If you think about it, then your chance to predict the outcome of a trade is 50/50. It turns out that a person with good intuition can earn big money on Forex with no extra effort, right? Unfortunately, lovers of easy profit - it doesn’t work this way. It is quite possible to use intuition in trading, but you need to understand why it happens and how to do it correctly.
What Is Intuition
Have you tried walking in your apartment where you have been living for several years in complete darkness? You easily tack between all pieces of furniture using only intuition. But what if you were put at night in someone else's apartment? Will you be able to repeat the same trick? Of course not.
Basically, intuition is the unconscious performance of certain actions. And an important condition here is your previous experience. When you perform the same action over and over again, it comes to automatism. It’s like your body itself tells you what to do because it is already used to doing it.
Intuition In Trading
It is not only mechanical actions that can be brought to automatism, such as movement in a dark apartment. You can achieve the same success with intuitive trading. When you look at charts year after year and see how the price behaves in a particular situation, you need less and less time to see a suitable trading setup. At some point, you notice the trading signal so quickly that your find seems intuitive to you.
Whether you should use this skill depends on your experience:
- Novice traders should not rely on instinct. Even if it seems to you that the price is about to fall, do not rush to open a sell trade. Find confirmation signals and double-check them before taking any action. Before you can apply intuition, you need to go through a year or two of successful Forex trading.
- Experienced traders that have been showing profitable trading results consistently for more than a year may rely on their instinct from time to time. However, do not trust it 100%. When it seems to you that the price will begin to rise, check your hunch in the usual ways that you check any other trading signal (for example, the RSI overbought/oversold indicator).
The Main Enemy Of Intuition
Imagine that you have been successfully trading Forex for a couple of years and you feel that the market will drop at any moment. You continue to look at the charts when the price falls down. You’ve missed a perfect moment. And it was caused by fear.
If you want to use intuition in trading successfully and achieve high results on Forex in general, then you need to exclude any emotions. And it’s worth starting with fear.
Why do you think the results of your trading on a demo account exceed your indicators in real trading? You are not afraid to lose virtual money. And when your brain tells you that the trade will be successful you are not scared to try it.
Yes, you can’t do without risk on Forex. However, an unconfident trader cannot reach success in trading.
How To Test Your Intuition
How do you know whether to trust your instincts? It is very simple. Every time your intuition tells you something, note it in your trading journal. You can highlight such trades or even place them in a separate table. This way you can analyze your progress. When the successful prompts of your intuitive trades will be much more unsuccessful, you can safely begin to use hunch in your trading.