Hey, this is Sasha and welcome to another episode of ‘Let’s Talk Stocks.’
Skill versus the Art of Trading
Combining skill and art or creativity within your trades and how that applies as you’re going on in putting on trades, managing trades, and looking to set up a position.
We’re going to cover three main points: what is a skill when it comes to trading, what is the art when it comes to trading, and then combining skill and art for trading.
Let’s take a look at this and break this down as we look at Skill versus Art and understand what it is all about.
First, I want to share with you a quick little tennis story back when I was learning to play tennis.
Typically, what skill is — skill is something you’re born with or something you grow and develop. I wasn’t born with the skill of playing tennis, but I raised it. What I did was I ended up playing tennis. You’re practicing with tennis, and you grow that skill.
There are different types of tennis players — different styles of tennis.
For me, for example, I enjoy hitting long balls from the back baseline. I enjoy nice deep swings. For other people, they enjoy coming to the net and getting closer. They were more into hitting those quick short shots or volleying very quickly.
Everybody’s a little bit different when it comes to their creative side.
You might have ten different players where they all have the skill, hit it from the back or the baseline. You might have those same ten players that are also very good also at the net or very close to the net. Then, you have the creative side where well somebody at the net that just lost powering it at the net and loves to play those kinds of shots and other people they may finesse things. They might do a quick little drop shot or they may do some stuff with some creative spins.
That’s being a little more creative on how you approach the game.
That’s really what it comes down to when it comes to trading.
What is skill when we look at trading?
When you look at trading, investing — the skilled part of it is looking to develop your understanding and how to place a trade.
For example, you know nothing about the trading panel, well you need to get that skill to be able to place the trade in the trading panel.
Let’s say — here’s my trading panel, here’s my platform, here’s my stocks, here’s my orders, and then you got this big button for the order or go and execute.
Skill is knowing how to do that because you’re not born with. You grow that. You learn that and now you have the skill to be able to do that.
Now, the art behind that is more creative with it. When we look at art — it’s able to finesse those things, and that may be something like hey I go ahead and use shortcut keys on my keyboard, or I go ahead and use multiple monitors to be able to manipulate my trade windows. Now, I’m more artistic with my trading.
That’s just the baseline of executing a trade, but you have many different things regarding trading. When it comes to skill versus art, there are a lot of variations to it.
A skill, again, is something that you grow and develop.
Whereas, the art is how you do it that’s different.
This is what you’re getting at is a combination of both of these. As we combine skill and art — as they start to overlap — this in the center is what creates your style.
That’s what you’re getting at. When you start composing your style, that’s where independent trading happens because initially what you do is you get some skill, you acquire it, maybe by looking at other people, and then you try to apply it. But, you start getting a little creative with it, but you don’t go too far outside the box.
Eventually, you start seeing other things, and you get a little more knowledge. You see how people are doing it. Finally, when you have full creativity like you could see that with an artist where he knows he has the total skill, he’s developed those almost to the max, but now he gets very creative with those in how you approach it.
As the stock is breaking down, you could be creative, and the part of some people may want to go ahead and add to the position. They may want to go ahead and hedge it with a put, or they may add some calls, or they may sell verticals on one side or the other.
If you don’t know what verticals are or options are, in that case, you don’t have the skill set. So, you’re growing, and you’re developing the skill.
With time, your creative side will improve
You’re mixing this combination of growth of skill and being creative little side by side. But if you don’t have the skill, it’s tough to be creative unless you’re just a person who’s full of freedom. In that case, you might do a lot of creative things, but they may not end up working out very well.
This is why having a little bit of skill gives you a little bit of creativity. As you get a little more, more and more skill, you’ll become a bit more creative, or you’ll be able to be more creative.
With some people, they don’t want to go outside. They have that range in creativity. They want to stay in the box, and that may be okay if you know you’re consistent in your trading and you’re happy with where you’re at, and maybe you don’t want to develop those things further.
But in general, as skill grows, you may get a little more creative to experiment with the things that work for you and the things that don’t work for you.
Ultimately, skill is something that you’re either born with, or you’re growing, and art is something that you’re more creative with on the trading side.
As you’re looking to grow things — grow your knowledge, grow your education, grow your wisdom — you’re slowly developing this. As you get more creative with it that allows you to construct your style and strategy, which makes this unique to you personally.
As far as skill and being artistic or creative when it comes to your trade, I need a little bit of both.
If you have the skill and constantly keep developing your skill, well then you might be very linear in your approach. When you put on a trade or when you’re managing a trade, which on the one hand could be okay if you trade like a robot, but humans typically don’t do that.
We then go to being a little more creative. But having too much creativity without having the skill when you’re fully creative could put you in a few wrong directions or path.
Combining these things a little bit of skill grow that aspect a little bit of creativity and now you start compositing these things making it your own. Creating your style for your trading.
That’s really how you do it as far as creating your style and what works for you within your trades.