Does trading require talent?

[PKFFW]

It is really amazing to me that people think trading cane be learned by anyone. That is clearly not supported by the evidence. To the contrary, the evidence shows that only a tiny percentage of people can learn to trade profitably over the long term.

The evidence only shows that a small percentage do learn to trade successfully. It does not show that only a small percentage can.

When I speak of talent, I mean all the qualities one needs to be a trader. The reason why people think trading can be learned is because it looks really easy when you look at a price chart. In FX there are hundreds of pips of flactualtions every day, there are tiny ranges that sometimes go on for hours. Anyone with average intelligence can see, usually after the fact, it cannot be that hard to exploit the market. It is very easy to conclude trading can be learned provided you have dicspline, etc.

The reason people think it can be learned is simple. It is a skill. Skill can be learnt. Ergo, trading can be learnt. The logic is inescapable. If this were not so, babies would be born knowing how to read a chart and place trades and make money. Clearly this is not so. Ergo, they must learn the skill of trading.

Ask yourself why most people who try it fail. I have observed rows of people sitting and watching the same price moves, the same news items and generally the same information. Almost everyone ends up losing. How is it possible that something that is learnable poses such incredible obstacles for everyone who tries it? In any other walk of life, everyone would agree that this is stuff only a few people can do and we usually accept those who can do it have a gift.

People fail primarily because they are not willing to put in the effort to learn the skill required. They give it a try, do not do well and eventually give up.

When it comes to trading we are quick to assume anyone can do it. Why? Calearly only few people can do it. If you compse music, you are gifted, if you can do high level maths, you are gifted, if you can win the marathon you are gifted, etc. For some reason, you don't need to be gifted to trade successfully. That makes no sense.

You are comparing natural genius to achieving any level of success. This is not a valid comparison.

When we hear a Mozart type person in action we say "gifted". Does this mean only those natural geniuses can learn to play the piano? Same with high level maths. There are the Nash's of the world and then there are the many people who graduated high school with a level of math ability they learned that would never be considered gifted. Sporting activity is no different. There are the gifted athletes who compete at the highest level. Many people have finished a marthon in under 3 hours(the generally accepted time for a "good" result) who would never be considered gifted athletes.

It is true there are some human activities where you can be good without being gifted. For example, anyone can learn kung fu given enough time. How do we know? Because everyone who tries it becomes good at it over time. In other words, the evidence is clear. In trading the evidence is more than clear that you need talent to make it.

You really chose the wrong activity here! I train in kung fu!! How dare you suggest anyone can be good at it!!

Seriously though there are the naturally gifted among us and then there are the rest of us. Logic, experience and past results show that any skill set can be taught and learnt. The level of success one achieves in any endeavour will be greatly influenced on their natural ability. However if one tries hard enough one can learn any skill set to some level of proficiency and achieve "success".

Cheers,
PKFFW

 

[new_trader]

I would make two counter points.

First winning a marathon (to use one of your examples) is only considered success by a relatively few. Most folks consider it a success to finish and/or to make a certain time. In other words, success is extremely relative. Trading is absolutely no different.

Failing to beat your personal best time in a marathon doesn't cost you anything. People would view marathon running differently if they lost £10 for every second they are behind 1st place, or if there was some other financial penalty for under performance. That way 'success' wouldn't be relative. Especially if, like trading, people wanted to run marathons full time and make enough money to buy a yacht or Ferrari or radio controlled watch...etc

 

[Profitaker]

It is really amazing to me that people think trading cane be learned by anyone. That is clearly not supported by the evidence.

What evidence ?

 

[FXSCALPER2]

I would make two counter points.

First winning a marathon (to use one of your examples) is only considered success by a relatively few. Most folks consider it a success to finish and/or to make a certain time. In other words, success is extremely relative. Trading is absolutely no different.

Second, your point about kung fu (and other activities) is a fair one. Given enough time and practice any of us can become "good" at anything. That doesn't mean we necessarily excel, of course, but we can be at least passably competent. The problem with trying to relate that to trading is the forced drop out rate. If you blow yourself up you can't trade anymore. If someone can avoid do so, and thereby stick around in the markets long enough to learn what they need to learn, then they can develop the necessary competence to be successful - whatever that means for them.

