Learning How To Trade: Those Years of Practicing Piano Paid Off
Wed, Sep 8, 3:26 PM ET, by Betty L. - Freshman Equities Trader, Hedge Fund Live
My piano teacher taught me well. No, it wasn’t the old “practice makes perfect” adage. He taught me how to practice. My piano teacher would get furious whenever I practiced by playing a section over and over again. He would make me break the problematic section down to the most microscopic level to find out exactly where in the music I was running into trouble. In fact, he would get even more furious when I would repeat a section without identifying the root of the problem because I’d most likely continue to play it with the same mistakes. Practicing like that is the worst thing you could possibly do simply because of the way our memory works. Every time you make a mistake, that mistake gets embedded in your memory. My teacher would say that for every time that I play a mistake, I have to play that section over correctly ten times in order to offset it. Having grown up under his teachings for the bulk, if not all, of my childhood, I have this concept of understanding how to practice (quality over quantity), rather than just repetitiously practicing, engraved in every aspect of my life. If I’m preparing to take a test, for example, I will not go through as many practice questions as I possibly can (at least not as a starting point). After tackling the fundamentals of the test material, I might take a practice test or two to see which questions are giving me the most trouble. Trust me, it’d be much easier to just run through a million practice tests, but improvement will be extremely slow to nonexistent if you go that route. The analysis, breaking it down, is the hard part. Why am I going on about this? Well, my trading lately has been terrible. And my head is telling me that profitable trading will not come simply through experience. It is recognizing what works and what doesn’t over the course of my experience that will improve mytrading. I have been trying to weed out the flaws in my trading lately. I was really starting to feel the adverse effects of non value adding repetition in my trading with my streak of red PnLs. In fact, it brought me to ask Schwartz today if I could execute some trades for him. Right now, I believe that execution trading will help me identify my weak points in my own trading. In terms of my trading today, I was particularly careful not to chase stocks. I know that I am not good with reversion trades, those that will bounce off a level and reverse its direction. So it makes sense that I was prone to chase stocks. And it actually worked for me in the past whether it was due to luck or not. But today I made sure to stay away from that habit and laid out bids noticeable below the current price, something that I rarely do as my bids lately have been just a few pennies at most below where the stock is trading. Finally, I had an up day in my PnL, and being the skeptic (or realist) that I am, I will call it luck (how much longer could I have gone ending down on the day?). But the important reminder from today for me is to pay careful attention to weeding out my mistakes and weaknesses in my trading. Visit HedgeFundLIVE.com.
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