Wednesday, January 13, 2010

Openings, middlegames, and endgames

Josh Waitzkin, in The Art of Learning, points out the pitfalls of focusing on openings to the exclusion of the rest of the chess game. “There is a vast body of theory,” he writes, “that begins from the starting position of all chess games, and it is very tempting to teach children openings right off the bat, because built into this theoretical part of the game there are many imbedded traps, land mines that allow a player to win quickly and easily—in effect, to win without having to struggle to win.” What’s wrong with beginning with the beginning? “The answer is quicksand. Once you start with openings, there is no way out. Lifetimes can be spent memorizing and keeping up with the evolving Encyclopedia of Chess Openings (ECO). They are an addiction, with perilous psychological effects.” (p. 35)

Waitzkin claims that a person learning a new skill should lay a “solid foundation by studying positions of reduced complexity (endgame before opening)” and clear principles. For instance, when the six-year-old Josh was learning chess his mentor started with just three pieces on the board—king and pawn against king. “Over time,” he says, he “gained an excellent intuitive feel for the power of the king and the subtlety of the pawn.” “Layer by layer,” Waitzkin continues, “we built up my knowledge and my understanding of how to transform axioms into fuel for creative insight. Then we turned to rook endings, bishop endings, knight endings, . . . exploring the operating principles behind positions that I might never see again. This method of study gave me a feeling for the beautiful subtleties of each chess piece, because in relatively clear-cut positions I could focus on what was essential. I was also gradually internalizing a marvelous methodology of learning—the play between knowledge, intuition, and creativity.” (pp. 33-34)

Those students who focused on openings tried to win fast. If they weren’t triumphant quickly, however, they got into trouble. They didn’t know how to navigate through a middlegame, especially not Josh’s complicated middlegames. They were “crippled by the horizon imposed on them by their teachers.” (p. 38)

The parallels to trading should be apparent. Beginning traders are transfixed with entries. They rarely think about exits, let along how they’re going to get from entry to exit. Often they simply invert an entry to define an exit, as if entering and exiting a trade were simply two sides of the same coin. (Yes, I know that even some advanced systems proceed this way.) Short of learning a few ground rules about stops, they figure that the middle will pretty well take care of itself.

We need not overcomplicate trading, but it’s imperative to focus on what really matters. We have to learn to trade in such a way that we’re more than snipers. (The high-frequency crowd is pretty well controlling that space.) We have to be prepared for a struggle. We have to learn when to defend our position, when to become aggressive, and when to walk away. I suggest that the least critical part of the trade is the entry and the hardest part of the trade is the middle. So why not start with the end game?

* * *

This will be my last post on The Art of Learning. For those who missed the earlier installments, here they are:

Two approaches to learning
Losing to win, investment in loss, not repeating mistakes
Using adversity
Growth in mastery, the hermit crab between shells
Matching style to temperament

1 comment:

  1. Brenda,

    Excellent point. One of the things I did when first learning to trade (not that I'm not still learning) was to replay the trading day, knowing the opening and closing prices (without knowing the structure, though) and trying to milk as much as possible out of the market. Of course, this did not provide a realistic estimate of earnings! However, it helped greatly to get a feel for volatility and was invaluable in developing my trade management (placement and movement of stops, exiting through targets or allowing the trade to be stopped out, etc.)

    Best trading,