Nature or Nurture?

[TheNegotiator 13]

Trading can be a very profitable profession. Where there is a lot of money there tends to be a lot of competition. So what does it take to come out on top? Really? In something like professional sports, I think many more people would be quick to hold up their hands and say they couldn't compete at that top level. But is that true? Are these people naturally gifted to such an extent that nobody else can get near them? Or is it that they have had an unimaginable amount of hard work and experience? Or is it that they've been taught by the best?

[TheNegotiator 13]

I forgot to mention, I think a big part of it is your ability to learn from your experiences and adapt accordingly.

 

"Men are wise in proportion, not to their experience, but to their capacity for experience."

 

James Boswell

 

(this could be wrong so please correct me if it is. poss Samuel Johnson)

[zdo 20]

Are these people naturally gifted to such an extent that nobody else can get near them?

Yes. The player bringing the best combination of stronger, faster, more mentally focused and resiliance will win in any performance type of work/play - period.

Or is it that they have had an unimaginable amount of hard work and experience?

Yes. Again. In any performance type of work/play such as trading, when the stronger, faster, more mentally focused and resiliant player goes up against other stronger, faster, more mentally focused and resiliant players - the edge becomes "unimaginable amount of hard work and experience". - period.

Or is it that they've been taught by the best?

No. Highest level performance does not require being taught by "the best". Highest level coaching relationships are more a matter of a spectrum of compatibilties between the two than they are a factor of the consensus reputation of the quality of the coach. "The best" teachers/coaches have a broad general understanding of what to bring a player's focus to - but a 'compatible' teacher/coach will be able to bring the player's focus to the very specific things the player needs to focus on better than a "the best" coach can...

[steve46 12]

Trading can be a very profitable profession. Where there is a lot of money there tends to be a lot of competition. So what does it take to come out on top? Really? In something like professional sports, I think many more people would be quick to hold up their hands and say they couldn't compete at that top level. But is that true? Are these people naturally gifted to such an extent that nobody else can get near them? Or is it that they have had an unimaginable amount of hard work and experience? Or is it that they've been taught by the best?

 

I suspect that it is a little bit of all three...one has to have an aptitude for the business, and it is certainly true that successful participants work extremely hard...for example I estimate that I put in more than 50 hours a week, and I have been lucky enough to have learned from skilled professionals. Finally I would estimate that it took a good 6-7 years to get consistent...

[SIUYA 11]

ditto to whats said above....combination.

I would say a good coach/mentor/teacher can help so long as you have the other two, otherwise forget it

[TheNegotiator 13]

I think I'd like to agree with these sentiments. I do agree. But I got thinking about it(a dangerous thing!) and feel that there has to be an additional element. I remembered watching a programme years ago on the subject of feral children. For those who are unaware of what these are, they are children who have been raised in the wild pre-developmental stage with no human contact. Bear with me please!! Now I know the following case is about speech centres of the brain but could it have bearing on any areas? The show had a girl who had been feral and could not speak. With intensive speech therapy, the girl did learn to talk but could never string together more than a few words to form a short sentence. It turned out that the speech centre was so underdeveloped that they concluded she would never be likely to speak as fully and fluidly as most of us take for granted.

 

So my thought was, you describe the set of skills that would be invaluable to a trader. Being quick with numbers; making fast assessments of social situations and making risk based decisions which result in gain or loss; strong emotional discipline and determination to succeed etc., etc.. Then, you designed various levels of tests and exercises to promote these facets and assign them to a child from possibly even birth. Would these children develop far more than an adult who decided to become a trader then practise these skills?

 

Is the role developmental phase a valid additional component to be a great trader?

[zdo 20]

Negotiator, great thoughts. And, yes it could have bearing in many areas besides just ‘speech’.

Reminds me of some of the Malcolm Gladwell, etc work on what you’re calling “role developmental phase” In development, there are multiple junctures and multiple pathways along the way. That plasticity of development results in a myriad of permutations whether triggered by nurture or by trauma.

