Dr. Indre Viskontas:
Hello, and welcome to Inside the Mind of a Trader, the show where we explore how brilliant traders are wired for success. I'm Dr. Indre Viskontas, neuroscientist and professor of psychology at the University of San Francisco. And my next guest is Lorraine Gavican Kerr. Hi, Lorraine.
Lorraine Gavican-Kerr:
Hi. How are you?
Dr. Indre Viskontas:
Really well. How are you?
Lorraine Gavican-Kerr:
Thanks for having me.
Dr. Indre Viskontas:
So you come from background with a history and a geography degree. How did you find your way into trading?
Lorraine Gavican-Kerr:
Good question. So yeah, I studied history, geography, and the Irish language, which is incredibly useful, obviously, and I was kind of working in different frames, I worked in education for quite a while, and then just kind of was always interested in finance and kind of how the markets worked and those things. So I saw a job pop up when I was looking to change careers at a small institute called thinkorswim, which some of you may be familiar with, and then I decided, "Why not? Let's take a chance here," so I took a job as an option specialist with very little knowledge about options. So that's really how I got into it. I just kind of something I wanted to do and I'm like, "Life is short, why not try it?" so that's what I did.
Dr. Indre Viskontas:
And I'm sure your kind of pathway represents what a lot of the people who are using the platform now might be doing, switching from one career to another, trying to gain new experience. So when you think about that kind of a person, as you put together these learning resources, how are you structuring them so that they can have this kind of wide opportunity for different types of pathways?
Lorraine Gavican-Kerr:
Yeah, I think it's really about thinking about what are the things that people want to do, so putting yourselves into the shoes of a client when they're trying to either build their wealth, maybe they're trying to protect their wealth, maybe they're trying to plan for retirement or, say, for their kid's college, all of those different things. So I think a lot of it was like what are the things that clients want to do and then how can we help them get there. Clients are coming from all different walks of life and different levels of knowledge and engagement, but what we really focus on is making the things that we do actionable, teaching on our platforms, and making sure that we're really putting things out there that are easy to understand and really practical, how can we take you to help you achieve your goal, and that's really what we want to do here, and we're very committed to it.
Dr. Indre Viskontas:
And there has to be a balance, though, between people who are using their kind of gut instinct or intuition and being really analytical in a particular situation. So how do you manage that kind of a balance in terms of what you provide?
Lorraine Gavican-Kerr:
Yeah, I think we really think of this as, first and foremost, we really like to teach our clients about risk management, about using a platform. Those are things everybody needs to know. I think that we really want to set people up for success for whatever they want to do. So traders have different aims, different goals, they trade different types of products, they trade different times of the day, so really what we want to do is kind of cater to all of those. The way we look at this is we kind of look at different personas and kind of think through. I know that you're interviewing different people that have different levels of interest and operate in different markets, so it's really just having that wide berth of coming up with almost a learning plan for all of those characteristics and then kind of putting it together so it works well.
Dr. Indre Viskontas:
So do you have names for these different personas?
Lorraine Gavican-Kerr:
No. I mean, you know, you have your basic, like you have a futures trader, options trader, maybe a new-to-options trader, you of somebody who's never placed a stock trade before, all different kind of brands of people who are just trying to achieve something, and putting yourself in their shoes and really telling them and giving them the information that they need to build up the skills to be a good trader. I think what we're trying to do is we want to teach people how to trade brilliantly, and that's really what we're here to do. When I think of brilliant, I think of skillful, and I think that's what we're here, like build up those skills, whether they are somebody who's completely beginning or somebody who maybe is moving from being an options trader to a futures trader, trading a new product, trading a new feature on a platform, so it's really like taking those niche areas and covering them so people have that support.
Traders are very committed learners. When we look at the tenure of people who use our education offering, they've been with us a long time. So it's all about staying engaged with the markets, with the technology, with the different things that we release on the platform, and then there's always something new coming along, so we try to make sure there's coverage there for all of that.
Dr. Indre Viskontas:
Yeah. I mean, I think that that intuition is built over time through learning, right? It's not just, like if you're going to go in there just because you have a particular feeling, you're probably not going to do super well.
Lorraine Gavican-Kerr:
Yes, definitely true.
Dr. Indre Viskontas:
And so I'm really interested in how you think about building up that kind of learning that ultimately is going to be at least partly unconscious in terms of how it manifests.
Lorraine Gavican-Kerr:
Yeah, I think a lot of what we do is we set this kind of foundational knowledge base, which is a lot of the content where you go and read, or you take a course, you watch a video, so you're learning how something works, the mechanics, then you kind of have to make sure that you're not ready right then and there to go pull the trigger and place your first trade. You need to teach people what are the risks involved here, how does this operationalize when you place a trade as a self-directed trader on our platforms, and then I think one of the most important things is it's not just, "How do I start trading?" It's, "How do I manage that trade? When do I want to get out? When do I want to maybe stay in?" and then really rolling out of things when you need to, whether it's that you've taken a profit or maybe you just want to stop the damage if something is going against you.
