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difficulties, knowing which questions to ask, and understanding how to frame the problem in their mind. Intuition helps traders solve the challenge by deciding where to look for the relevant facts, how to test an idea, 'how to interpret the data, and how to recognize what is important and relevant. |
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Do you know why Ray Kroc purchased McDonald's despite the advice of his friends? Because he decided to listen to the feeling in his "funny-bone." Let me ask you another question: Does the market exist solely in a "material world" that allows it to be measured, quantified, and defined with precision, or could it be something else altogether? Could it exist only as a manifestation of the beliefs of all the traders involved? Stop reading right now, and take the time to think about it before answering. |
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The way you answer will tell you a lot about your perception of the market, and how your trading methodology will probably evolve. Your answer will also tell you how your ego wants to perceive the market. |
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The rational-empirical mode of thinking works best when you can control or predict all the variables that affect the subject you are studying, when you can measure, quantify, and define these variables with precision, and when you have complete and timely information. As we covered in the first chapter, there is no holy grail. The trading market represents hundreds of thousands of variables that no one can predict, quantify, or measure with precision. As an aggregate we can to some degree come up with a representation that can measure, quantify, and define the market. However, since it is an aggregate we are unable to predict with 100 percent certainty what will transpire. Consequently this mandates that a trader work in probabilities. |
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When we attempt to trade using a methodology that is based solely on the rational-empirical mode, we are setting ourselves up for a lot of frustration. What we are attempting to do is apply a science that was designed to deal with the physical world, and extend it to a nonmaterial, nonquantifiable world. When we attempt to trade exclusively on the rational-empirical approach, we will not be able to deal with critical and nonquantifiable considerations such as perceptions of other traders, the prevailing continuity of thought, and the overall market psychology. |
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The degree to which you are able to penetrate the transcendent and illuminate the sublime aspects of the market will depend on your success in developing your intuitive skill. The trading environment is a reflection of the opinions (beliefs) of all the traders involved. The traders' opinions will cause them to be (1) sitting on the sidelines watching, (2) already committed 100 percent in the market, (3) in the market but waiting to commit more funds, (4) in the market waiting to exit fully, or (5) in the market and wait- |
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