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Forex Trading Tips: 10,000 Hours
The latest Malcolm Gladwell book Outliers should be a must read for anyone who trades. Mr. Gladwell studied the backgrounds of many extraordinarily accomplished people from all walks of life and found that the reason for their success had far less to do with their innate talent and far more to do with their circumstances and their work ethic.
One of the most fascinating insights that Mr. Glawell offers is that the time of your birth can be a far more important factor in your overall success than any other variable. From Canadian hockey players all born between January -June (early birthday gives you a huge advantages in your youth when body development and coordination skills are most pronounced) to computer entrepreneurs such as Bill Gates, Bill Joy and Scott McNeally all born in 1955 (the perfect year to take advantage of the personal computer revolution that came on line in the middle 1970’s) to superstar corporate lawyers all born in 1930 (who came of age just as mergers and acquisitions were becoming the norm of American business) -- when you were born was more important that who you were.
But lady luck was not the only factor necessary for achievement. Skill, honed by 10,000 hours of work was the other crucial component of success. Talent was needed to be sure, but it was really a baseline. Any reasonably bright person could qualify. The key was developing your skill set, and the dividing line between those who were good versus those who were great was 10,000 hours of practice. Whether you played violin or programmed a computer or practiced corporate law- your did not achieve true proficiency until you had 10,000 hour under your belt.
For us as FX traders Gladwel’s findings are great news. We happen to live at the best possible time for trading as technology has eliminated almost all the barriers to entry. Transaction costs are low. Execution speeds are measured in milliseconds. Dissemination of news has become much more efficient. And every year the market sees steady improvement in all three areas. Meanwhile the field is still new (there are only 500K retail FX traders across the world vs. millions of equity traders) and full of possibilities.
But to succeed we must continually practice. Think of what it means to have 10,000 hours of trading time. That’s 50 hours per week for 4 years straight before you can truly feel proficient at the game. Next time you feel like you want to quit in despair, just remember this figure and remember what unites every successful person throughout history -- they never give up.