To relate it more closely to kung fu, imagine an environment where kung fu is actually used in life and death combat. In such a situation weak fighters (read new) would get knocked out on a very frequent basis. Those that were able to avoid getting killed would eventually develop the necessary skills and experience. Same idea as trading.

I like discussing stuff with clever people!

I did think about whether you can get it given enough time (you don't get killed, you don't run out of money, etc). However, you are using the example as a substitute for logic. I have been doing King Fu for some years and I observed what actually happens when people learn the skills. The one thing that immidiately strikes you (no pun) is how fixed the methodology of learning and the discpline itself are. There are variances specific to body types, dexterity, etc, but people learn kung fu in pretty much the same way. Once you got it, you got it. With very few exceptions people are over time as good as their years of experience.

In trading, things change quickly, you are chanllenged in ways that are impossible to understand. This is especially true of discretionary, relatively high frequency trading. The game has so may twists and turns. You get caught out time and again. This happens to every one. You can be Richard Dennis and you lose 50% of your capital after years and years of trading. It is puzzlingly hard.

A better analogy is chess. Most people can learn the rules. They know the moves but very people are really good at it. What most people do is just play for entertainment. What most people would manage in trading given enough time is brobably to break even: trade but not sucessfully. Alas, most of us can't do that where money is involved.

 

[Rhody Trader]

Failing to beat your personal best time in a marathon doesn't cost you anything. People would view marathon running differently if they lost £10 for every second they are behind 1st place, or if there was some other financial penalty for under performance. That way 'success' wouldn't be relative. Especially if, like trading, people wanted to run marathons full time and make enough money to buy a yacht or Ferrari or radio controlled watch...etc

The marathon bit was carrying on a previous comparisson and used to demonstrate that different people have different ideas of success, not that success in trading is somehow related to success in running, or anything else.

My general point is that the word "success" gets thrown around quite regularly on these boards but is never defined at all. Why? Because we all have different ideas of what it means. A major problem with newbies in trading - and here's a skill they need to develop - is knowing what success means to them, not going by what someone else says.

 

[new_trader]

The marathon bit was carrying on a previous comparisson and used to demonstrate that different people have different ideas of success, not that success in trading is somehow related to success in running, or anything else.

My general point is that the word "success" gets thrown around quite regularly on these boards but is never defined at all. Why? Because we all have different ideas of what it means. A major problem with newbies in trading - and here's a skill they need to develop - is knowing what success means to them, not going by what someone else says.

Yes, but the thread is about talent, not success. What difference can it make how people define success in trading? Do you honestly think if aspirants aimed really low they could achieve that level of success? People struggle to avoid losing money let alone making a tiny bit...

 

[Rhody Trader]

I like discussing stuff with clever people!

Likewise!

I did think about whether you can get it given enough time (you don't get killed, you don't run out of money, etc). However, you are using the example as a substitute for logic. I have been doing King Fu for some years and I observed what actually happens when people learn the skills. The one thing that immidiately strikes you (no pun) is how fixed the methodology of learning and the discpline itself are. There are variances specific to body types, dexterity, etc, but people learn kung fu in pretty much the same way. Once you got it, you got it. With very few exceptions people are over time as good as their years of experience.

I'm not a trained martial artist, though I do know more than your average non-practioner on the subject and keep saying I want to learn Tai Chi.

Think of it this way. Learning kung fu involves developing a group of skills over time. Having been a volleyball coach for a long time myself, I know what you mean when you talk about that process. But we need to think of it in the context of application, not just in terms of the skills. A kung fu fighter who doesn't fight for a long time will lose his edge, just like a trader. A kung fu fighter, like a trader, will be challenged by a wide array of opponents and/or circumstances over time. The fighter who can avoid getting hurt too badly (which is more likely to happen when new and inexperienced) will survive and learn from the experience (hopefully). The same with a trader.

 

[Rhody Trader]

Yes, but the thread is about talent, not success. What difference can it make how people define success in trading? Do you honestly think if aspirants aimed really low they could achieve that level of success? People struggle to avoid losing money let alone making a tiny bit...

You're the one who pulled one paragraph of my reponse to someone else out of a larger bit to address. I'm just going with it.

And yes, I do believe if people set the bar lower they would improve their chances of succeeding. Most people are going to find beating the return they would get on their bank deposits much easier than doubling their account each year. If more folks aimed at more reasonable objectives rather than trying to turn $1000 into $1 million, they would probably not take as many stupid risks and hang around the game long enough to develop the necessary skills.

