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What do successful Traders and Students have in common

What may be the connection between yesterday’s post on Trading’s Mid-Life Crisis: Getting Bigger Vs. Getting Broader, written by a trader and authority in trading psychology, and Time Magazine’s article on How to bring schools into 21st century?

Let’s first read a couple of quotes from the shools article:

-“Many analysts believe that to achieve the right balance between such core knowledge and what educators call “portable skills” critical thinking, making connections between ideas and knowing how to keep on learning the U.S. curriculum needs to become more like that of Singapore, Belgium and Sweden, whose students outperform American students on math and science tests. Classes in these countries dwell on key concepts that are taught in depth and in careful sequence, as opposed to a succession of forgettable details so often served in U.S. classrooms. Textbooks and tests support this approach.”

– “Countries from Germany to Singapore have extremely small textbooks that focus on the most powerful and generative ideas,” says Roy Pea, co-director of the Stanford Center for Innovations in Learning. These might be the key theorems in math, the laws of thermodynamics in science or the relationship between supply and demand in economics. America’s bloated textbooks, by contrast, tend to gallop through a mind-numbing stream of topics and subtopics in an attempt to address a vast range of state standards.”

Those so-called ““portable skills” are basically what neuropsychologists call Executive Functions.

Another example is Awareness, or the ability to evaluate one’s own cognitive functioning and act appropriately. We have identified a few executive functions so far: 1) Awareness, 2) critical thinking, 3) making connections between ideas and 4) knowing how to keep on learning.

Let’s now review some quotes from Trading’s Mid-Life Crisis: Getting Bigger Vs. Getting Broader, by Brett N. Steenbarger.

Awareness: “And, in life as in trading, we face the issue of getting bigger vs. getting broader. Do I build on success by growing my company and doing more of what is working, or do I begin to develop other aspects of my life and use this success as an opportunity to widen my horizons?”

– Critical thinking: “The problem with getting bigger is that you’re bound to be at your maximum size when markets change and your edge erodes. I have seen this occur with many very successful traders at prop firms. In a sense, they were one-trick ponies and all their eggs were in the basket of that one trick.”

Making connections: “It truly is a mid-life crisis for traders. In the mid-life crisis we normally think about, we get to the point where we’re established in a career field and in a marriage/family. We realize that either we’re going to coast to the finish line or tackle something new and challenging while we still have enough time and youthful energy to see it through. That ‘s really the same issue facing the successful trader.”

Learning how to learn: “Second-order competence is the ability to master markets as they change (…) that’s what the great artists do. They don’t just paint, write, or sing in the same style the same way throughout their careers. They remake themselves and keep their work fresh.”

In short, over the long run, what successful traders and students have in common is that they know how to learn AND never stop learning. In a fastly evolving world, it should come to no surprise that surfing new waves and adapting to new environments is a must. Schools, parents, and communities and all of us should view the development of executive functions as an education priority. And traders should read Brett’s post.

For related reading, you can now check out

Cognitive Neuroscience and Education Today

Student Achievement Gap, Stress, and Self-Regulation

Enhancing Trader Performance and The Psychology of Trading: Interview with Brett N. Steenbarger

Dr. Elkhonon Goldberg on Brain Fitness Programs and Cognitive Training

An ape can do this. Can we not?

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8 Responses

  1. Eyal says:

    Interesting article. You may also want to consider the disadvantages of the curriculum in the countries you suggested the US should follow. One I am particularly familiar with is that of Singapore. Singaporeans pay a hefty price for their excellent results in international tests. Singaporean students not only spend enormous amounts of time on their studies learning material by heart but also end up finishing school with almost zero knowledge in history, literature, arts, geography and a host of other subjects in humanities.

  2. Alvaro says:

    Eyal, good comment. I think in fact that the article idealizes what happens in other countries.

    My main point is not that the US should what other countries do. My point is that we should focus more on the systematic development of executive functions, such as awareness, critical thinking, learning how to learn. And do so better than anyone else does.

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