The 10000 Hour Rule in Forex Trading
Last Updated 4th September 2017: There’s a saying that when someone studies something for 10,000 hours they become an expert. Nowadays people think they are an expert after watching YouTube videos or listening to some “guru” for a few days. 10,000 hours (broken down) is studying for 40 hours a week for 50 weeks a year (2 weeks holiday) for 5 years! That’s an insane amount of research and implementation and sheer time that goes into learning a particular craft or industry. But when you reach this level there’s a certain trust in yourself that happens. This isn’t just in the trading or investing markets this is in relation to any skill in the world. This can include running, sports, learning an instrument, learning a language, running a business and just about everything in-between. As Warren Buffett said “If I want a second opinion I’ll look in the mirror.” – That’s confidence from one of the most successful traders of all time!
Although Warren is better than 100% of traders out there, the theory he uses isn’t all that impressive. He believes in the 10,000 hour rule, or probably the 50,000 hour rule by now! If you accumulate enough knowledge of a particular subject and then utilise this knowledge through smart implementation, there is no reason why you won’t be successful (and rich!)
There was recently a Tedx talk on this exact subject (Well not quite but it talked about risk intelligence). The individuals who can make good decisions when there is a risk element will generally make good investors. In this case I wanted to talk about professional sports traders. These are individuals that generate a full time income through trading sports games. These people can “see” the sporting event before it has even happened but all the calculations take place in their head. They literally have been researching and digging through the data manually without knowing it for years! Trading is very similar.
I’m not going to drag on about how important research is, as I’ve done this multiple times on the blog before, instead I want to talk about how important mindset is. Your not gambling when it comes to trading or investing of any sort. If you want to have a quick rush or buzz then go to the bar or the casino, but leave the smart investing at home when you sit down and actually start trading.
Mindset & Trading
Confidence vs arrogance – What’s better to be overly confident so that you don’t listen to anyone else? Or to be so arrogant that you ignore what everyone is saying? Well they are the same thing. Don’t confuse a couple of lucky trades with long term success. If you’ve been trading for 5 years with profit each and every month for 5 years then you have my respect. If you have made a profit after 2 months then you do not! Don’t get over confident until you hit 10,000 hours (that’s 5 years more or less for most people.)
The importance of a positive mindset – I’ve read enough trading, investing, business, marketing and psychology books to last a lifetime, and what 99% of them all say is very similar – Mindset is the key to success in anything. If you’re one of those people who read that sentence and said “yeah right” then you can leave now because you won’t be a successful trader in the long term. My switch in mindset lead to a huge profit my second year of trading! Bankroll management, knowledge and correct mindset is how you become a profitable trader. Don’t rush, just learn.