You raise an interesting point Rhody Trader. It is such a common occurrence in trading circles there is a name for it and it is called ‘Losing the Plot’. I had been trading for about 5 years when I felt that my continued and deep exposure to charts, the detailed analyses of price action and volume interactions, 7 days every week (you can still work with charts at the weekend and out of market hours) for around 12 hours per day, had bestowed upon me the ability to sense the most likely development sequence over the next X bars. And every time that conscious thought occurred I invariably followed my instincts with absolute certainty and confidence and was quietly pleased to discover after a number of years of experiencing a significant number of such hallucinatory moments, that I was clearly wrong far more often than I was right. During that period though, I was completely assured my instincts were so finely honed and focused that I could do no wrong and somehow, I alone had drawn upon godlike powers known to no other mortal. There is a word for it I am sure, but it is a case of remembering the few occasions when we are right, and forgetting quite completely those things that showed us to have been totally wrong. The result being a quite biased view of my own capability and performance. I can’t remember what shook me from my stupor, but certainly examining my trading performance statistics when adhering to my systematic trading methods compared with my intuitive-discretionary modes of operation were quite empirically conclusive.
Do not misunderstand me, I do know for a fact that exposure and intense concentration on charts, or anything for that matter, over long periods of time do bring about changes to our psychological and physiological structure to a degree which is not only significant, but demonstrably measurable. The key to proper utilisation of these blossoming skills though is not to be consciously aware of them. Easier said than done? No, not at all really. You aren’t trying not to be not consciously aware of something (which is quite impossible by the way). All you are doing is ensuring you recognise when you are consciously aware of something.
As soon as the ‘you’ or the ‘I’ enters into your current view of your trading Universe, you know you’re off the track. Conscious awareness, particularly self-conscious awareness or self-reflection is not conducive to trading excellence. These occurrences and they do occur in us all from time to time, take you away from rather than toward innate comprehension of the market as it is here and now which is exactly where you need to be. Once you recognise these feelings when they occur for what they are, I have found personally no remedy myself except in quitting my trading at least for the rest of the trading day. As soon as you even get a hint that you’re capable of differentiating from all of the possibilities of what may occur the one that is definitely going to occur rather than taking your decisions based on what is happening right now, it is my view you should down tools and go do something else, anything else.
I have mentioned elsewhere the need to be aware of the possibilities and the probabilities of these possibilities becoming reality for you, but you must constantly assess the development of these possibilities. Your ability to make instant decisions when these possibilities develop into recognisable events which are committed and are unable to regress or diverge or bifurcate, is directly proportional to the emptiness of your expectations. It is by using your knowledge of what is happening right now, with the sum total of all your past experiences and compared with the probabilities associated with all of the possibilities of what could happen next that provide you with all you need to make your next trading decision.
In short, trading instinct when you know it to be instinct will invariably lead you off course. It is only when your instinct operates at an unconscious level, out of your awareness, that you find you made the right decisions.