I hypothesize that if we had a sample of 1000 feral kids a large percentage of them would pick up speech quite quickly. (for example, - Tarzan had learned proper king’s English within months razz – but then again he was hot for Jane…motivated )

I think the particular way her neurons got networked in that one case was more of an exception – compared to normal socialization. I wouldn’t be surprised if the researchers ignored some exceptional other sensation and perceptual ‘talent’s she had developed using the parts of the brain that are typically ‘dedicated’ to speech recog and production…

 

Back on topic

Talent is overrated – where singular breakthroughs/ exceptions are concerned.

Talent is not overrated – where day in and day out consistent performance at a skill is concerned.

So re “Would these children develop far more than an adult who decided to become a trader then practise these skills? ” As a group they would develop more, but not far more. The ones that would develop far more are the ones who had the initial talents and then were nurtured. At the essence - it's nature AND nurture.

 

So re: “Is the role developmental phase a valid additional component to be a great trader? ”

Yes, No getting around the ~10000 hours part – even for the exceptions like Tom Baldwin, etc who take much less linear time to do it.

And the list I provided above – strength, speed, focus, resilience etc was certainly not complete.

You later mentioned Adaptability as important. However, in most cases the weaker hands are the ones being forced to attempt more adaptations, make breakthrough exceptions, etc. than are the truly strong performers.

 

It’s harder to discuss, and iIt doesn’t follow developmental lines in the same way - but Character is another area involved

ie there are definitely additional elements

[TheNegotiator 13]

Interesting and well thought out points zdo! I have to read some Gladwell. I have "The Tipping Point" sitting right in front of me along with a stack of books 2ft high!! I really need to learn to speed read!!

 

Anyway, a quick question on the points of talent being under and overrated. I think I would reverse the two personally. I would say day to day consistent performance(to whatever extent) is more about determination and mindset. I think that can be taught. Breakthroughs generally occur with the extraordinary talents of this world.

 

One more idea to throw into the mix that I believe I mentioned somewhere else in the forums. Luck. The few good traders I have known compared to the extremely successful traders are often only separated by a run (or single day in some cases) of excellent trading given exceptional circumstances. It allows them to move to the next level. Of course the truly exceptional traders tend to capitalise when their luck appears...

[SIUYA 11]

perfectly said Zdo and Neg (this thread is clearly the mutual appreciation society)

 

There are two things that I could add to this.....speech is not a great measure, only as it has been shown that all humans have an ability to produce a wide range of sounds, and this diminishes very quickly with age...which is why its hard as adults to learn certain languages. Though I still think the idea of hothousing children would make for an interesting study in the rearing of super traders. (personally I think it would have similar success rates as real life - lets ask Thales in a few years)

 

2ndly Neg - i have to go with Zdo on this one, breakthroughs are generally more a combination of sheer luck, persistence, risk taking (and hence survivorship bias) and group effort. there are very few truly inspirational individual breakthroughs in any field. This is definitely where being able to capitalise on luck does separate the wheat from the chaff.

Read the Malcolm Gladwell books - they can be done in a day and are definitely good thought fodder

[TheNegotiator 13]

perfectly said Zdo and Neg (this thread is clearly the mutual appreciation society)

 

There are two things that I could add to this.....speech is not a great measure, only as it has been shown that all humans have an ability to produce a wide range of sounds, and this diminishes very quickly with age...which is why its hard as adults to learn certain languages. Though I still think the idea of hothousing children would make for an interesting study in the rearing of super traders. (personally I think it would have similar success rates as real life - lets ask Thales in a few years)

 

2ndly Neg - i have to go with Zdo on this one, breakthroughs are generally more a combination of sheer luck, persistence, risk taking (and hence survivorship bias) and group effort. there are very few truly inspirational individual breakthroughs in any field. This is definitely where being able to capitalise on luck does separate the wheat from the chaff.

Read the Malcolm Gladwell books - they can be done in a day and are definitely good thought fodder

 

Fair enough on point 2. I that for me though, breakthroughs of any significance must combine all factors.

