliberately practicing needs to be the 'correct technique' i.e. something that's actually going to improve your trading — You can go through the discomfort of learning the precise motions of a bad tennis serve until you have it down cold but would that actually help your game? If it was the first serve you learned you'd probably even be net-disadvantaged for your efforts.
I like those points :)

But the bigger worry for me, connected to your tennis analogy is a "rule change".

What if the atp decide: "We're not gonna serve diagonally anymore, we're gonna serve straight".

Personally, that would take me months/years to spot - especially if diagonally had been the convention for the last 100yrs. Let's say 6mths later I'm fed up of consistently losing by severing the old way - I make the change. But then the atp come out & say: "We don't like severing straight, we're going back to convention".. then the old trend reasserts :x :x :x Fickle bastards :lol:

It's almost like every trader needs "a higher edge". We need an edge for trading the market, but we also need an edge for trading the "results" of that edge - cos in theory we're basically trading it like a trend!!!

Tl;dr: When our equity curve falters is this a natural drawdown, or a fundamental shift? - & if it's the former, why ever work on improving edge?
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ruthlessimon
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eightbo wrote:
Fri Sep 20, 2019 1:36 pm
Focusing on quality
Again, not a magic bullet - but you'll like this :D This is a bane of my trading atm.

All I'm gonna do, is "slightly shift" this strategy's criteria

Image

And we see a clear failure - but this thing passed several out of samples, & the yearly cycle :x Interestingly the strategy has become "random" (it's not losing enough to be deemed a reverse edge). The thing that especially worries me, I dunno how to protect what's still working

-interestingly just watching that gif, the "failure date" was kinda chronological, & connected to how I've shifted it.. :? :? :? :?
SweetLyrics
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How would you know if it were losing enough to be deemed a reverse edge?
ruthlessimon wrote:
Fri Sep 20, 2019 7:00 pm
(it's not losing enough to be deemed a reverse edge).
eightbo
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Location: Malta / Australia

External changes are outside of your control. Make informed decisions based on the data you have and identify points at which it would be reasonable to conclude something's not right (to take a step back, reassess, tweak and/or possibly pull the plug on what you're doing and pursue something new instead) and leave it at that.

In the world of "deliberate practice" feedback is a key component which ensures improvement is effective.
In an ideal scenario you'll have a mentor e.g. your Tennis coach will pick up pretty quickly on the fact that your serve is utter pants and provide you with direct feedback you can trust. If you're going it alone then your feedback will be slightly slower and have to come in the form of results. It's up to you to be reflective about your games and draw the conclusion yourself when you realise half your serves are landing in the audience area. I'm not too great with automation just yet but in your case, I suspect either a % or £ drawdown amount would've saved you unnecessary additional losses.

I also think striving for certainty behind your decisions in an uncertain environment doesn't seem like the most effective way to go about things and I'd imagine probably just leads to undue stress. Prescription: 2x 250mg Probabilistic Mindset Tabs™ twice a day, half an hour before meals.
SweetLyrics
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eightbo wrote:
Fri Sep 20, 2019 7:36 pm
I also think striving for certainty behind your decisions in an uncertain environment doesn't seem like the most effective way to go about things and I'd imagine probably just leads to undue stress.
+1

Certainty is generally like the blue in the sky - an illusion.
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ruthlessimon
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eightbo wrote:
Fri Sep 20, 2019 7:36 pm
pursue something new instead
The issue I struggle to come to terms with is history. Assuming I reanalyzed a video in the 2018 period - the edge from the gif above will be present. Surely it's illogical to ignore it & pursue something new, because my 2018 self wouldn't have been able to anticipate a failure in the future. How do you get around that issue? I guess one of the answers could be to discard old data/videos - but then question becomes how much data/videos is/are necessary? Hence why i completely agree with your point that, at the end of the day, perhaps mentorship is the true edge to achieving longevity.
eightbo wrote:
Fri Sep 20, 2019 7:36 pm
I also think striving for certainty behind your decisions in an uncertain environment doesn't seem like the most effective way to go about things
You don't think that's backwards? & it's the discretionary trader's who are the ones striving for certainty?

