How important is Intuition in Trading?

Trading Discussion
1

Hello Everyone

While I was thinking to ask a question on the subject topic with the BP Community, but before doing so, I tried to search the word “Intuition” on BP Community Search Bar and found almost 50 results.

I read the following three threads and found them to be included in my post for reference purpose:

I also googled “Intuition in trading” and got a good article with reference to my search which may be read here Does Trading With Intuition Make Your A Better Trader?

I would be pleased to hear from BP Community on the following questions:

  1. Does intuition play a role in Trading?

  2. Have your ever experienced it in your trading?

  3. What is your opinion on the aforementioned article?

Regards

2

  1. No

  2. No

  3. N/A

This post must be at least 20 characters long but I can’t think of another damn thing to say.

3

Thanks @tommor for your views to my questions. But you mentioned “N/A” against the question # 3. Have you read the Article or not?

4

I had a gut feeling I wouldn’t like it.

5

Ok bro … I respect your opinion. But it would be a better and wise able approach if you would have read the article first and then commented on it.

However you have confirmed in your recent post that you believe on gut feeling (intuition). Perhaps your gut feeling is wrong and you would like it.

6

I assume trading with intuition will involve an element of luck. But isnt this what we traders try to minimize by picking trades with precise mehtods and systems with money management, which if done properly, will turn you profitable in the end no matter how unlucky run you are having? why would you rely on luck when you can rely on ? logic and maths?

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7

Ok so what do we mean by “Intuition” ?

Have you ever “felt” you were being watched ? and found out later that you were ? Is that "Intuition " ?

What about driving your car ? I drove light haiulage for a living once and drove for around three hours as part of a trip - afterwards - I had travelled around 200 miles on a road I was fairly familiar with, but did not remember a single thing about those three hours or that part of teh journey - was that me driving on “Intuition” ? - or was it simply my subconscious taking control (Right brain) as opposed to the reasoning part (Left Brain) When we start to drive, it is very hard - all those things you have to do and check and watch - but after many years, you get in the car and just go where you wanted to go. No real effort or "Thought " involved.

Nowadays I can look at my favourite chart and just “know” where it is going (Direction wise) - That is a major part of my trading and it irritates the hell out of my little mate who has all sorts of ADXs and RSIs and MAs - He can have 2-3 trades a week and is generally correct, but takes a few tens of pips. I can only trade when “I feel it” and sometimes emotion is screaming “NO<NO< NO !” when I get in. THAT is really hard to do !

BUT I don’t get that many bets - I can look at the chart and have no idea whether it will go up or down, so I have to stand aside. Meanwhile my little mate has a trade or two and makes money on them ! When I do get a trade I usually can take a hundred or more, but I am ALWAYS “In too soon and Out too soon”.

“Intuition” for example tells me that GBPUSD is going to 1.5000 and probably1.6000 or higher :grin:

Can I trade it ? - Nope ! because I have no idea when (Most likely it will be Years and years), or whether it will retrace the last 6 months or so and “Double Bottom” first, or it may just go straight there ! - I have no idea where to place my stop.

Here is an example of what I mean ;

https://forums.babypips.com/t/bitcoin-to-fall-off-cliff/117389

When I started that thread BTC was approaching 6000 from below and we all know what has happened since ! - So I would have been “short” way too early and would have been stopped out at any sensible level of stop. However in mitigation I would point out that there was no previous history attached to this particular “Tulip” :laughing:

So how much of anything is “intuition” and how much is “Experience” - is hard to say.

So back to my question ;

"…Have you ever “felt” you were being watched ? and found out later that you were ? Is that “Intuition " ?..”

Now go and think hard "Have you ever felt you were “Being watched” and later found that you were not ?

  • You simply don’t remember those times when “Intuition” does NOT come to fruition ! So you tend to develop a faith in “Intuition” which is probably unfounded :slight_smile:
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8

No more “Luck” than" logic and maths" (arithmetic) - imo - left brain is really very poor at decision making - “Right Brain”, properly schooled will change your life ! :wink:

But “trading with intuition” as a novice WILL destroy your account - because “Intuition and Emotion” are pretty much indistinguishable until you have a Lot of experience.

TRY it 1 - open 5 minute bars any chart and without any indicators at all - try to “Beat the market” - See how you can get 10 out of ten bets completely WRONG ! - but that is not “Intuition” that is “emotion” - the market is VERY Good at “emotion”

9

@frazali32 How did you know that I rely on luck? Have I mentioned anything about my assumption in my post?[quote=“Falstaff, post:8, topic:146095”]

But “trading with intuition” as a novice WILL destroy your account - because “Intuition and Emotion” are pretty much indistinguishable until you have a Lot of experience.
[/quote]

@Falstaff Yes you are right and this is what the author emphasized in his article.