 

[PKFFW]

Yes, but the thread is about talent, not success. What difference can it make how people define success in trading? Do you honestly think if aspirants aimed really low they could achieve that level of success? People struggle to avoid losing money let alone making a tiny bit...

Well then the simple answer to your question is a resounding NO.

Anyone can trade. You click a button to buy and you click another to sell. That is trading. No talent necessary at all. I would say just about any person on this Earth is capable of that.

If the success or otherwise is illrelevant to the discussion then there you have it. If success is relevant then one must first define success before one can have any intelligent discussion on the topic.

Cheers,
PKFFW

 

[PKFFW]

Failing to beat your personal best time in a marathon doesn't cost you anything. People would view marathon running differently if they lost £10 for every second they are behind 1st place, or if there was some other financial penalty for under performance. That way 'success' wouldn't be relative. Especially if, like trading, people wanted to run marathons full time and make enough money to buy a yacht or Ferrari or radio controlled watch...etc

What if there was a financial incentive for every person you beat? You may come 100th in the race but if that is out of 5000 who ran then you may very well come out ahead in the end. There would not necessarily be any need to come first.

In trading you don't have to make the most money out of everyone who trades to be successful. If that were the case there would only be one successful trader in the world, the one making the most money, and all else would be unsuccessful. You only have to make money consistantly. Sometimes someone will win money from you other times you will win it from someone else. To be net successful you only have to make sure you win more from other people than other people are winning from you.

Cheers,
PKFFW

 

[new_trader]

Well then the simple answer to your question is a resounding NO.

Anyone can trade. You click a button to buy and you click another to sell. That is trading. No talent necessary at all. I would say just about any person on this Earth is capable of that.

If the success or otherwise is illrelevant to the discussion then there you have it. If success is relevant then one must first define success before one can have any intelligent discussion on the topic.

Cheers,
PKFFW

Why must one define success? How do you measure success if a person has never traded? I define talent as a natural aptitude or skill, not an ingrained 'skill' such as a mechanical activity like Kung-Fu or playing the piano. These are activities in which rote repetition can improve mechanical dexterity and ultimately performance. Trading is an abstract concept, like writing poetry or composing music. A talented pianist can record themselves playing using MIDI such that every note is recorded with perfect fidelity. This can then be replayed and it would be indistinguishable from the original performance. Has the talent been transferred from the pianist into the computer?

 

[dbphoenix]

What if there was a financial incentive for every person you beat? You may come 100th in the race but if that is out of 5000 who ran then you may very well come out ahead in the end. There would not necessarily be any need to come first.

In trading you don't have to make the most money out of everyone who trades to be successful. If that were the case there would only be one successful trader in the world, the one making the most money, and all else would be unsuccessful. You only have to make money consistantly. Sometimes someone will win money from you other times you will win it from someone else. To be net successful you only have to make sure you win more from other people than other people are winning from you.

Cheers,
PKFFW

PK cuts to the chase rather quickly. For those who'd rather dawdle, this has all been discussed exhaustively in a thread entitled Why Do So Few Succeed. That discussion eventually ran to 850+ posts.

Enjoy.

Db

 

[dbphoenix]

Trading is an abstract concept, like writing poetry or composing music.

You buy something, you've made a trade. You sell something, you've made a trade. Nothing abstract about it.

Db

 

[new_trader]

What if there was a financial incentive for every person you beat? You may come 100th in the race but if that is out of 5000 who ran then you may very well come out ahead in the end. There would not necessarily be any need to come first.

In trading you don't have to make the most money out of everyone who trades to be successful. If that were the case there would only be one successful trader in the world, the one making the most money, and all else would be unsuccessful. You only have to make money consistantly. Sometimes someone will win money from you other times you will win it from someone else. To be net successful you only have to make sure you win more from other people than other people are winning from you.

Cheers,
PKFFW

I never realised....all this effort I've put into running...It was a simple example to explain that things take on an entirely different perspective whenever there is a financial reward OR penalty involved. I'm learning to play the piano and frankly I couldn't care less if I am talented or not, I just enjoy it and I am progressing. It would be different if I was losing money every time I played.