So it's really just those eventualities, making sure that people have the skillset to be, I think, analytical themselves. A lot of that comes from planning. We really encourage people, "Have a trading plan, know what your risk tolerance is, how much you want to risk, be comfortable with that risk," and then making sure when they're using a tool on the platform, or the charting capabilities that we have, or new things that, you know, that Chesley's team releases, we really, really try to make sure that there's kind of almost a book of reference so that they understand how to do those things and they can self-serve a lot of that without having to make a phone call. These are busy people who want things at their fingertips, so we try and put things at their fingertips.
Dr. Indre Viskontas:
Yeah, it's really interesting when you think about the trajectory of learning a complex new skill, there is this first initial kind of explicit stage where you have to be deliberate conscious, like we think about declarative memory, the parts of the brain that are involved are the ones that really, you know, it's effortful, it requires your full attention, but as they get automated and you can see patterns that you hadn't seen before, it goes into a whole other learning system, implicit memory and non-declarative. And then there are times where the explicit memory system can actually interfere with that activity. So a classic example is that if you're learning to swing a tennis racket and then you start overthinking it and thinking about your elbow and your wrist, you actually are going to be worse than if you just weren't thinking about it at all. Is there a kind of component like that that you're talking about here in terms of when now you're in the midst of a trade and you start to overthink that actual particular decision? Like how do you get back into the-
Lorraine Gavican-Kerr:
Yeah, and I think that's why planning is so important so that when you set a goal and then set a plan for yourself, so when you come up against that, I guess I call it kind of internal maybe overthinking, that you can go back to your plan and say, "Okay, this was where I was at, this is what I was comfortable with. I'm going to stick with that."
And you can always adjust that over time, but I think being organized in that way can really help people. You know, a lot of people, if you don't do that, if you don't plan, you can go out and maybe see an opportunity that isn't such a great opportunity. You need to learn probabilities, you need to be able to look a little bit further down the line. So I think having a plan can help you course-correct, and then I think it becomes natural. You don't need to do that as much because you kind of, I won't say it's a feeling, I think it's a learned skill, I think trading is a lot about skill. So I think you develop those skills over time and just get better and better.
Dr. Indre Viskontas:
Yeah, so you are a skilled Irish dancer, which looks really hard to me, and yet it seems to be so effortless once you're skilled. Is there anything that you've learned from that kind of training?
Lorraine Gavican-Kerr:
but yeah, I mean, it was just part of my culture growing up that we did that. Yeah, definitely a lot of skill.
So yeah, I mean, I think it's all about building up time and maybe you watch somebody do something, which is what we do here with training, we teach people kind of over the shoulder of a coach doing it first, kind of a similar analogy with Irish dance, you watch the teacher do it and then, you know, "Try it. Well, you're not great. Keep trying it, you get better." You know, "Don't do it that way because you're going to fall." So I think that a lot of it just is trial and error and, again, it's practice and repetition. But you have to invest a lot of time as a trader. It takes a lot of time and energy and effort, and it's just part of the process. It's not all about just pulling the trigger, placing a trade, making money. It's about really having a definitive plan for what you want to do and executing in it. So there's a high element of skill involved.
Dr. Indre Viskontas:
Yeah, and it seems like trading conditions change frequently, and with new electronic trading coming into the marketplace, how do you make sure that you're keeping up and also telling the people that are using your platform when it's time to relearn a skill?
Lorraine Gavican-Kerr:
Well, the good news is our thinkorswim platform team is on top of all of that. So they really stay around the cutting edge of the industry when it comes to what we put forward. They put a lot of effort into seeing what's coming up, what we can do better, what we can improve in the platform.
I think that how we keep up with it, if we think back 20, even 15 years ago, access to tools like thinkorswim were very limited. They weren't widely accessible in the market. Market makers had the power in every kind of way, shape, and form. Now, what we've moved to is kind of this technology. The cost of commissions are accessible to the everyday investors, the everyday trader. So we've kind of put that power in their hands, and with power comes responsibility, and I think that we feel responsibilities to the people who are using our platforms, who are trading our products to make sure they understand how to do that from top to bottom, whether it's how the technology works, how to read something, learning charting, fundamental analysis, all of those different things. I think a lot of the effort that we do is to make sure that people have those tools accessible to them to get better over time.
Dr. Indre Viskontas:
You're also a basketball coach.
Lorraine Gavican-Kerr:
Yes.
