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.
This is not a “how to develop intuition in trading” post because that’s beyond my expertise. What this article is about is sharing some of my experiences regarding trading with intuition so that you can see how intuition can help you in forex trading.
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.”
I don’t know…you just know it.
So what is the purpose of intuition? I think it exists to :
- protect you
- 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.
Or have you read stories where a person had to make a choice on how to invest his money on something, say a business or investment opportunity and there were a few good options that look REALLY ATTRACTIVE but he chose one option that didn’t look good at first but he had this “gut feel” about it that it was the right choice?
Turns out later, that guy made the right choice. His investment was successful and he made a lot money on that. And those other investors that invested their money those other attractive options didn’t succeed at all.
That’s an example of how intuition makes you succeed.
Here’s How Intuition Works in Forex Trading
- There will be times when I’m trading that I just know I should exit a trade.
- There will also be times when I look a trade setup and I just know I should buy or sell that trade setup.
- there will be times when I’m looking at a trading setup and I just know I shouldn’t buy or sell even though the setup looks good.
- There will be times when I’m trading that my profits will be like $1,500 or more and I just know I have to take the profits and exit the trade.
Now, here’s an interesting thing: every time I’ve refused to do what ” I just know” is the right thing to do at that moment, things have turned into “disaster”.
If you are forex trader that have recently started trading forex, this may not be the subject you’d be interested about.
You wouldn’t have the “experience” in forex trading to know what I’m writing about.
If you have been trading forex for a few years and have had your ups and downs, you’d most likely understand what you are going to read in here.
I’m pretty sure, there have been times in the past where you had an impression or a thought cross your mind to do or not to something and you’ve seen the result of not following that or the result of obeying that.
EXAMPLE OF INTUITION AT WORK (OUTSIDE OF TRADING)
There was this young pretty woman, she jumped into a bus to travel. As she was sitting in her seat in the bus, she just had this very strong feeling or impression to move to another seat. She just knew she had to move to another seat.
But she didn’t. She just sat there.
Then it happened for the 2nd time. Why should I move to another seat…I’m already sitting ok here, she thought. Her mind was fighting against her intuition.
Then the third time it happened, it was so strong, it was as if someone was telling her to”MOVE NOW!” The impression was so strong so she left her seat and found a different seat on the bus away from where she sat.
Soon after that, on the next bus stop, the bus stopped to pick up passengers and one of the passengers was a man and he took the seat where that young woman was sitting initially.
That man pulled out a knife and pushed it against the male passenger sitting next to him and demanded wallet, money, watch etc.
If that young woman was sitting on her previous seat, that man would have sat next to her and she would have been the one that was going to be held up with a knife pressed against her stomach or neck and she wouldn’t have a clue on how to handle that situation.
The outcome of that would have been terrible. She would have got injured or got things stolen from her.
I know what she would have done though…she would have pissed her undie 🙂 and totally paralyzed with fear.
Joke aside, this story gets interesting…
Before that young woman left her seat, there was another man sitting next to her. This man was not an ordinary passenger as you will read below.
That man was an off duty policeman who was very well trained to handled such situations.
Using his training, he disarmed the man very quickly and on the next stop, he was taken to the police cell by the off duty policeman.
That young woman now happens to be my wife.
Here’s another one…
When I was a young boy, one day I met this old man about 70 years old or something like that. I’ve just met him for less than a minute, and I haven’t even told him where I was from. He just looked at me and said, ” You are from that place, aren’t you?”
He never knew me before, he hasn’t even set foot on the place were I was from and yet he knew where I was from. It was nothing to do with my face, my accent or anything of that sort that could give me away as to where I was from.
I was so surprised I asked him ” How did you know that?!”
He just looked at me with a tiny smile on his face and did not answer.
How do these things happen? I just don’t know. It just happens when it needs to happen, I guess.
Intuition makes you “feel” things or situation without any logical explanation or reason. It is only after that you know the reason(s) why you felt that way because now you can see the result(s).
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.
For those that don’t have it, I think that its not that you don’t really have it.
It is just that you have not learnt to know what it is or cannot tell the difference with so many things going on in your mind.
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.
An Example Of Trading With Intuition
I remember one sell trade I took years ago very clearly and that sort of stuck with me very clearly even to this day. I can’t remember what currency pair it was but it was going down like crazy!
I was short (sell trade) so I was really killing it. My profit was up thousands of dollars.
When I opened my charts to check that trade, I just knew I had to get out of the trade FAST! The temptation was there to ” keep hold on and wait for bit more profits” because price didn’t show any signs of slowing down.
But I listened to what my “gut feel” was telling me. I took my profits and bailed out.
Guess what happened next?
The very price level where I exited the trade, price made U-TURN and reversed from there all the way up!
If I had waited, it would have eaten most of the profits that I have made in that trade as price was moving down.
Here’s the interesting thing about that trade:
- there were no support levels or trend lines providing support or it wasn’t a Fibonacci retracement level to cause price to reverse and head back up.
- there was no major news etc to impact the change in price direction.
- It just reversed up from that level for whatever reason.
I got out exactly at the very bottom of that price move because I just knew I had to get out. There was nothing to indicate to me that the price was going to reverse from there.
None at all.
And also there will be times when I don’t feel right about trading a trade setup but I would trade it anyway and when it turns into a loss later, I would say to myself ” I knew I shouldn’t have taken that trade.”
That’s intuition trying to protect me but my refusal to listen caused me to lose.
That’s what trading with intuition is all about. Do I trade all the time like this?
Do I Always Follow My Instincts/Intuition In Forex Trading?
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.
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!!!”
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.
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.
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.
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Intuition basically a subconscious process. Our subconscious mind sees and senses everything and knows a lot more than our conscious mind. I definetely use intuition in order to avoid bad trades even though all rules are met in my strategy. Unfortunetly I can’t risk it vice versa because I can’t tell if I’m being greedy and I want to believe that price goes in my way or my subconscious mind saying to me: ” okay buddy, I know it’s not the best setup but you have enough experience to tell it will go down/up”
Very interesting article, thank you!
thanks for commenting. You hit the nail on the head with the mention on the “subconscious process”.