 

As far as the speech point goes, you said the ability to learn languages diminishes with age. This is my point. The implications were that the ability is present via a physical and chemical mechanism during the developmental stages of life which later on in life, disappears. Speech is a very clear manifestation of this as every 'normal' human being learns to talk and develops speech centres and so on. This is the 'hardwiring' phase. My idea is that if not only were humans equipped with the knowledge and understanding of the markets but also had these skills 'hardwired' in the developmental stage, would the results be far more positive than if the same exercises were applied to a group of intelligent adults post developmental phase?

[zdo 20]

re:

I think I would reverse the two personally.

and

Breakthroughs generally occur with the extraordinary talents of this world.

Yes, the way I classed them is kind of counter-intuitive – like saying Einstein was not a talented genius . But if you observe those who do consistent high level performance work across a long time period and compare that to the sporadically blessed with breakthrough (, and usually tortured,) geniuses… See Gladwell’s Outliers book … although I think he doesn’t quite get the importance of the ‘nature’ components…

 

Mixing in creativity veers us off a little bit. Have been trying to stay relatively close to the original topic of consistent high level performance. Quality of creativity is involved with that. But quanity or degree of creativity like it is with those in 'creative or adaptive tensions' not so much

 

I would say day to day consistent performance (to whatever extent) is more about determination and mindset.

Talent is one aspect of performance. Inclination is another. To me, “determination and mindset” are factors of inclination…For example, I'm blessed with quite a chunk of musical talent, but little inclination. And instead of not being able to, the feral girl simply may have not been inclined to make all these stupid noises.

 

I’m with you on the Luck factor. For me, the Luck is a ‘spiritual’ component of the whole deal.

 

PS TN I got a thing for feral girls… it’s been dormant for a long time now… you just had to bring it up ... now I'm obsessed again... lord have mercy on me.

[Rande Howell 10]

Trading can be a very profitable profession. Where there is a lot of money there tends to be a lot of competition. So what does it take to come out on top? Really? In something like professional sports, I think many more people would be quick to hold up their hands and say they couldn't compete at that top level. But is that true? Are these people naturally gifted to such an extent that nobody else can get near them? Or is it that they have had an unimaginable amount of hard work and experience? Or is it that they've been taught by the best?

 

A committment to learn a skill (methodology) set that requires a long term view to become competent in the knowledge. However, there is a vast difference in trading and athetics. Sports requires body and mind to perform in synch with an emphasis on body. Body training in trading is minimal compared to athletics. Mind and belief training is really the crux of the inner game of trading. Much of our value of self is tied up in our money narratives. If a trader doesn't become mindful of these beliefs (and change them) operating in the background of his awareness, it will be difficult for him to ever compete with a skillful trader who has combined platform, methodology, and psychology into a winning combination. A researched guess is that 80% of any decision is emotional, rather than logical. As long a trader doesn't have the meaning that is attached to his emotions regarding money in an effective place, he will always fuse uncertainty with fear. A good trader has learned to de-couple this. This allows a very different mindset to be present while trading. How a trader learns to do this can be different. Some are born into circumstance where risk management is the norm. Others suffer through years of self learning and arrive at an effecitive belief system around money and trading. Others seek mentors and coaching. Trading is a flat playing field when you take full responsibility for the money narrative that drives your trading.

 

Rande Howell

[FXGirl 10]

Such an interesting topic, guys.

 

There does seem to be a window for development of verbal language. Miss it and the result is limited verbal skills. I wonder about sign language. Some mothers teach their children sign language to communicate effectively (“I want milk”) before their kids reach the verbal stage. I wonder if the feral girl would have done better with this method of communication?

 

If I’m remembering my neurobiology correctly, there is a second period of intense change in the brain about 10 to 12 years of age. This is when kids develop the ability to think abstractly. All of a sudden you can teach a child algebra! I wonder how this might impact the ability to trade.