Dr. Indre Viskontas:
And I remember one of the, this is seared into my brain, one of the mistakes that a coach that I had once made, was that I missed a bunch of baskets in a row and he pulled me out. And that was just devastating, and then after that, I probably, the rest of the season, I didn't play well, and that happens, I think, to traders all the time, where either the market forces change or they make a mistake or whatever and then they lose a lot of money. What advice would you give them, or how do you manage? Do you ever use your coaching skills to get people to-
Lorraine Gavican-Kerr:
Yeah, for sure. I think one of the things when I started off in this industry and got comfortable in kind of talking about options and complex products with clients was that it kind of bothered me when I would talk to somebody and they didn't understand it, so you'd go that extra mile to help understand the product, understand the strategy, what they were trying to do.
So yeah, I mean, I think there's an element in there. We just actually released something called Schwab Coaching, which really is something that we do where we have a coach that teaches on our platforms in live market conditions about the market, so how to enter a certain trade, what are we looking at to get in, what's our entry and exit points, what is our trajectory, what's our goal here. So it's really, so somebody before they're even trading for themselves on the platform, maybe they've got that foundational knowledge, but it's a different situation to learn all that information and then translate it in live market conditions when things are changing, as you said, so much. So that coaching offer really gives people the opportunity to look over the shoulder, have somebody watch them execute, manage a trade, and understand why we did it, what the thinking is, and then you kind of develop your own opinion of that. People can ask questions and kind of learn more.
So I think that's really important to have that handholding beyond just reading something in a textbook. People learn in different ways, and I think that just gives us that kind of interactive element that shows people, "Here's how you do it in real life." But yeah, I mean, I never take kids out for missing a shot. They stay in there till they make them. So that's what we try and do. We want traders to stay in here, we're going to help them make it.
Dr. Indre Viskontas:
Yeah, you're a good coach.
As you mentioned, people do learn differently, and there's a myth out there that people should be taught according to their learning style. Now, that feels very good because if you're primarily a visual learner, that it might be easier, it might be more comfortable for you to engage with material visually, but the scientific evidence really doesn't hold up that that is the most effective way for you to learn, because learning involves some element of discomfort. You have to get out of your comfort zone to actually benefit from learning. So is there a way that you can be both accessible to a large variety of learns and people whose brains are wired in different ways but still encourage people to be comfortable with discomfort so that they actually change?
Lorraine Gavican-Kerr:
Yeah, I mean, I agree. I think people like to learn in different ways. I think the end goal is going to be the same. I think it's more preferential than it is necessary. I think it gives people to learn in a way that you like is better, right? If we're in school and we're being taught a certain way, we get to the end goal, but it was like, "Oh, I didn't really like the way that was taught to me or the way I learned it," whereas if you do it in a way that's more, I guess, amenable to you and your personal style of preference, I like to read stuff rather than watch, other people are different, I think it just gives people an easier track to get to where they need to be.
So that's really what we're trying to do, is just kind of make that journey for people easier. At the end of the day, it's learning about the same things but just in the way that maybe resonates with them more, is more comfortable for them. But yeah, there's going to be discomfort with everything, and I think that's part of a learning trajectory, and we try to make it as easy as possible.
Dr. Indre Viskontas:
So I want to talk just briefly about this sort of teaching people when to exit and how not to have this sense that they missed out. Let's say you've got a coach who's working through... Do they ever talk about like, "Okay, now I've exited that particular stock and it's gone up, and I'm okay with that"? Like do they kind of explicitly talk about that?
Lorraine Gavican-Kerr:
Yeah. I mean, I think that's, again, we come back to the idea of having a plan for what you want to do. And it's tempting, right? When something gets to where your plan's set but it's still going and like, "Oh, maybe I'll stay in this for a little bit longer." The good news is there's ways to kind of guard against that. There's order entries that you can make that can kind of take advantage of some of those moves up, but like you're not going to... So I think it's about those skill sets to know, "Well, maybe I want to stay in this a little longer. I can adjust my plan." But I think it's important on both sides, right? If a trade is going up and you're making money, and on the flip side, if a trade is going down and you're losing, when do you get out, I think that having something in place that says, "This is where I said I want it to go, and I'm going stick to my plan here." And not everybody does that, and that's okay if you're comfortable with the risk of not doing it.
Dr. Indre Viskontas:
Yeah.
So what are you most excited about coming up in the next year or so?
Lorraine Gavican-Kerr:
Well, we've just launched Schwab Trading. I'm really, really excited about really helping people learn how to trade brilliantly. I think that's something that we are very committed to. The people who work behind the product and the experience are traders. They're super engaged, they love what we do. When we meet with clients, they tell us things. We go back and we talk about those things. We want to make them come to life, if they're good ideas, of course. But I think I'm most excited to start to kind of build this offer up to be even better than it is today, and I think there's a huge audience of younger people, of women who aren't fully engaged in the market that can take control of their finances and do more, and I'm really excited to see ways in which we can do that and continue to build and get better every day.
Dr. Indre Viskontas:
Well, Lorraine, thank you so much for coming on the show.
Lorraine Gavican-Kerr:
Thank you for having me.
Dr. Indre Viskontas:
And join us next time as we look inside the minds of brilliant traders.
