No Guts, More Glory
Ignore Your Feelings and Trade With Intent
Thus, this article aims to calm your gut feelings. Consider this your "trading Yakult"...
Gut feeling, instinct, hunch, premonition, inkling, vibe, spidey sense...This feeling, like the devil, goes by many names. Depending on how your brain is wired, it's felt in the abdomen, chest, head, skin, neck, shoulders, pee-pee, wee-wee, pee-wee, womb, or testicular sac. By all accounts, Scottish songbird Marti Pellow feels it in his fingers. And, sometimes, toes.
This miracle of the human mind, intuition, is the ability to understand something without logical reasoning and offer instant insights...and it's more dangerous than flip-flops for traders.
Intuition, as Carl Jung described in Psychological Types, is a form of perceiving that goes beyond conscious logic, allowing us to tap into unconscious patterns. Intuition grasps complex situations or insights rapidly in ways that are often hard to articulate. Daniel Kahneman, in Thinking, Fast and Slow, distinguishes between two modes of thinking: System 1 (fast, intuitive) and System 2 (slow, deliberate). Whilst intuition can be a powerful tool, Daniel warns that it is error-prone.
Watching a football match, you might sense a goal before it happens—detecting a shift in momentum or some chemistry forming between players. For instance, when Kev De Bruyne makes a sweet-as-a-mango pass to Haaland, you "know" the Norse god is about to thunderfuck the net. But hang on.
Intuition isn't foolproof—it has a margin for error. Since it's based on pattern recognition, intuition can misinterpret situations or miss new variables. As Daniel Kahneman wrote, emphasising the superiority of data over human intuition, "Algorithms beat individuals about half the time. And they match individuals about half the time." However, intuitions often mislead because they come to us, one by one, with considerable confidence, like Jehovah's Witnesses.
But confidence, in general, is a poor cue to accuracy. As stated, intuition is a mental miracle. A cognitive function that allows us to make quick, effective(ish) decisions under pressure, it thrives in scenarios where immediate action is essential and there's no time to fanny around with thinking. In these moments, intuition taps into deep reservoirs of past experience, enabling responses that feel instinctive, correct, almost divine. Footballers and referees, therefore, need to use their intuition. But traders watching the game definitely do not.
We have the luxury of time—the time to create a plan based on solid data and reasoning, considering all the variables and how we will react to them. With a little malice aforethought and a trade roadmap, we shift from being market cannon fodder into traders who advance on markets with the strategic might of Napoleon Bonaparte.