 

One trader I know had his early-teen children look at the charts daily. They quickly became better than he at identifying trade setups. The kids looked at trading as fun – which speaks to Rande’s notion of money narrative. He gave the boy a trading account and his son rather quickly made several thousands of dollars, bought himself all the toys he wanted and then lost interest in trading. I’m not in contact with the trader, so I don’t know if his son got interested in trading again when he wanted bigger toys.

 

Motivation or interest would be a big factor in raising a child to be a trader. Any mother who has had more than one child can tell you that each child is different from the get go. No tabula rasa here. Once you factor out the ‘want to get Daddy’s (or Mommy’s) approval’, you are left with innate interest, and some would say, ability. Example: my dad was a professional musician and he wanted his kids to be musicians too. As a result, I could read music before I could read words. But when I hit junior high, I threw over orchestra for mechanical drawing.

 

But if you still wanted to raise a trader, what would you do to foster the essential skills? Pattern recognition games? EFT to manage emotions? Biofeedback to teach physiological awareness and management? What would you say about the value of money and how you get it? How would you teach resilience in the face of loss? How do you teach that uncertainty isn’t scary? What else would you need to teach? What kind of a person would you need to be to be a good role model as a trader (since very few kid do what you say rather than do what you do)?

 

And what does the Chinese Tiger Mom’s experience tell us?

[BlowFish 10]

Nurture, as the Turtles experiment indicates. They repeated the experiment a second time and got the training period down to a week. Mind you it was a pretty simple system, something better suited to being done programatically nowadays. It has be said that 'old fashioned' trend following needs fairly deep pockets and cajones of steel.

[zdo 20]

Nurture, as the Turtles experiment indicates. They repeated the experiment a second time and got the training period down to a week. ...

 

Nature.

Less than 20 of the thousands of applicants were hired. “Dennis’s hiring process … given the nature of the interview and questions asked it was clear certain characteristics were required of potential turtles.” He was looking for specific talents and inclinations. Had the experiment been with a statistically significant sample of randomly chosen, non biased subjects – then we could do some heavy leaning to the nurture side…

 

Also, I would say Dennis did not train / ‘nurture’ real traders. He enrolled wetware agents to leverage his own activities – activities that can also be handled by software agents as you mentioned. While he won the short term bet, in the long term the experiment really wasn’t that successful. Only a small handful of the Turtles really made it. A pretty large percentage of the originals subsequently failed /blew up. Most of them moved on - it was a job they didn't really like - because the method wasn’t true to their nature.

 

Put 10,000 traders out on a field and only a very small group of them will be true trend followers in their very nature. I personally know one of the ‘Turtles’. He was with Dennis from 84 to 88 and then left to go on his own. He did very well – but only because true trend trading is in his very nature. I’ve asked him about this several times and in several ways. He understands that things came together for him and didn't for so many others because the method really matched his nature.

 

 

btw... the real answer is Both . Have a great weekend all.

[BlowFish 10]

Hey Zdo I wondered if I was going to get pulled on that! True, they did have pretty specific selection criteria. Having said that anyone that followed the reasonably simple instructions did well, the (few) that swayed or seconded guessed did not. As it was pretty much a fully systematic approach anyone that had done as instructed would have done well. Must re read way of the turtle one of these days, forgotten most of it.

[MightyMouse 12]

I would say that it takes a lot of hard work to learn how to trade, but once you have developed the aptitude, a degree of luck does play into determining financial success in trading.

 

I hope a lot of people do not struggle with this.

 

MM

[Cory2679 11]

I would say that it takes a lot of hard work to learn how to trade, but once you have developed the aptitude, a degree of luck does play into determining financial success in trading.

 

I hope a lot of people do not struggle with this.

 

MM

 

""A real man makes his own luck." Billy Zane, Titanic." Dwight Schrute, The Office.

[TheNegotiator 13]

""A real man makes his own luck." Billy Zane, Titanic." Dwight Schrute, The Office.

 

Maybe, but it's not always quite that simple.

