Little Bets by Peter Sims

Little Bets is one of my favorite books because of its important message on how to ‘get better’ through learning and practice. Find out how others discover, develop and test an idea to gain expertise.

One story Sims shares is about Chris Rock and his process for developing new material coupled with refining the delivery of that material. For example, Rock, before debuting a new act will usually do 40 to 50 shows in small clubs testing and refining different jokes and stories to determine the best of each including the sequence for delivery.

We have all heard a number of times how important practice is to one’s learning process. Yet, from the polling we do of traders and feedback we receive, we find that the simulation functionality (replay feature) in our application and the trading applications provided by other developers, is one of the most unused features offered.

In reading books that reference deliberate practice, a concept best quantified by Anders Ericsson and discussed in books such as The Talent Code, Talent is Overrated, and Outliers, it is typically stated that it takes roughly 10,000 hours to develop and gain significant expertise in a skill. For traders taking 2 or 3 trades a day it will take a long time to achieve expertise.

However, when we use replay functionality and replay sessions with intent and focus, we have the opportunity to shorten the time significantly because of the applications ability to allow us to view numerous scenarios in a concentrated period of time versus 2 or 3 scenarios during the course of 6 or 7 hours (a normal trading day).

Other benefits of replay or simulation functionality include but are not limited to:

Distilling the market information that is available down to what is the right and essential information one requires.

Drilling specific skill sets such as: interpreting inter-market relationships, interpreting different object patterns, understanding different time-frame relationships (day, short term, intermediate, long-term), and the management of risk.

Practice sessions using real-market data from a previous session at a place of your choosing and a time that best supports your learning style.

The ability to refine either a component of your methodology or create an entirely new methodology including the ability to ‘test it on different contracts and/or timeframes.

Study sessions focused on improving your ability to gain a deeper understanding of both market generated information and the market’s auction process.

Practice sessions focused on gaining insight into and proficiency with the different features, functionality, and options related to the software.

In understanding mistakes and errors made, how they happened, why they happened, and t you need to do to minimize their re-occurrence.

Plus, plus, plus.

Until next time . . .