The Risk of Trading: Mastering the Most Important Element in Financial Speculation

INTUITION TRADING

Intuition Trading Style of trading that is dependent on what the trader believes will happen rather than relying on pure, data-driven, statistical decision making.

There should never be a point in your trading when a decision is made without the use of statistical edge as the primary decision factor. It should not matter if you feel lucky or unlucky. Nor should you be concerned if the setup is occurring after three previously successful trades or in the midst of a dismal losing streak. After several years of trading, I still rarely use my intuition about a trade. Measuring trades where I opted to use my intuition rather than historical data often proved victory on the data side, at least over a period of time. I still use intuition on occasion. After all, I'm a human trying to trade like a robot, not a robot trying to trade like a robot. In the end, there may be a spot for intuition to be a part of your trade executions. A viable solution is perhaps a hybrid, having intuition with the backing of some form of statistical data or some other factual information. Intuition is used more often in my corporate risk management side, since the human element is more of a factor. The best poker players will often consider intuition in their risk-based decision. Coaches in sports often look to their stomach during pressure situations. They may call it intuition, but there probably is some form of past experience that is giving them that stomach pulse. Tracking your ...