 

As far as the turtle discussion goes, I don't think it's an especially useful comparison, although it's of course fascinating nonetheless. Firstly, there were interviews and specific characteristics were looked for so the study was skewed. Secondly, one style was taught to the trainees and we all know there are many different styles people can trade successfully depending on their personality/aptitudes. Lastly, I would say that the nurture aspect is the way you are brought up and the values you have etc., not specifically what/how well you are being taught specific trading strategies.

[zdo 20]

fxgirl re

But if you still wanted to raise a trader, what would you do to foster the essential skills? Pattern recognition games? EFT to manage emotions? Biofeedback to teach physiological awareness and management? What would you say about the value of money and how you get it? How would you teach resilience in the face of loss? How do you teach that uncertainty isn’t scary? What else would you need to teach? What kind of a person would you need to be to be a good role model as a trader (since very few kid do what you say rather than do what you do)?

 

Big picture... Ideally I would

>be impeccably trustworthy.

>want the child to feel believed in.

>teach by asking questions only - mostly about strengths

>address what Rande calls the 'money narrative'

> ...

 

Comments

The 'neg' of the first two = my blfs would have to be based in truth. If I doubted 'talent' and/or stopped believing in her, the 'course' would be over period...'we're fired'

 

Re" the 'money narrative' At this point I seriously don't have clarity how that would be dealt with. With my own kids, the one who was seemingly most contrary and resistant to the values I was trying to instill has now turned out the one most aligned to the attitudes I was trying to 'teach'. Leaves me confused. Maybe Rande or others have suggestions.

Now that I think about it, I don't for sure know what 'money narrative' is. My feel for it is that I've been through 3 or 4 of them so far in life, but none of them have been explicit. Maybe I could just google 'money narrative' and find out what the heck he's talking about...

 

Hey I gave it a shot fxgirl And, to be real, that was all ideally. In real life, I must admit I would likely often go old school and dish up a pile of judging and fussing...:doh:

[Rande Howell 10]

fxgirl re

 

 

Big picture... Ideally I would

>be impeccably trustworthy.

>want the child to feel believed in.

>teach by asking questions only - mostly about strengths

>address what Rande calls the 'money narrative'

> ...

 

 

Re" the 'money narrative' At this point I seriously don't have clarity how that would be dealt with. With my own kids, the one who was seemingly most contrary and resistant to the values I was trying to instill has now turned out the one most aligned to the attitudes I was trying to 'teach'. Leaves me confused. Maybe Rande or others have suggestions.

Now that I think about it, I don't for sure know what 'money narrative' is. My feel for it is that I've been through 3 or 4 of them so far in life, but none of them have been explicit. Maybe I could just google 'money narrative' and find out what the heck he's talking about...

 

We are born into stories that connect money, power, worth, mattering, and adequacy. These histories have been moving through the generations like an avalanche coming down the side of a mountain. And we don't see them because they are wired into our perceptual map of the world long before we can think or reflect. They are the attitudes, biases, and assumptions of our family and our culture about money and risk. We don't have a money narrative -- the money narrative has us.

 

This money narrative will dominate your perception of trading. What you believe about yourself and money is not yours -- you are just the most recent crest in the wave of history. Waking up to this history and changing the narrative is critical to changing the core beliefs from which your trade.

 

Rande Howell

[SIUYA 11]

on that Rande, is it the attitudes of power, worth, money that gets drilled into us by our parents, or does this stem from something more innate/more primal regards the ideas of possession and loss?

Do our brains actually hit a road block to do with money, and value or is this taught?

I ask as there are now so many economic experiments showing we are not necessarily rational when it comes to assigning values to things.

[BlowFish 10]

Maybe, but it's not always quite that simple.

 

As far as the turtle discussion goes, I don't think it's an especially useful comparison, although it's of course fascinating nonetheless. Firstly, there were interviews and specific characteristics were looked for so the study was skewed. Secondly, one style was taught to the trainees and we all know there are many different styles people can trade successfully depending on their personality/aptitudes. Lastly, I would say that the nurture aspect is the way you are brought up and the values you have etc., not specifically what/how well you are being taught specific trading strategies.

 

True enough.