I can't remember where I saw it, but I've had the following written down for ages:

"A more complex model of reality (i.e. discretionary trading) is more likely to be real but also the performance of that model is less well understood. Whereas, systems (quantitative trading) rely on highly simplified models of reality that are less likely to be real. However, the parameters are well understood."

Whoever wrote it, I like it :D big difference between certainty & simplicity
SweetLyrics
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Joined: Sat Jun 16, 2018 7:57 pm

ruthlessimon wrote:
Fri Sep 20, 2019 10:21 pm
The issue I struggle to come to terms with is history. Assuming I reanalyzed a video in the 2018 period - the edge from the gif above will be present. Surely it's illogical to ignore it & pursue something new, because my 2018 self wouldn't have been able to anticipate a failure in the future. How do you get around that issue? I guess one of the answers could be to discard old data/videos - but then question becomes how much data/videos is/are necessary? Hence why i completely agree with your point that, at the end of the day, perhaps mentorship is the true edge to achieving longevity.
Not sure I even understood half of that! :D

Mate, you are tying yourself in knots! I mean that constructively.
ruthlessimon wrote:
Fri Sep 20, 2019 10:21 pm
You don't think that's backwards? & it's the discretionary trader's who are the ones striving for certainty?
I guess everyone wants the comfort blanket of certainty, but I haven't noticed a tendency for manual traders to be particularly susceptible to this.

I once regularly corresponded with a discretionary trader. I don't know how much he earned, but he was in higher PC territory. He couldn't tell me what the basis of his profits was, as he himself didn't know! You are going through all sorts of mental gymnastics that these guys simply aren't.

My mate did stuff that made him money for the period when he did it. That was good enough for him. If what he did had stopped making him money, he'd have eventually tried something else.
ruthlessimon wrote:
Fri Sep 20, 2019 10:21 pm
"A more complex model of reality (i.e. discretionary trading) is more likely to be real but also the performance of that model is less well understood. Whereas, systems (quantitative trading) rely on highly simplified models of reality that are less likely to be real. However, the parameters are well understood."

Whoever wrote it, I like it :D big difference between certainty & simplicity
That sounds like something you'd read in an academic paper! I'm not sure it will make you any money, however. :)
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ShaunWhite
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Though the war is bitter and violent, the conflict between the nations of Lilliput and Blefuscu started because of an absurd disagreement: Lilliput believes an egg should be broken from the small end, while Belfuscu believes it should be broken from the big end.
eightbo
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Location: Malta / Australia

I would love to stay and point you to the light Simon but I'm not sure this is much related to Deliberate Practice.
SweetLyrics
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I hadn't come across this before - I like it! The things us humans fall out over! :lol:

I imagine that most quants and discretionary traders have a great deal in common, in that they will use systematic approaches (even if the approaches used by the discretionary traders may be unconscious).

I suspect the basic difference is that, whereas a discretionary trader will have a glance at the charts to determine (for example) the overall trend, the quant will use technical measures such as MA.

They play to different strengths. The quant probably usually needs to have good computing and analytical skills to find a combination of indicators that express what the discretionary trader may see in the blink of an eye, whereas the discretionary trader needs to have strong discipline and the ability to see the market as it is, not how they wish it were.

Allow me to also include a centuries old quote, which I feel is relevant (especially to discretionary trading):

"Beauty is truth, truth beauty,—that is all
Ye know on earth, and all ye need to know."

From Ode on a Grecian Urn
BY JOHN KEATS
ShaunWhite wrote:
Sat Sep 21, 2019 1:08 am
Though the war is bitter and violent, the conflict between the nations of Lilliput and Blefuscu started because of an absurd disagreement: Lilliput believes an egg should be broken from the small end, while Belfuscu believes it should be broken from the big end.
SweetLyrics
Posts: 207
Joined: Sat Jun 16, 2018 7:57 pm

At the risk of annoying Simon, I still think he should try a bit of deliberate practice of discretionary trading, using £2 stakes.

