In the Learning You Will Teach, and in Teaching You Will Learn

Before the post…..

I’d like to say thanks to all those who have written in enquiring about my tunnel carpal situation. It’s well on the mend. Not typing while I was in Bangkok certainly helped!

Slowly getting back to ‘typing’ using Dragon, voice recognition software. I can ‘type’ without stressing my wrists. Hopefully, I’ll be back to normal by the end of the month.

I am often asked why I spend time, effort, and money teaching.

There is a two-fold reason:

• I’d like to leave a legacy; and
• I have learnt such a lot from my students.

The last month or so has been a perfect example of what I mean. I had been struggling to answer the question: “Why is it that some students put in the necessary effort and yet fail to make the grade?”

Four students, Guan Boon, Martin, Jody and Joe, provided the answer. I came to believe that a method needs to reflect the personality of the trader. In other words, the method is either mechanical or discretionary rule-based. However, many newbies encountered difficulties with both approaches:

1. Mechanical traders found it difficult to bear the run of outs that is common to systematic trading. Intellectually they would accept the stats, but emotionally, the discipline would slip after three or four consecutive losses.
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3. Also, mechanical traders need to be aware when the assumptions behind the methodology no longer apply. For example, Goldman Sachs suspended the algorithmic trading in the 2007 financial crisis.
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5. Discretionary rule-based traders find creating rules from their market model (e.g. the Wyckoff model) a complex process. And, even if they are able to create the necessary rules, they find applying them is beyond them.

Thanks to the four students, I was able to create the 4-Phase Framework that overcame these difficulties. The rules for each phase are simple, but because they are based on Wyckoff and Market Profile models, the trader can avoid the disadvantages of a mechanical system.

Then, Stewart, Beau and Sharon came into the picture. They pointed out that the 4-Phase would be improved if I allocated timeframes to the model. I did this and presented the new model in Bangkok. At the end of the presentation, the reviews showed that of the 20 respondents, 19 were happy with the new learning.

Since I started teaching full-time in 2011, the experience here has been one that has been repeated time and again. As traders, I believe that we need to improve just to continually keep up. What do you think?

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