Praise for Trading from Your Gut

Master traders use technology to keep their skills
sharp and their intuition honed to a fine edge.
Master traders use technology for analogous reasons. They use
it to keep their skills sharp and their intuition honed to a fine edge.
They use it so that they can sift through hundreds or thousands of
trading opportunities during a time period when they might previ-
ously have been able to sort through only tens. They use it to speed
up their learning. They are ready to act on any opportunities the
market brings.
Techno Trading
I started programming trading systems using an Apple II when I
was still in high school. At the time, this was a cutting-edge use of
technology. When I traded as a Turtle, our quote terminals con-
tained only prices. They showed the high, low, last price, net change,
and volume for each contract. That’s it. 
We had to draw our own graphs on paper. We didn’t have intra-
day charts. We had to look at the prices and determine whether the
price was significant using only memory and paper charts. Using a
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very simple trading method reduced the amount of information I
needed to keep in my head.
Fortunately, the technology available to traders has tremen-
dously advanced during the last 25 years. The modern master
trader’s tools are a fast computer, a fast and reliable Internet con-
nection, a few large-screen monitors, and advanced trading soft-
ware. Most traders have two or three computers: One they use only
for trading, another they use for trading research, and sometimes
another they use for e-mail and general Internet use. 
Traders can use this technology to promote and sustain a
healthy interplay between the left and right hemispheres. For exam-
ple, when your intuition comes up with an idea, it’s easy to test dif-
ferent aspects of trading ideas using computer software programs.
For long-term trading, it is even possible to create completely auto-
mated trading systems that make money. For medium-term trading,
it is a bit more difficult but still generally possible.
However, even with today’s advanced technology, total automa-
tion is often impractical for short-term trading such as swing
trading. The biggest reason is that a completely automated swing-
trading strategy is beyond the programming capabilities of the vast
majority of traders using the tools that are available to the retail
trader. So you need to use a balance of your whole mind to properly
test a potential short-term trading idea.
Consider the rebound swing method. Although it is easy to train
your right brain to recognize whether a particular stock has clear
support and resistance, this is a difficult concept to program into a
computer. Support and resistance are concepts that are primarily
based on visual perception. Does the support hold up if the price
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goes 25¢ below the previous low? How about 45¢? Does it make any
difference if the previous support was only five days earlier? How
about three days? How much price differential between the support
and resistance is significant? These are all fuzzy concepts with fuzzy
answers.
Computer programs want hard answers to specific questions.
They don’t like fuzzy concepts or fuzzy answers. Algorithmic com-
puter programs are entirely left brain. They are annoyingly logical.
They want to be told exactly what to do. They can’t see the big pic-
ture. They can see the trees, but they don’t know that a forest exists.
The important factor for the specific concepts
of support and resistance is what other traders
will perceive using their eyes.
The important factor for the specific concepts of support and
resistance is what other traders will perceive using their eyes. Other
traders’ perceptions of support and resistance create the tendency
for the price to rebound off support and resistance. If you can’t
accurately program a concept that duplicates other traders’ percep-
tions, you won’t be able to accurately test the method. The best
retail trading computers and software programs cannot currently
perform this task. 
This is good because it means that traders who use a proper bal-
ance of intuition and intellect will be able to test and implement
ideas that are profitable but that are not likely to be automated. The
trading that exists just beyond the reach of technology offers better
opportunity for those who have properly trained their gut intuition
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to excel. If it were easy to create a computer program that could
duplicate your intuition, more computers would be trading and less
opportunities would be available for the individual trader without
the banks of hyperfast computers that Goldman Sachs might have
available.
This is also one of the reasons swing trading offers good poten-
tial for intuitive traders. It is beyond the reach of our current left
brain-oriented computer technology.