Repetition To Intuition
The following post is a reprint from June, 2008
The ultimate goal for traders is to get to the point where our intuition is contributing to the trading process. And to get to that point takes work.
The road to that point starts with repetition. It’s the same philosophy in the military for training soldiers in basic training. If you want an individual to be able to perform in a high stress environment, you attempt to simulate that environment, and then you make them execute the task at hand, or the plan, over and over and over again. The idea is to get them to go beyond memorization, to get completely out of their own head to where they are not even thinking about what they are doing; they are just doing. Once they are physically executing the plan with speed and ease with little if any mental input, they are ready to go live. Once they survive, and go on to have successful live experiences, and start to approach the same levels of speed and ease in an actual stressful environment as they did in the simulator, then they are in a position where they’re intuition can contribute. They can make the connection that the sound around the corner is the footfall of a boot, or a loafer, and react accordingly; while the person lacking training, or still caught up in thinking, is not even sure if there was a noise or not.
Well it is the same thing in trading. It starts with back-testing to understanding the signals. Then it evolves to demo trading on different time frames where for long-term trading you don’t consider fundamental news releases, and for short-term you do. Then it evolves from taking every signal to passing on certain signals because of timing, or trend stance. You know were the trend-lines are because you placed them yourself. You know where the previous highs and lows and Pivot Points are because you know their colors. And you recognize dojis and hammers and inside bars and change-of-direction candles the instant they close and you know what they mean in the context of the current and previous trends. And you know the current momentum, and you know when the next significant news release is coming out, and you know there is absolutely nothing for you to do till the candle closes, and you know exactly what you are going to do, depending on where it closes. At that point you are still demo trading but you are starting to glimpse your potential, and you know you can’t rush it because that would not be showing patience. You concentrate on not missing trend triggers and avoiding questionable counter-trend triggers because you need to know what your win/loss and risk/reward ratios are going to be over time. You need this information because you know that the only way to subconsciously believe you can succeed at trading is to do it yourself in a demo account.
Then you have to replicate that same process in a live account with your hard earned money, and succeed at it. Then, over time your intuition may bud like a plant. And that is where we want to be going.
Jay Norris is the author of Mastering the Currency Market, McGraw-Hill, 2009 and a Trading Instructor at Trading-U.com. To schedule a complimentary, interactive tutorial with Jay on determining market direction and hear more about “Live Market Exercise” go to One on One Tutorial
DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. Risks include the potential that changing political/economic conditions may substantially affect the price/liquidity of a currency. Investors may lose all or more than their original investments.
Even the best indicators will give conflicting results , eg.,
A perfect bullish candle set-up will go opposite direction . How do you use intuition– I thought this thing was based on something more sound and substantial.
Replicating your trades in the Demo account and looking at previous successful trades is very important to making profits from trading. To be in control of your own chart set up and studies therein is an excellent start.
I personally will always trade with the trend. Eg. If the weekly trend is Bullish and so it the Daily, then I will attempt to go Day-trade on the Long side on the smaller time frames like the 15 or 5 minutes. If a trade does go wrong it is only because I have not got the timing right, or I have entered a trade when the price is on an opposing trend line; or I have bought on a previous high, etc. However, I will never feel guilty, or like a failure, if my trade goes wrong while I am trading in the Trend direction. More often than not it’s a successful trade.
Hello HR,
Even the most sound signals can go wrong, if and when they do aim to exit at breakeven if at all possible. Remain defensive as trading is about protecting your assets first and foremost. But I understand where you are coming from when ‘perfect’ signals can slip through the net. Keep positive in the trading game by praising your efforts – it works for me.
Hi HR,
Good Point. You had better have a sound, fact based method FIRST. Intuition in the short run will help you determine which method is best for you, and in the long run will help you in trade selection and in picking out that one occurence you may have missed in your initlal analysis.
Great article.