Pre Workshop Series: Day 5

Will It Be the Hard Way or the Expressway?

What does it take to reach the top?

Many people say it’s in the genes. They believe natural ability is the driving force behind those who excel. You’ll often hear people say, “they’re a natural”.

Sure, genetics play a roll... a person’s physical and mental abilities are often important.

Take sprinting for instance. Only a few people can run the 100 metres in under 10 sec. No matter how hard most of us try, there’s a physical barrier we can’t overcome.

It’s also fair to say that you need something extra special to be a NASA rocket scientist.

But let’s assume you’re dealt a reasonable genetic hand…

What are your prospects of excelling at trading?

You’ll remember the story I told you a few days ago. It was about the Turtles… a group of ordinary people who became extraordinary traders — all thanks to a man called Richard Dennis.

Now, Dennis thought just about anyone could learn to trade profitably. The secret was to teach them a set of trading rules… rules that were proven to produce results.

The end result was the stuff of legend.

A former Turtle says the group made over $175 million dollars in five years. Many of the Turtles went on to hugely successful careers independent of Dennis.

There’s no doubt the Turtles are an amazing story. But can ordinary people really be so successful? Is there any science to this, or is it just a Hollywood style script?

Well, there’s quite a bit of evidence that suggests the Turtles were no fluke.

What it takes to excel

I read a fascinating book a while back called Bounce. The author, Matthew Syed, is an Olympian and award-winning journalist. And he’s done a lot of research into what it takes to excel.

Now, it turns out that a key driver is something called: purposeful practice. This is what separates the best performers from the rest. Practicing with purpose is what sets them apart.

So what’s the difference between purposeful practice and regular practice?

Well, quite a bit…

You see, purposeful practice is quality practice.

Top performers use this type of training with the sole aim of getting better. It engages the mind and body completely, and pushes the outer limits of their ability.

This was certainly my experience as a young trader.

The sink or swim culture of an investment bank didn’t leave much room for error. The clock was ticking from the day I got the job… I had to learn a lot from every trade.

I remember studying price charts for hours on end. The goal was to find recurring patterns that I could use to make money. This was intense learning. It was purposeful practice.

Champion golfer Jack Nicklaus explains it like this:

"Nobody, but nobody, has ever become really proficient at golf without practice, without doing a lot of thinking and then hitting a lot of shots. It isn’t so much a lack of talent; it’s a lack of being able to repeat good shots consistently that frustrates most players. And the only answer to this is practice."

Just change a few words and it's all about trading — or anything else, for that matter.

How about this: It’s a lack of being able to repeat winning trades that frustrates most traders.

"Repeating an earlier success is often hard. It can be that much harder if you’re not practicing effectively..."

Many people will relate to this. Repeating an earlier success is often hard. It can be that much harder if you’re not practicing effectively, and if you don’t have the right plan.

The key is to fully commit to whatever you’re doing. You then need to practice with purpose. That’s how you become really good.

And that’s exactly what the Turtles did…

Dennis gave them a set of trading rules. He told them to study the “formula” and apply it to every trade. The results were life changing for many of his students.

So just how much high-quality practice do you need?

Brace yourself for this, it’s a big number.

The magic figure is about 10 years.

It doesn’t matter if you’re a chess grandmaster, a sportsperson, a musician or a trader. The findings are the same. It takes roughly 10 years of purposeful practice to be your best.

There’s another excellent book I recommend: Outlines by Malcolm Gladwell.

Gladwell refines the 10 years to a 10,000-hour rule. He says it takes at least 10,000 hours — or 1,000 hours per year — to become an expert at any complex task.

Yes, that’s a lot of purposeful practice.

It also helps explain why there’s no such thing as an overnight success.

But is there a shortcut?

Your shortcut to the top

Well, I believe there are two ways to accelerate parts of the 10,000-hour rule. These techniques are largely how I got through my early years as a trader.

You see, my boss back in those days was a man called Carlos. He was in his mid-40s, and he’d made the bank a lot of money over the years.

Carlos was always telling me to read about successful traders. He said this was a way to fast track my learning. The experiences of others can be a great teacher.

And do you know what?

Carlos was right. Studying these people had a huge influence on my career. Following their lead gave me a big head-start. It put me way ahead of those relying solely on trial and error.

But reading will only get you so far…

At some point, you have to get your hands dirty. This is where a proven set of rules could help.

You see, a set of rules is your playbook. It acts as your step-by-step guide for buying and selling shares. This can help focus your attention and sharpen your skills.

Another advantage is that rules often help on the emotional side. They do this by removing the guesswork and inconsistencies that plague so many traders.

You could say that having the right set of rules is like having a coach. Not only do they tell you what to do, they could also help you reach your goal faster.

The alternative is 10,000-hours of blood, sweet, and tears.

Which method wins the day for you?

All the best,

P.S. If you think that a proven set of trading rules could help you, then make sure you tune into my upcoming Trader’s Workshop. Just like the Turtles and Dennis, this could be your chance to excel at trading, without 10 years of purposeful practice.

P.S.S. Tomorrow, I’ll tell you how my “end of the world” moment became a golden opportunity. Had it not been for this surprise event, I probably wouldn’t be writing to you now.