 

[PKFFW]

Why must one define success? How do you measure success if a person has never traded? I define talent as a natural aptitude or skill, not an ingrained 'skill' such as a mechanical activity like Kung-Fu or playing the piano. These are activities in which rote repetition can improve mechanical dexterity and ultimately performance. Trading is an abstract concept, like writing poetry or composing music. A talented pianist can record themselves playing using MIDI such that every note is recorded with perfect fidelity. This can then be replayed and it would be indistinguishable from the original performance. Has the talent been transferred from the pianist into the computer?

As I said, if you do not wish to define success then so be it.

The title you chose for this thread is "Does trading require talent". Being that you chose the word "does" to begin your sentence it is by default a question. To answer a question one must define the parameters of the question.

Firstly one must define trading. Trading is pushing a button to buy a product and then pushing another button to sell it. Nothing more and nothing less. No abstractness there. No nebulous illdefined idea. Simple, straightforward. Push to buy, push to sell.

Secondly one must define talent. We will go with your definition, a natural apptitude or skill.

So the answer to your question is NO. No talent is needed to push a computer button. Therefore no talent is needed to trade.

Anything else you wanted an answer to while I'm at it?

If you wish to further define the parameters of the question we could do that. However, I would think doing so would entail putting some sort of definition on trading that included the success or otherwise of the endeavour. If that turns out to be the case then one must further define the meaning of success. As you've stated you do not wish to do that.

Cheers,
PKFFW

 

[new_trader]

You buy something, you've made a trade. You sell something, you've made a trade. Nothing abstract about it.

Db

Very good. Dozens of internet forums,1000's of websites and 1000's of trading books written on the subject and yet you've summed it up in only 3 sentences!

It's like playing piano, all you need to do is press down the right keys with the right fingers and the piano practically plays itself!

 

[new_trader]

As I said, if you do not wish to define success then so be it.

The title you chose for this thread is "Does trading require talent". Being that you chose the word "does" to begin your sentence it is by default a question. To answer a question one must define the parameters of the question.

Firstly one must define trading. Trading is pushing a button to buy a product and then pushing another button to sell it. Nothing more and nothing less. No abstractness there. No nebulous illdefined idea. Simple, straightforward. Push to buy, push to sell.

Secondly one must define talent. We will go with your definition, a natural apptitude or skill.

So the answer to your question is NO. No talent is needed to push a computer button. Therefore no talent is needed to trade.

Anything else you wanted an answer to while I'm at it?

If you wish to further define the parameters of the question we could do that. However, I would think doing so would entail putting some sort of definition on trading that included the success or otherwise of the endeavour. If that turns out to be the case then one must further define the meaning of success. As you've stated you do not wish to do that.

Cheers,
PKFFW

So, your answer is NO? Phew...I'm glad this is over...

 

[PKFFW]

I never realised....all this effort I've put into running...It was a simple example to explain that things take on an entirely different perspective whenever there is a financial reward OR penalty involved. I'm learning to play the piano and frankly I couldn't care less if I am talented or not, I just enjoy it and I am progressing. It would be different if I was losing money every time I played.

Whether or not you are penalised every time you play the piano has no bearing on your skill or otherwise at playing the piano.

It would only have a bearing if you were penalised every time you played the piano unsuccesfully. If that were the case you may choose to quit trying to learn to play successfully so as to avoid the penalities for unsuccessfly playing.

Of course before penalties could be set you would need to define what is successful and unsuccessful playing. Would you wish to do so?

Cheers,
PKFFW

 

[PKFFW]

Very good. Dozens of internet forums,1000's of websites and 1000's of trading books written on the subject and yet you've summed it up in only 3 sentences!

It's like playing piano, all you need to do is press down the right keys with the right fingers and the piano practically plays itself!

How would you define trading? Specifically how would you define trading without any definition that included the success or otherwise of the endeavour?

All the books, forums and websites attempt to define, teach, etc successful trading. That is where the volume comes in.....with the definition of success, not with the definition of trading.

Cheers,
PKFFW

 

[dbphoenix]

Very good. Dozens of internet forums,1000's of websites and 1000's of trading books written on the subject and yet you've summed it up in only 3 sentences!

It's like playing piano, all you need to do is press down the right keys with the right fingers and the piano practically plays itself!

Depends on how you define "play". If you define "play" the same way you're defining "trading", all you'd have to do is sit on the keyboard. Or club it with something.

Db