 

One of the most interesting is that particular style (I call it 'old fashioned trend following' though 'long term trend following' may be more discriptive) is actually very simple. Of course it's still not easy as most of these types of system will have close to 70% losers. You will also need a large account to trade them as they rely on trading multiple markets simultaneously. That kind of compounds the 70% rate as you are likely to suffer big absolute $ draw downs. Oh and you will need pretty large stops (days or even weeks away) But pretty much anyone can 'do it' if they follow the rules.

 

Interesting comment about the turtles being wetware ZDO. I agree however my overall view is different. Trading can be a very a simple activity that requires little intelligence or even background knowledge. One of the reasons people fail is that they find that hard to accept, their ego demands more. Of course you can make it a complicated activity also. You can look at all sorts of sophisticated bells and whistles but it's not absolutely necessary. Those original break out systems still 'work' (you would have absolutely cleaned up over the last few years in fact).

 

None of this really proves much of anything (as has been pointed out:)) however I do suspect that you can train pretty much anyone to trade though you might need to attach electrodes to their genitalia to break some of those traits that where nurtured at an early age. You know, all the ones that help you in many endeavours but are counter productive in trading.

[TheNegotiator 13]

Simple but thorough is the way I would always suggest to go. I think you're right though Blowfish. Anyone COULD learn how to trade. An important thing to recognise though is although there are core principles(which in fact are just common sense really imo) the things each individual needs to learn to be a successful trader, may be need to be different depending on their personality. Square pegs don't fit in round holes. That's why people always talk about finding a market and style that suit you. Another important point is the way we are wired(nature, nurture and development) makes us perceive the markets and trading in a non-productive way from the moment we start to look at trading. Not all people but many experience this. Perception and attitude must change before a trader becomes successful.

[Rande Howell 10]

on that Rande, is it the attitudes of power, worth, money that gets drilled into us by our parents, or does this stem from something more innate/more primal regards the ideas of possession and loss?

Do our brains actually hit a road block to do with money, and value or is this taught?

I ask as there are now so many economic experiments showing we are not necessarily rational when it comes to assigning values to things.

 

Nature and nurture is a both/and proposition. Through the process of attachment and attunement, our brain comes to very primal valuations of our worth. It is this internalization of this worth that is so important. To the young developing brain, worth in their parents' eyes is equated with survival. Without their care, the child dies. So the developing brain is invested into organizing itself into someone that the parents will take care of (love and belonging). The inherent worth of a human being gets compromised here. There is an external judge of that worth (wounded parent) that greatly influences the brain's development of identity. And how they prove their worth. This is not just our families of origin, but also our culture. It is the intergenerational conditions to this worth that is transmitted to each of us and becomes embedded into our neural circuitry as our beliefs. Due to human fallibility, our fallen nature, or our wounding (however you wish to define it), we come away needing to prove our adequacy, our mattering, our worth, and even our power because of the conditions placed on the developing brain's need for cherishment and belonging to a group that will take care of it. This is called external validation vs. internal validation. All grown up, trading exposes this situation in the most powerful of ways. The vast majority of traders equate their success or failure in trading as a measuring stick of their worth. This is an extention of the money narrative learned in the soup of the family and culture. People who find transendence in life also find their worth and value through internal validation. Their worth is inherent to their humanness.

 

As I think you suspect, I believe there is more. My belief (no empirical proof here) is that the human condition is composed of both destructive and constructive elements of our being. And it is our place as human beings to become mindful of this primordial struggle and to consciously decide which elements of the self to feed and which ones to resist. What most people who work with me find out is that trading is only the context that is used to ferret out this inner battle. No matter where you turn in life, you will find this inner struggle. In trading, unlike many other domains in life, the trader can not avoid his inner life. He no longer has to worry about avoiding his psychological demons. Because he is in trading, they now are stalking him. So the trader has to equip and prepare himself to cut through his own self deception and come clean. It is a journey that I feel honored to be part of. Takes faith in a courage and a wisdom not yet born. This is our choice.

 

Rande Howell