10,000 Trades And The Investing Outlier
Right now, I’m reading “Outliers: The Story of Success” by Malcolm Gladwell.
As always, Gladwell’s book is full of counter-intuitive beauty. In this book he is able to pierce the skin of common wisdom about success. For instance, there’s a common meme that there are some people who are just destined for success.
Take the Beatles for example.
And while Gladwell points out that John Lennon, Paul McCartney, George Harrison, and Ringo Starr had lots of natural talent. It was practice that made them great. Lennon, McCartney, and Harrison, for example, were given an opportunity to play strip clubs in Hamburg, Germany, where they had to play eight hours a day, seven days a week.
They were also introduced to different styles of music, too.
Consequently, they were a much better band when they came back than when they left.
So how much practice is necessary? Gladwell thinks the magic number is about 10,000 hours based on a study of classical musicians.
What does this mean for traders and investors?
Using Gladwell’s logic, practicing trades and studying would make a trader more successful. Unless you use a practice account, though, that trading could be expensive.
But there may be other ways a trader could gain the edge of an outlier. Technology is perhaps the best success-multiplier for traders.
Back testing and walk through testing would help.
Automated Trading is another. The Automated Trading strategies that Online Investing Ai is developing, for example, can test thousands of strategies in a short time, easily reaching that 10,000-trade threshold.
And while the process is probably not as interesting as playing rock and roll music in a Hamburg strip joint, it does point the way to the “practice makes perfect” theory of success.
Related posts:
- Malcolm Gladwell’s Outliers
- Automated Trading and Investing
- Will Automated Trading Turn Me Into A Lazy Slob?
- Why Automated Trading And Manual Trading Are Compatible
- Call for Traders
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is one of my favorite financial books of all time. It's an allegory about a guy who has a terrible job, and how he overcomes challenges to achieve his dreams.
