Most top players agree that you must watch the approaching ball.  Then as you contact the ball, you must focus your attention on your opponent’s racket.  By watching the incoming ball, you will be able to make the last second adjustments.   Then, by watching your opponent’s racket, you will have a good idea of what stroke he will be using and where he generally intends to hit (even prior to him hitting the ball).  These concepts are very basic.
 

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The difficult concept comes into play when you need to multi-task.  As the ball is approaching, you need to LOOK AT the ball specifically while SEEING your opponent in the distance from your peripheral vision.  For example…    Just as you are about to hit to your opponent’s backhand, you see a subtle step around where your opponent wants to use his forehand from the backhand side.  Instead of merely hitting to the backhand, you quickly change and play to the open court, the wide forehand.  By LOOKING AT the ball, you can be precise with your hit.  While SEEING your opponent in the background, you can have a good idea of WHERE to hit.
 
So how can you practice this skill of LOOKING AT THE BALL while SEEING YOUR OPPONENT?
 
This type of practice can be simple or complex.  I’ll give you 2 simple drills.
 
Drill #1
Ask your training partner to serve short no-spin to your backhand.  Next, have him move to a position – in the center of the table, wide to the backhand, wide to the forehand, crowding the table, or far from the table.  Watch the ball specifically and don’t take your eyes off the ball, flip the ball according to where your opponent is at.  If he steps around, usually flip to the wide forehand.  If he is in the center, usually flip to the transition point, if he is very close, usually flip to his body.  Without taking your eyes off the ball, see your opponent and flip to the correct location.
 
Drill #2
Ask your training partner to play slow backhand rallies.  After about 3-5 balls, have your training partner surprise you with a step-around forehand.  If you see him step around prior to your contact point, then suddenly surprise him to the wide forehand. 
 
Even after perfecting this skill, your game will be the same.  Your loop and spin and power won’t change at all.  The difference is in YOUR OPPONENT.  By perfecting this skill, you can constantly put your opponent off balance and place the ball in an awkward position for him.  And THAT is exactly your goal for the match – your goal is to control the table by making your opponent uncomfortable and inconsistent!