This is what has been explained in the article:

You see, when you are trading, there are so many voices demanding your attention. Your mind is constantly bombarding you with so many different thoughts every single minute.

And in the context of all this, intuition is also there and intuition is the one with the smallest voice!

What I know is that intuition is very subtle.

Those other voices and noise in your head can easily drown it out and you really have a very limited time opportunity to listen to it and follow it or you don’t.

Only later, when you stuff up and then you say to yourself ” I knew I shouldn’t gave got into this trade!!!”

Too late…

10

@anon58863749 i am sorry i didn’t mean to imply that.

11

Thanks @Falstaff for a lengthy reply to my simple three questions.

In General term, intuition is called “Gut Feeling” or “Sixth Sense”[quote=“Falstaff, post:7, topic:146095”]
So back to my question ;

"…Have you ever “felt” you were being watched ? and found out later that you were ? Is that “Intuition " ?..”
[/quote]

Yes … It is.

Yes … it is too. [quote=“Falstaff, post:7, topic:146095”]
You simply don’t remember those times when “Intuition” does NOT come to fruition ! So you tend to develop a faith in “Intuition” which is probably unfounded :slight_smile:
[/quote]

I again quote here from the article:

So what is the purpose of intuition? I think it exists to :

1- protect you
2- make you succeed

As I said, I’m not an expert in this thing…I’m just saying based on my experiences.

Have you read stories about people not jumping in a car or a plane or a train because they have this gut feel or instinct not to jump in?

Later they hear that the plane, train, car etc that they were supposed to jump in crashed and there were people who got injured and some died?

That’s an example of how intuition protects you.

This is what the author explains in his article

Does intuition work all the time in every trade execution you take? No.

Intuition is not like a light bulb switch that you can easily switch on every time you want to trade. Unfortunately, it doesn’t work that way.

Now, here’s one thing I have learnt, this may not be necessarily intuition but I think it comes pretty close.

Its called FIRST IMPRESSIONS.

Whatever your first impression about something is usually right.

In the context of forex trading, this is how it works: when I open up a forex chart, any timeframe, just a normal naked candlestick chart with no indicators or lines or trendlines drawn a I look at the price and my first impression is that price is going to go down (for example).

But then I begin to draw trendlines and perform my technical analysis on that chart and I spot a buy opportunity instead of a sell.

I execute a buy trade instead of a sell trade. Guess what happens? That buy trade loses. If I had sold, I would have made money.

First impression counts.

Its almost like you meeting someone for the first time and within a few seconds you either like that person or you don’t. That’s the same kind of thing here.

My first impressions about what direction a currency pair is going to take when I open a chart is pretty accurate but its only when I start over analyzing that I stuff things up.

So how do you develop intuition in trading if you have some experiences of trading with intuition?

That is hard question to answer. The only thing I can say is “follow your gut”. In other words, follow your instincts.

12

I thought everyone is putting his thoughts/views without reading the article to which I asked the question # 3. Perhaps they don’t have much time to read it or they assume it not worthy to be read.

However, I try to quote some extract from the article so that you people get acquaintance of it:

Trading With Intuition is an exciting subject on its own but is a topic you wont read much about in forex websites or forex blogs.

The way I see it, when it comes to intuition, you either have it or you don’t.

WHAT IS INTUITION: DEFINITION

Intuition is a gut feel. You may call it the 6th sense. It is a process where you have the ability to know something directly without analytic reasoning or without the need for conscious reasoning.

Call it instincts if you may. It is something that ” you just know it.”

How?

I don’t know…you just know it.

THERE’S ONE THING NO TRADING BOOKS CAN NEVER TEACH YOU

Intuition in trading.

You cannot learn that from reading a forex blog or buying and reading self help forex books. Intuition is developed. Which means I can write about my experience but it kinda sucks because there are no steps or process that a trader can follow to develop intuition in trading.

You have it or you don’t.

So is intuition the most important thing in trading?

Nope…proper trading mindset and risk management is the most important thing.

You will still make money even if you don’t have intuition at all because trading is all about following rules.

But trading with intuition does help.

Do I Always Follow My Instincts/Intuition In Forex Trading?

Unfortunately no.

There are so many times when I feel I should not buy or sell but I go ahead and do it anyway and I get burnt each time I refuse to follow my gut feel, my instincts.

