Implicit learning

Unesco1995rafalolbinski

I wanted to share with you guys Brett N. Steenbarger’s article Learning to Trade: The Psychology of Expertise, —it’s definitely a must read.


According to Brett, there are two fields where a trader must labor to achieve expertise, namely, research and pattern recognition.

In very few words,

  • Research has to do with the necessary exploration required to develop mechanical systems; and data mining, where the trader presupposes changing markets and is constantly looking to adapt his systems to take into account these variations.
  • Pattern recognition, has to do with finding the characteristics of a predefined situation, – the symptoms of a disease, if you will; in order to know how to act when the same circumstances are encountered again.

That’s all fine and well, it sounds familiar. But, what I found striking was his third perspective on acquiring expertise. As Bret explains in the following paragraph, there is also present in the development process a little known and neglected ingredient, implicit learning:                     

While immersion in research and in pattern recognition can indeed produce trading expertise—a finding made clear by Schwager—the key ingredient in trading development may be the immersion, not the research or the patterns per se.

If this is true, efforts to find the best trading system or the most promising chart pattern are off the mark. The what of learning trading may be less important than the how.

If you want to become a proficient trader, the most promising strategy is to immerse yourself in the markets under the tutelage of a master trader. You need to process example after example under real trading conditions, with full concentration, to develop your own neural network.

In other words, the exposure to thousands of trading hours has in itself a tremendous value; our mind seems to be at work subconsciously trying to figure it out, and eventually, through repetition, it learns what to expect next; surfacing, as I see it, through the feelings we experience during trading, pushing (or warning) us into (or out of) a trade.

Happy trading!