Janice Dorn, MD, PhD
Neuropsychological Trading Coach
Janice Dorn, M.D., Ph.D., has been a full-time futures trader since 1994. Doctor Janice holds an M.D. in psychiatry and is board-certified by the American Board of Psychiatry and Neurology in general psychiatry and addiction psychiatry. She holds a Ph.D. in brain anatomy. A graduate of Coach University, she is a pioneer market psychiatrist and financial neurobehaviorist. Doctor Janice has written over 500 articles on the financial markets and coached over 600 traders worldwide. She is the Global Risk Strategist for Ingenieux Wealth Management Group, Sydney, Australia.
|
Intuition is the supra-logic that cuts out all the routine processes of thought and leaps straight from the problem to the answer…Robert Graves
Among the many topics relating to Trading Neuropsychology, intuition is high on my list of favorites. Perhaps this is because it is the least understood and studied. Moreover, I believe it is among the most critical to understand. This Trading Wisdom—third in our countdown, with three more to go for the year—has many ramifications, twists and turns.
Reaching back to my training as a medical doctor, I know that most people believe that doctors arrive at diagnostic and treatment conclusions through objective, thorough and painstaking questioning and laboratory tests. In fact, most doctors use these methods. Some, however, they have another skill that is almost impossible to quantify. These doctors are able to smell disease or diagnose disease by feeling the radial pulse or looking into the iris of the eye. Others can tell what is wrong with a person by simply looking at them closely and sensing some kind of “energy field” around the patient. Those of you who are familiar with methods of alternative and complementary medicine are well aware of the many varieties of intuitive experience as applied to medical diagnosis and treatment. This is in no way a value judgment of any of these techniques. Rather it is in the service of getting you to think about the way you make decisions.
The groundbreaking, Nobel Prize-winning work of Kahneman, Slovic and Twersky outlined in detail many of the challenges of medical diagnoses and ways in which intuition is used in these real-life diagnostic situations. Empirical evidence indicates that human intuition is remarkably flawed. One of the leading researchers in this field, Robin Dawes, has published a number of studies based on his 1982 paper titled: “The Robust Beauty of Improper Linear Models in Decision Making.” In over 100 studies based on this paper, the mathematical (statistical) model has outperformed the intuitive model by a considerable margin.
That said, I have witnessed some amazing examples of intuition by traders that appear to defy any empirical analysis. Based on years of coaching traders, I have, through these observations, come to the conclusion that a trader can be mindful in the present moment of both empirical (pragmatic) phenomena as well as intuitive (metaphysical) phenomena. Trading intuition is, in my experience and through the Trading Intuition Test that I am beta testing, nothing more than the manifestation of mastery of trading skills (specifically unconscious competence) coupled with screen time and real market experience. In other words, the trader makes what can be called, for lack of a better term, an “educated guess.” This occurs when, for a variety of reasons, information cannot be calculated mathematically or statistically.
Daniel Goleman describes intuition as the capacity to sense messages from our internal store of emotional memory. This personal and unique reservoir is really the cornerstone of the key components of trading competence, all falling under the rubric of “Management.” This means management of self, data, continuing education, lifestyle/stress and money. We have referred to these in many previous Trading Wisdoms as forms of capital. This is simply another way to look at ways to grow and augment these aspects of capital by adding the element of intuition to what you have already learned about the stages of trading competence.
There is no question that moods bias thinking processes and affect judgment. All one has to do is to observe him or herself on a minute-to-minute basis to confirm the truth of this statement. The work of the psychologist G. Clore in 1992 states, “The most reliable phenomenon in the cognition-emotion domain is the effect of mood (affect) on evaluating judgment." What he is saying, in simple terms, is that we do not use facts alone to make judgments. In life, as in the markets, we are faced constantly with situations that are ambiguous and unpredictable. In the face of these conditions, we make judgments combining what we know with what we feel.
Thus, I believe that we, as traders, must learn to harness the power of our intuition in order to put ourselves in a position to make the best possible decisions, particularly under conditions of uncertainty.
For those who wish to read more, I have written an extensive article on trading intution, including the brain systems that are believed to be active in making intuitive vs. non-intuitive decisions.
Now, we have counted down from A (Acceptance) to D (Determination, Discipline) to I (Intuition). The next Counting-Down Trading Wisdom for 2007 will be about Excellence and Education.
Only when we find the quietness in our own minds can we begin to hear our inner teacher, so that we may receive some intuition. Only when we are ready to recognise and value the wisdom that we carry at the core of our being will we turn our attention inwards and 'listen in'. But it's been a long time since we truly listened, so a little practice and patience will be needed. Sit down, be quiet and listen in at some point today and you might be surprised at what you hear. Then do it again tomorrow. All you need to do is remember that you are the listener and not the noise…
Blaise Pascal
Until Next Time,
Good Trading and (Revitalized) Brain On!
Janice Dorn, M.D., Ph.D.
janice@thetradingdoctor.com
P.S. Every week, I send you a Trading Wisdom designed to make you better, smarter, more balanced traders. Today, I want to ask you, “How are you doing?” Please join me and your fellow traders at the message board and tell us which of my Trading Wisdoms have been most helpful in getting you on a path to profitable trading. How have you used my methods and insights to make big money or avoid huge pitfalls? Tell me what you think, and your favorite Trading Wisdom may be featured in my upcoming book! Stop by today!
|