Can Intuition Make You A Better Forex Trader?

Based on my experiences, the answer is yes.

There’s a “but” coming….

BUT, intuition is totally useless if you do not have the discipline with forex money management. You can be the best intuitive trader but if you lack money management, what good does trading with intuition going to do to you?Nothing!

How To Develop &Use Intuition In Forex Trading?

If you don’t have it, don’t stress too much about it. But if you think you have a tiny bit of it then that’s good because now you really need listen to your intuition, your gut feel, your instinct.

The more you listen to it, the more it grows. That’s what I think anyway. If you know you have it, you need to learn to “listen” to it and use it.

Summary

Trading intuitively is not for everyone. Some of you will have it, some of you wont. Trading with intuition is not necessary for trading forex successfully but it does help for those that have it.

After reading this article and you realize that you do have some experiences of trading with intuition, then remember to listen to it more because in forex trading, anything that helps to make you a better trader towards achieving your goals in trading has its weight in gold.

14

No problem … @frazali32 no need to say sorry.

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15

Intuition imo is a vital ingredient. I don’t like to think of trading as a rigid inflexible science, it is an art form. We all think we will become great traders if we follow a great inflexible rules based system but I don’t believe that is possible. You can have guide lines but they must be bendy to allow for your intuition to have some input.

I read a book a while ago can’t remember if it was Pit Bull, Market Wizards or Jay Norris, but it was a factual story about trading in the Chicago pits. A newbie trader joined the pits and he held an empty can to his ear during the trading day, traders would laugh at him, when asked why he was doing so he said that extra terrestrials would give him instructions on whether to buy or sell that day. He was a laughing stock but he became one of the great successful traders of his era. He became successful because when he was told to buy and he bought and price went the wrong way he cut his trade early. When he was told to buy and price went his way he held on too his trade…True story and no charts, setups, patterns involved.

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16

Strong discussion… It really depends on the kind of trading you do. Highly leveraged speculative instruments like currency, may require more guessing than real ideas, the information flow is so dense that building robust theories and models is tricky. A lot of those interested in robotic trading (use of Algos) or machine learning, will say screw intuition. If you are still adamant that humans rule, then you will say yes, it is especially if you have to guess positions.

If you are a stock market investor, then you are constructing plays and looking for value where others think not. This is less intuitive and more about proving your play. You can call this a nose for investing but in the end it is a different type of trade. Either way intuition could be a good starting point but not a pre-requisite in today’s algorithmic heaven.

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17

That would be Norris - I don’t remember reading that that anywhere - so I think it must be him I think.

[Edit - although Buzzy Schwartz did have some rather esoteric trading methods - taking recommends from Bob Prechter and using his “Magic T” indicator.

Note also that he went completely “Bust” several times before his wife took some control and his “Intuition” developed]

18

I have no experience trading based on intuition, or using unconscious sense, to predict movement ahead, but if there are some trader that having opinion if intuition has role on trading maybe they trust with their intuition, might already figured on their minds, if they can working with intuition, but I think also still not always intuition become true

19

Sadly that is very true. - We make judgements far too easily and without proper understanding or research. Mostly we (you) never give the “person” you judged so glibly an opportunity to demonstrate their attributes and potentials - But you will never know that you just rejected someone who could have profoundly changed your life for the better !

This is something the “Propagandists” capitalise on in an age where short attention spans and “Black and white” decisions are dominant, to the exclusion of real thinking.

Look to the “Man made Carbon Dioxide is causing Global Warming” issue - sounds plausible and is very heavily promoted by a whole industry. - Despite the fact that if you actually bother to think about it and do proper research with a critical mind, that it is clearly falacious nonsense.

[Edit - that’s one which is worth a big short - IF you can find a way of doing it ! :wink:]

20

That is not “Intuition” - simply a refusal to take responsibility for your own decisions. - You need to reject entirely that way of thinking. We make decisions on the basis of incomplete information. those decisions are Right, or wrong, or “Partially right” - Now take responsibility for them ! Feeling bad about a single trade is just counter-productive. All you have to do is get more right (in terms of total “return”) than you get wrong !

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21

Intuition: the ability to understand something instinctively, without the need for conscious reasoning.

I believe yes in answer to question 1 and that the intuition comes in two forms; talent and/or experience (screen time). Price Action and Technical Analysis are very subjective. That is not to say that research and statics are not important, but at the end of the day the good sense of the trader determines the outcome.

You can analogise that with almost anything, there is a difference between knowing how to do something and actually being able to deliver it.

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