In our everyday language, we use the terms skill and ability as synonyms for each other. But most people are not aware that they are not synonyms, and even fewer people can name the specific difference.
For learning, and therefore for learning trading, these two terms play a major role. The importance is so great for us as a training company that we want to provide clarification at this point.
In this blog post, you will learn what the competence concept is, what the difference between a skill and an ability is, and - most importantly - what this has to do with your learning success in trading.
What does competence (the competence concept) mean?
"Competence can be defined as skills and abilities to meet a complex need or to perform a complex task or to cope with a complex task on one's own and to be able to act."
Franz E. Weinert defined competencies in 2001 as "the cognitive abilities and skills available to or learned by individuals to solve specific problems, as well as the associated motivational, volitional, and social attitudes and abilities to successfully and responsibly use problem solutions in variable situations."
So what exactly does that mean?
On the one hand, competence explicitly refers to being able to solve specific problems and not just accumulating "pure" knowledge. In this context, knowledge is often distinguished between inert/pure and intelligent knowledge.
Inert knowledge is defined as "non-transferable, short-term acquisition and use, no cross-connections to other areas", and intelligent knowledge is defined as "transferable, long-term perspective, networking of other areas in horizontal and vertical directions".
On the other hand, the triad of knowledge, attitudes, and skills is described. This means that a competence always consists of three components. The competence concept thus combines knowledge (cognitive abilities) with skills (i.e., the ability to handle and shape) and values and attitudes.](https://dbs-lin.ruhr-uni-bochum.de/lehreladen/planung-durchfuehrung-kompetenzorientierter-lehre/kompetenz-pruefen/kompetenzbeurteilung/)
Wherever people solve situational problems, they use their knowledge (cognitive abilities) to shape their actions (skills) and this is always guided by values (attitudes, beliefs -> English: mindset). This also leads to the following equation:
- Competence = Knowledge + Ability + Action
- Competence = Active handling of knowledge
- Competencies are learned in action and demonstrated in action.
What the competence concept has to do with trading education
The competence concept is of great importance for educational science because it shows how an education must be structured. It is therefore not sufficient to convey only one or two of these components. For a sustainable and well-founded transmission of a competence, the triad of the three components is essential.
And this is precisely where we come in. Just like schools or universities, we must also incorporate these findings from science into our concepts and philosophy to ensure the best possible learning success for our students. We must ensure that all three components of the competence concept are present in an appropriate form. Because ultimately, the potential success of the students and the quality of the education derive from this.
In the short definition, competencies are "(...) available skills and abilities to solve certain problems and to be able to successfully use the problem solutions in variable situations".
Especially the last part of the definition makes it clear why competencies play a big role in learning trading. In trading, it is essentially about being able to make situational decisions and to include experiences in current decision-making. Knowledge is a basic requirement for trading, as is technical application. Similarly, the head and psychology also play an important role. But no successful trader has only one of these three components. Successful traders achieve pronounced performance in all three disciplines at the same time.
How our trading education conveys competencies
With these insights in mind, it makes sense how we have structured and organized our educational content.
- Cognitive abilities (Knowledge): Trading knowledge is made available to each student in the form of self-learning videos. We have made sure that it is perfectly structured, didactically built on each other, and the individual topic areas are explained to the point. After each topic area, the conveyed knowledge is reinforced with challenging quizzes to achieve maximum learning success for each student.
-Skills (Ability): The saying "Learning by Doing" is not without reason. Skills have to be learned, and consequently the competencies as such. In the context of our trading education, we place a great emphasis on this part of competence transmission. We encourage each participant to practice intensively and share about chart analysis with the community. By sharing the results, the WirmachenTrader team and all other members of the community can give feedback and tips. Thus, we have initiated a continuous improvement process that helps all involved to become better.
-Values (Action): One of the most difficult challenges in trading remains one's own head. Many aspiring traders struggle with this component over and over again. They master the other two disciplines perfectly, but simply cannot align their inner attitude and mindset with trading success. We are aware of this problem. It is also our great strength to convey the right trading mindset. In our webinars, we specifically address this topic. We teach the psychology of market participants, we show and point out the most common thinking errors, and we give our students solutions and help to perfectly master this third component.