The Importance of Deep Work for Traders

The natural evolution of technology in general --and stock trading specifically-- has led to shorter attention spans for society. This self-reinforcing cycle is harming our natural ability to think and engage critically with our work. 

The growth of information and accessible brokerage platforms has distracted investors, pulled our attention away from traditional analysis, and reprogrammed us to constantly look for the next big move.

Deep work is more important than ever for traders.

In this episode, we consider the power of “deep work,” the concept’s roots, and why investors need to build a process with deeper market engagement. 

We'll explore why the speed and magnitude of stock movements cause many to fall victim to classic investor biases precisely when we need to elevate ourselves above the noise. 

We’ll also share steps to help you begin the process of deep work and shift your daily routine into something more impactful.

What is “Deep Work”

The term deep work was recently popularized by Cal Newport’s book. His focus is broader than trading and applies to almost any field of work. 

Newport’s ideas are easily applicable to trading psychology and the routines that make up our daily lives. 

The better you understand your natural practices and the broader strokes of the deep work framework, the more efficiently they can be brought together to maximize productivity.

The Basics of Deep Work

Deep work refers to long periods of uninterrupted thinking in a distraction-free environment.

In modern society, this can be a challenge and demands a concerted effort. Deep work requires planning, prioritizing, and a willingness to disconnect from technology.

Shallow work is non-cognitive and can be accomplished while preoccupied or distracted. So ask yourself, “Can I do this while I am distracted?”

If you can change your habits and get into a deep work state, you can access a trading strategy’s second, third, and fourth-order effects, levels otherwise not available through surface-level thought.

Access to the Market

Market access for retail traders was not always as direct as today.

The barriers to entry have gradually evolved to the point where we are now instantly able to trade stocks on nearly any device without an intermediary.

While it can be seen as progress, there are also downsides to technological developments. The lack of friction and speed of access has resulted in some very negative outcomes, and we are victims of the industry we have created.

The overabundance of information has led us to think less and more shallowly.

You could argue that one of the main issues in modern stock trading is the loss of fundamental analysis.

The only way to counteract the issue is to impose stricter measures on ourselves and enforce new habits.

Create a Deep Work Habit

1. Schedule time
2. Eliminate distractions
3. Avoid over-planning
4. Find the right time of day
5. Embrace analog
6. Shift your environment

Don't miss podcast episode 170: The 5 Critical Factors for ANY Trading Strategy

Trader Q&A:

PABLO: Hi Kirk, I am Pablo from Poland. I've been trading for about one year. My question: Is there any difference between trading out-of-the-money credit spreads and in-the-money debit spreads when the probability of success in both cases is around 70%? Is there any advantage to trading one strategy over the other? Thank you for your explanation.