I read a really useful article a little while ago and have since found it online at:
The Expert Mind
Studies of the mental processes of chess grandmasters have revealed clues to how people become experts in other fields as well
By Philip E. Ross
Its 6 pages long on the Scientific American website.
For those of us learning and doing trading and investing I found the article has much to offer. It emphasises that the research shows that mastering a field has much more to do with effortful study than with talent. A couple of pertinent points from it (I wont quote huge chunks of it for copyright reasons and because it is worth reading the whole thing).
"The preponderance of psychological evidence indicates that experts are made, not born.
Without a demonstrably immense superiority in skill over the novice, there can be no true experts, only laypeople with imposing credentials. Such, alas, are all too common. Rigorous studies in the past two decades have shown that professional stock pickers invest no more successfully than amateurs, ..." While this quote particularly mentions the market, what is most interesting to me is the distinction made between a true expert and a layperson with credentials. I can't help but compare someone ike George Soros, with a sustained record of expertise in trading/investing, with the myriad highly qualified money managers who barely manage to keep pace with the overall market index.
"Ericsson argues that what matters is not experience per se but "effortful study," which entails continually tackling challenges that lie just beyond one's competence. That is why it is possible for enthusiasts to spend tens of thousands of hours playing chess or golf or a musical instrument without ever advancing beyond the amateur level and why a properly trained student can overtake them in a relatively short time." I can't help but think of myself here. Surely no-one has spent more time studying charts than myself ... and yet my results are not what I want (so far). I have since taken to studying 'replays' of the market, after market hours, rather than static charts, this is helping me to see price movement in a more wholistic way - seeing the links between volume and price, for instance, with more detail, and dynamically. I think this is 'effortful study'. In addition, there is the 'doing' - while in a trade the active management of the stop and the profit, the active monitoring of the market dynamics, looking for what is changing, and so on. Being a technical trader I often wonder how a fundamental-based trader/investor improves their market study ... reading more reports, looking for linkages, looking for cause and effect ... be interested to hear.
"Surely, they will say, it takes more to get to Carnegie Hall than practice, practice, practice. Yet this belief in the importance of innate talent, strongest perhaps among the experts themselves and their trainers, is strangely lacking in hard evidence to substantiate it. "
"Although nobody has yet been able to predict who will become a great expert in any field, a notable experiment has shown the possibility of deliberately creating one."
"motivation appears to be a more important factor than innate ability in the development of expertise." This, I think, is promising as well as a bit scary ... I am not sure if it implies that the failure to develop expertise can be laid at the door of a lack of motivation ... I am making an assumption that it does and working from this assumption.
If anyone reads the article and has some thoughts I think some fruitful discussion could ensue.