Intuition in Trading
Why, when it seems to you that you need to buy and you buy, the price goes down, and when you feel that you need to sell, but still you do not open an order, does the price immediately and strongly go down? Sod's Law? What to do with an inner voice? Tell him to shut up or listen to his opinion?
In various sources, you can often find completely opposite opinions about the role trading intuition. Someone says that only a systematic approach can bring success, someone, on the contrary, claims that without the “sixth sense” it is impossible to achieve significant results.
Who is right? I have been interested in this issue for quite some time and the most adequate conclusion: “Intuition should be used, but only after you gain experience in more or less successful trading within a year or two.»
Well, think for yourself: how can a person who does not have experience as a builder take a look at the house and immediately understand that “something is wrong” with him? No way. It’s just that the person does not have enough experience, he is too poorly familiar with the subject to make any judgments.
There is a wonderful book by Malcolm Gladwell that is called Illumination. There, the Theory of Thin Sections, which we call Intuition, is described in great detail. I advise you to read.
So how do you apply intuition in trading? The answer is simple -
First, gain experience by trading on a mechanical system, without using any judgments of the type “I feel, let’s fall!”. And only then, when an inspiration visits you, be sure to check it with the help of technical analysis. Having found confirmation of his intuitive guess, you can already perform some action.
In general, even a book has been written on this topic, it is called "Trading based on intuition." It was written by one of the “Turtles”, Curtis Feis (his previous book can be downloaded in the article Literature for the trader). In this book there is not much information specifically on the application of intuition, but there are a couple of practical thoughts.
In particular, I liked one idea, I even wrote it out:
The less fear, the better intuition works.
Perhaps this is the reason why it is so easy to earn thousands of dollars on a demo account and so difficult on a real one. Trading on a demo, we release the full potential of our brain, because nothing fetters our freedom, because the money is virtual and it's not scary to lose it.
Do you use intuition in your trading? And if so, how?