Calling all traders who "get it"

This is a discussion on Calling all traders who "get it" within the General Trading Chat forums, part of the Reception category; Originally Posted by David Knight Just for balance.. If you don't stick to your stop. Is that a discretionary decision? ...

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Old Feb 14, 2018, 11:51am   #25
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Quote:
Originally Posted by David Knight View Post

Just for balance..

If you don't stick to your stop. Is that a discretionary decision?

In other words, are you making discretionary decisions about all sorts of things all the time without realising/acknowledging it?

Is it a discretionary decision to be reading this during the trading session?...or not to be?
Hi David

Yes, I think you're right, we all use discretion all the time (even in bending our trading rules sometimes ). I suppose every choice we make all through the day uses some form of discretion.

I remember asking various experienced traders years ago questions like "why didn't you take that set-up, it met all the criteria you look for in a trade?" only to be answered with "mmm, well, it just didn't look/feel right to me".

As a beginner, answers like that can be very frustrating as you grapple with trying to formulate a plan, but later on, as experience increases, it makes more sense. This must be because our intuition improves with experience.

Even discretionary traders who hate words like "intuition" and "sub-conscious", must be using using their intuition all the time. So I agree, we are using it without realising it most of the time.

I suppose we do have some control over how much of the trading process we trust to our intuition and how much we stick to hard-and-fast rules, never to be broken, like:
- I never hold a trade over the weekend
- I never trade such-and-such instrument
- I never trade without a stop.

Maybe this whole trading experience is a process of finding a balance between using rules and using intuition, a balance that suits our particular temperament? For some it might be discretion in all decisions, including exit, for others it might be using discretion only for the exit...
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Old Feb 14, 2018, 12:00pm   #26
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Originally Posted by piphoe View Post
Is what you're asking this: Is it possible to trade profitably with an intuitive entry but a definite and arbitrary SL & target (50,100)??

I ask this in response: If we trust our entry to intuition, why wouldn't we we trust our exits too??
I have been thinking about your question since yesterday. Why not indeed?

Mmmm, it got me in a pickle to be honest, but thanks for posting it, this is just the sort of stuff I need to be challenged on to get clearer in my trading (& life!)

Eventually I came up with this answer:

Assuming that trading with rules is less stressful than trading with discretion, but discretionary trading is where my edge (& therefore profit) is. Then, using intuition for the least stressful decision (entry) and rules for the most stressful (exit) creates a balanced trading plan that suits my temperament, that is both profitable and low-stress.

Using intuition for exits too is obviously a lot cooler though and a whole lot less boring!
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Old Feb 14, 2018, 12:52pm   #27
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Originally Posted by jm1054 View Post
.............I suppose we do have some control over how much of the trading process we trust to our intuition and how much we stick to hard-and-fast rules, never to be broken, like:
- I never hold a trade over the weekend
- I never trade such-and-such instrument
- I never trade without a stop............

This is good. I find sometimes a rule makes more sense if the writer's motivation is -

"because other writers write rules and the publisher said I had to as well"
"because other writers have got a rule on this subject and if I don't have one I'll look like a lightweight"
"so that the new rule will differentiate me from other writers' similar rules"
"so as not to look silly with a reckless rule for a high-risk strategy"
"so that I'll be quoted lots"
"because I can say the same thing more snappily"
"so that the new trader reading this will not lose money - not too quickly anyway".

Our profit isn't always their motive.
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Old Feb 14, 2018, 11:36pm   #28
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I will add my 2 cents worth on the subject of "intuition".

Firstly I think it is important to differentiate between the notion of intuition and discretion. In my world view there are two types of traders, viz discretionary and non discretionary. Non discretionary are basically mechanical traders leaving discretionary traders as simply non mechanical in approach. I subscribe to the idea of intuition in trading but its application is generally random and exceptional rather than as a norm. I do not look for it but it presents itself randomly. So what is the difference between discretion and intuition since ultimately it is about choices? The starting premise is that even if we are discretionary in our approach, there is a systematic approach in our trading process. We may make choices in the instruments, the time to trade, the trading time frame and the core elements within our trading plan i.e. stops and targets. Intuition comes into play for me at least as it most often do is that all the elements of a set up to a trade presents itself and on that basis a trade would and should be taken and yet I hesitate. In essence, the overall picture doesn't look right somehow even though the individual component adds up. In other words, intuition stops me from taking what on paper appears to be a good trade. There is a caveat to it pertaining to the emotional context which I will explore in a latter point.

