Trusting Your Gut Feel in Trading
The best traders have a finely tuned ability to sense or ‘feel’ the market and what it might do next. This is often referred to as ‘gut feel’, and it’s something that I rely on heavily in my own trading. In my opinion, every trader must develop their gut feel in trading, and it’s something that comes from proper training followed by experience / screen time with the charts. Gut trading feel is something that will continue to develop within you as you gain more and more experience trading the market.
Gut feel may be better understood by beginning traders if we call it trading intuition and anticipation. It is simply subconscious intuition and anticipation of an event that may be about to occur.
Essentially, repetitive process and patterns in the market lead to intuitive feelings and can give rise to Déjà-vu types of experiences. A trader will experience these ‘premonitions’ that come to the forefront of their mind and trigger what we call the trader’s “gut feel”. If you see something often enough, your mind will give you a projected hypothesis of sorts, of what’s about to happen. This is obviously a very powerful and important ‘tool’ that you will need to develop to finally move up into the top 10% of successful traders.
Practice helps build gut feel
A professional sports player has put in a large amount of practice, and as a result, they’ve become good enough to go pro. They’ve played all opponents of all types and styles and this has given them a gut feel as to what their opponent’s next move is likely to be…anticipating their next move intuitively.
For example, if you play tennis enough times against the same opponent, you’ll get to learn their game and eventually you won’t even think; it will become gut feel and you’ll just anticipate or ‘feel’ their next shot in your gut before it occurs.
When it comes to a trader’s gut feel, after you’ve mastered your trading strategy and put in enough screen time, you’ll begin to develop that gut trading feel as a result. Then, as you analyse the market, it will become a combination of a subconscious “yes or no?” mechanism to take a trade or not, and a gut feeling about what the market might do next. This is similar to a tennis player who decides to hit a deep volley on the next shot because he can ‘feel’ what his opponent might do next. There are many other examples of gut-feel in sports as well as other fields, but in all cases, it develops only after enough practice and experience. Raw talent does help, but I believe that with training and enough screen time, anyone can develop a good gut trading feel.
Gut feel and price action trading
The various price action strategies that we implement to trade, will eventually become second nature to the experienced trader, and as time progresses, the trader’s gut feel will help in determining if “this is a trade worthy of taking or not?” Sometimes, the trader may not even understand why they are leaning towards one side of the market or the other, but that is their subconscious anticipation mechanism influencing their decision making. This mechanism only starts to truly sprout after enough time / screen time in the market.
You may not even understand what’s happening when you begin to feel this gut trading feel kick in, but the more and more you expose yourself to the charts and the price action, the clearer this subconscious ‘trigger’ will become. It won’t happen overnight, it will take training first, and then time and experience in the market, but eventually you will develop this gut feel when looking at the price action on your charts, and it will become part of your overall trading strategy.
There are always two perspectives…
You may have a gut feel about the market or a particular trade and not even know why; your subconscious mind is sometimes smarter than your conscious mind. So, whilst we may want to go long and see a long signal, the gut feel is saying “maybe this isn’t right”…the gut feel is ‘seeing’ something we can’t see…it’s a subconscious message, and in this way, our subconscious is often times more objective than our conscious.
For example, there’s always two views or perspectives on the market. One trader sees a chart and thinks it looks bullish and another sees the same chart and sees it as bearish. Thus, if you look at a chart from the other side, as if someone is on the other side of your trade, this is objectively viewing it. However, most of us cannot do this very easily just from our own conscious thought. Like it or not, we all get overly-attached to a certain view of the market from time to time, even if there’s a stronger case for it to move the other way. It’s at these times when our subconscious gut-feel can really assist us. It can alert us with a gut feeling that something is ‘wrong’, and you can use this feeling to look for reasons why your trade may be a bad idea. For example, if you have a bias to go long and you’re only looking to go long…how is someone else reading the same chart and wanting to go short? Your gut-feel will alert you to take a closer look.
When a chart looks long, but you have a gut feel that says it looks wrong, we can’t see it but our subconscious mind is being objective…it’s having a ‘look’ at it from the opponent’s side and is alerting you to that view. We may not have seen it originally, but our subconscious feel came over us with a flashing red light. Thus, our subconscious can be objective without us even knowing it because it sees the other perspective on a trade, based on our previous experiences and screen time.
Of course, to even begin developing your gut trading feel, you will need to first understand how to read the price movement on the charts. It all starts with learning to read the ever-changing price action of the market. Once you do this, screen time will build up your subconscious trading sense and you will begin to intuitively ‘feel’ the chart. You won’t always be right with your gut feel, but it’s something that will help you out a lot and that you need to develop if you want to become a successful trader. To get started learning how to read and trade price action, and eventually build your trading gut feel, click here.
10 Comments Leave a Comment
sometimes we need review past articles again and again to remind us what is correct…
Don’t you think Nial that gut feel can become a hurdle for a trader (if not very experienced)?
It may feel as if it is fear to get into any trade, the fear of losing!
Im reasonably sure you have written the sentence “trust what you see, not what you feel”. Which is true in the sense that all trades should come from a plan and good PA. So this “guts” stuff seems paradoxical if you will. I like that your PA trading has a sense of rules and a semblance of order i.e 1) find the trend 2) wait for PA 3) have an entry and exit plan. “Guts” seem like what I used to trade like re: hunches ! I prefer it remain banished from my vernacular , atleast I am to the level where this stuff is second nature as it is for you. This article should perhaps read “For people that have put in the screen time. For your eyes only”. he he
The article expressely exposes the required guts of a successful professional traders.
Such a wonderful and eye opening article. I always read your articles. You know what! I never found anyone who is writing like you. While I read your article I can feel my “gut feel” that you are a good man. I think most of successful traders think, “I am successful and I don’t wanna see another successful trader.” But this is not true for you. I think you want to see each and everyone successful.
Allah bless you.
Thank you so very much.
Wow a great lesson. I do have the gut feeling in many occasions in my life but sometimes I think they are fictional and I end up ignoring them.but from now I’ll be more careful.
Thanks Mr Nial.
Though a beginning trader, I have 100% belief in this ‘gut trading’ as I have seen it work in other areas of life. Besides, quite a good number of great traders alluded to it as indispensable ‘tool’ for successful trading career.
Pls keep up the good work.
If I was to follow my “Gut Feelings, I would never take a trade!
Great article though, enjoyed it. Thanks.
At 727AM on 11-2 I texted my trading partner about what I thought was an impending drop in the e-Mini S&P. I saw the price line up at one of my levels, which was moderately strong support. At 737AM it did just what I had sensed it was setting up to do. The down move was only 1 pt, but it immediately set up as my reversal indication, which yielded another pt. Two pts from intuition based on ALOT of study and work.
At approximately 750AM I saw this article and read it. Wow, what a “coincidence”. Thank you for your many insights.
Columbus, OH US
Even I am the beginner but I have had this gut feeling many times to take a trade but my mind thinks differently or been scared. Later on I have seen my trades would have been nicely in profit. Great article though!