Worst case scenario, he has some fun but gets nowhere and decides to revert to trawling through data for an elusive edge.

Best case scenario is that he ends the day in profit and thinks 'No way! I might actually be able to make money doing this, and it beats the hell out of spending the day with my head stuck in a spreadsheet, going round and round in circles! From now on, I'll leave the big data stuff to the guys with degrees in computing and statistics, and stick to what I'm good at'.
eightbo wrote:
Sat Sep 21, 2019 3:29 am
I would love to stay and point you to the light Simon but I'm not sure this is much related to Deliberate Practice.
arbitrage16
Posts: 532
Joined: Tue Feb 14, 2017 7:27 pm

ruthlessimon wrote:
Fri Sep 20, 2019 5:38 pm
eightbo wrote:
Fri Sep 20, 2019 1:36 pm
Focusing on quality and upping size on those few trades a day is way harder for me than mindlessly chopping around all day taking 50+ discretionary trades but it's a form of purposeful/deliberate practice so you know if you're not at least a little outside your comfort zone you're just practicing naively (so you'd better be satisfied with the results your current skill set fetches you!).

I should add that what we're deliberately practicing needs to be the 'correct technique' i.e. something that's actually going to improve your trading — You can go through the discomfort of learning the precise motions of a bad tennis serve until you have it down cold but would that actually help your game? If it was the first serve you learned you'd probably even be net-disadvantaged for your efforts.
I like those points :)

But the bigger worry for me, connected to your tennis analogy is a "rule change".

What if the atp decide: "We're not gonna serve diagonally anymore, we're gonna serve straight".

Personally, that would take me months/years to spot - especially if diagonally had been the convention for the last 100yrs. Let's say 6mths later I'm fed up of consistently losing by severing the old way - I make the change. But then the atp come out & say: "We don't like severing straight, we're going back to convention".. then the old trend reasserts :x :x :x Fickle bastards :lol:

It's almost like every trader needs "a higher edge". We need an edge for trading the market, but we also need an edge for trading the "results" of that edge - cos in theory we're basically trading it like a trend!!!

Tl;dr: When our equity curve falters is this a natural drawdown, or a fundamental shift? - & if it's the former, why ever work on improving edge?
Mate you've just completely de-railed this thread by focusing on your own issue which is totally unrelated to deliberate practice. The OP put a lot of energy into creating a considered and researched post to get people thinking and talking on a topic that has scant coverage in the trading community, and you use this as an opportunity to express your various fears about the future.
jamesg46
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Joined: Sat Jul 30, 2016 1:05 pm

I appreciate eightbo starting this thread and bringing my attention to deliberate practice, here is a decent video to get us back on track.

https://youtu.be/1-sjUoGO250
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ruthlessimon
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arbitrage16 wrote:
Mon Sep 23, 2019 5:53 pm
ruthlessimon wrote:
Fri Sep 20, 2019 5:38 pm
eightbo wrote:
Fri Sep 20, 2019 1:36 pm
Focusing on quality and upping size on those few trades a day is way harder for me than mindlessly chopping around all day taking 50+ discretionary trades but it's a form of purposeful/deliberate practice so you know if you're not at least a little outside your comfort zone you're just practicing naively (so you'd better be satisfied with the results your current skill set fetches you!).

I should add that what we're deliberately practicing needs to be the 'correct technique' i.e. something that's actually going to improve your trading — You can go through the discomfort of learning the precise motions of a bad tennis serve until you have it down cold but would that actually help your game? If it was the first serve you learned you'd probably even be net-disadvantaged for your efforts.
But the bigger worry for me, connected to your tennis analogy is a "rule change".
Mate you've just completely de-railed this thread by focusing on your own issue which is totally unrelated to deliberate practice. The OP put a lot of energy into creating a considered and researched post to get people thinking and talking on a topic that has scant coverage in the trading community, and you use this as an opportunity to express your various fears about the future.
personally I disagree.

The problem with deliberate practise is that edges/rules change over time. But unfortunately, I don't have an answer - hence why I queried Eight - I bl00dy wish edges never change, but unfortunately they do!!
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