The second point in this conversation about intuition is that those defending the predominant use of intuition needs to articulate what their approach represents and importantly how it presents as an edge to them. In other words it needs to deflect invariably a charge that intuition is simply a convenient excuse that they effectively don't know what they are doing.

Thirdly consistency in trading comes from consistency in approach and process. It has to be dominant feature in our trading because if not then we do not have a basis to evaluate and improve on our ongoing trade performance. Constantly moving targets do not in principle lend it self to proper benchmarking.

Fourth and last is that trading can be emotionally stressful. Studies indicate that only 37 % of traders are self aware of their state of emotion when making trade decisions. Having rules and an established process are meant to keep us discipline especially when under stress and emotions can overcome sound judgment. When intuition comes in for me, it is important as a safety check to ensure that intuition is not simply an emotional bias when making trade decisions.
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Old Feb 15, 2018, 9:23am   #29
 
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My 2˘ on intuition: The intuition of an inexperienced trader is going to be different to that of a trader with years of experience. Intuition by definition is the ability to understand something instinctively, without the need for conscious reasoning. It would be difficult to argue that a trader with years of experience is acting without any reasoning, conscious or subconscious.
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Old Feb 15, 2018, 10:58am   #30
 
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I find my intuition about as reliable as my “mechanical” rules . What I do find more reliable in respect of bottom line is trade management - out sharpish when trade goes against, take planned advantage when it goes well.
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Old Feb 15, 2018, 12:41pm   #31
Joined Feb 2009
jm1054 started this thread What a great post, I wish I was more eloquent like you! I find it very hard to get my thoughts on this subject down on paper (or screen) clearly enough!

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Originally Posted by Brumby View Post
I will add my 2 cents worth on the subject of "intuition".

Firstly I think it is important to differentiate between the notion of intuition and discretion.
Yes, I have been using these two words interchangeably but as you point out, they are not the same thing at all.

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Originally Posted by Brumby View Post

Intuition comes into play for me at least as it most often do is that all the elements of a set up to a trade presents itself and on that basis a trade would and should be taken and yet I hesitate. In essence, the overall picture doesn't look right somehow even though the individual component adds up. In other words, intuition stops me from taking what on paper appears to be a good trade. There is a caveat to it pertaining to the emotional context which I will explore in a latter point.
Yes! Intuition can keep us out of a sub-parr trade. Is it because our sub-conscious has recorded a lot more variables in all the trades we have experienced than our conscious mind? Therefore, our intuition adds to the incomplete picture made up of the mechanical components of trade selection?

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Originally Posted by Brumby View Post

Fourth and last is that trading can be emotionally stressful. Studies indicate that only 37 % of traders are self aware of their state of emotion when making trade decisions. Having rules and an established process are meant to keep us discipline especially when under stress and emotions can overcome sound judgment. When intuition comes in for me, it is important as a safety check to ensure that intuition is not simply an emotional bias when making trade decisions.
This is exactly what I was going to ask as I was reading your post. How do we differentiate between intuition and an emotional reason for being hesitant to take a trade? Self-awareness is the only way surely? Recognising our periodic grumpiness/frustration/lack of confidence and all the other emotions that can affect our trading decisions, for what they are.

Working on self-awareness is the single most difficult thing about trading imho. It is also not at all glamorous!
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Old Feb 15, 2018, 12:50pm   #32
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Originally Posted by new_trader View Post
My 2˘ on intuition: The intuition of an inexperienced trader is going to be different to that of a trader with years of experience. Intuition by definition is the ability to understand something instinctively, without the need for conscious reasoning. It would be difficult to argue that a trader with years of experience is acting without any reasoning, conscious or subconscious.
So, it's all down to experience! I don't suppose an experienced, successful trader needs to know which part of his trading is down to conscious decision-making and which is down to subconscious decision-making.

He trades well because of years of experience and therefore a well-developed awareness of what is going on inside his brain. This awareness is going to be much more developed than in the general population.

I wonder if there have been any studies of the brain activity of successful traders... you know like those brain scans they do of meditating monks which show heightened activity in certain part of the brain? It would be interesting to see if there are parallels...
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