Learning As Pattern Recognition
Brett Steenbarger, a professor of psychiatry at SUNY Upstate Medical University, has some learning advice for financial traders that is useful for the rest of us:
The core skill of trading is pattern recognition.
Whether the trader is visually inspecting charts or analyzing signals statistically, pattern recognition lies at the heart of trading. The trader is trying to identify shifts in demand and supply in real time and is responding to patterns that are indicative of such shifts.
Much pattern recognition is based on implicit learning.
Implicit learning occurs when people are repeatedly exposed to complex patterns and eventually internalize those, even though they cannot verbalize the rules underlying those patterns. This is how children learn language and grammar, and it is how we learn to navigate our way through complex social interactions.
Implicit learning manifests itself as a ‘feel’ for a performance activity and facilitates a rapidity of pattern recognition that would not be possible through ordinary analysis. Even system developers, who rely upon explicit signals for trading, report that their frequent exposure to data gives them a feel for which variables will be promising and which will not during their testing.
Research tells us that implicit learning only occurs after we have undergone thousands of learning trials. This is why trading competence—like competence at other performance activities such as piloting a fighter jet and chess—requires considerable practice and exposure to realistic scenarios.
Without such immersive exposure, traders never truly internalize the patterns in their markets and time frames.
Emotional, cognitive, and physical factors disrupt access to patterns we have acquired implicitly.
Once a performer has developed skills and moved along the path toward competence and expertise, psychology becomes important in sustaining consistency of performance. Many performance disruptions are caused when shifts in our cognitive, emotional, and/or physical states obscure the felt tendencies and intuitions that lie at the heart of implicit learning.
This most commonly occurs as a result of performance anxiety—our fears about the outcome of our performance interfere with the access to the knowledge and skills needed to facilitate that performance.
Engage in a structured training process.
Education—simply reading articles in magazines, websites, blogs, and books—is important, but it is not training. Training is the systematic work on oneself to build skills and hone performance. It requires constant feedback about your performance—what is working and what isn’t—and it requires a steady process of drilling skills until they become automatic. No amount of talking with a coach or counselor will substitute for the training process: not in trading, not in athletics, and not in the dramatic arts. (Read more here.)
Think for a moment about what “pattern recognition” means in your own job. For me, it means being able to recognize an interesting insight hidden within often-dense academic papers, and being able to fit that insight into the structure of things I know about learning, as well as into the structure of a blog post or a magazine article.
When I worked at Psychology Today magazine many years ago, and had to churn out dozens of news items for every issue, I actually made a list of common story-telling structures: “So you thought X was the case? Well, new research shows that actually Y is true.” “New research shows that that old bit of wisdom, X, is more true than we realized.” “Here’s something you’ve never considered: X.”
Rather than leading to formulaic, same-sounding stories, these templates gave me opportunities to showcase what was unique and different about each new study I wrote about. I was reminded of my templates when I read Made To Stick, the wonderful book by Chip and Dan Heath, which pointed out that the most effective—and creative—advertisements are those which actually work within established storytelling conventions.
This long digression brings me back to the question I posed above: What are some “templates” or commonly-occurring patterns in your own work, and how can you more precisely define and refine them? I’d love to hear your thoughts.