Praise for Trading from Your Gut

Intuition and Time Pressure
I believe that most left-brain-dominant people have great diffi-
culty trusting their intuition. In these individuals, the left brain is in
charge and wants explanations. When the right brain can supply
them, the left brain is satisfied. In contrast, if the intuition comes as
a feeling, a vibe, or a bodily sensation, left-brain-dominant people
have a hard time giving the intuition any credence. The left brain
wants explanations; if you can’t supply them, it won’t believe an intu-
ition. This lack of trust in your intuition can be a big impediment to
your ability to improve in your trading.
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Even for the most highly left-brain-dominant people, however,
there are times when the right brain takes over. According to Profes-
sor Gerard Hodgkinson of the Centre for Organisational Strategy,
Learning, and Change at Leeds University Business School, “People
usually experience true intuition when they are under severe time
pressure or in a situation of information overload or acute
danger, where conscious analysis of the situation may be difficult or
impossible.”
In the case of another Formula One driver who experienced an
intuition to brake, bearing an uncanny similarity to Fangio’s, Profes-
sor Hodgkinson explains: 
The driver couldn’t explain why he felt he should stop, but the
urge was much stronger than his desire to win the race. The
driver underwent forensic analysis by psychologists after-
wards, where he was shown a video to mentally relive the
event. In hindsight, he realized that the crowd, which would
have normally been cheering him on, wasn’t looking at him
coming up to the bend but was looking the other way in a
static, frozen way. That was the cue. He didn’t consciously
process this, but he knew something was wrong and stopped
in time.
Interestingly, although the urge was strong enough to get him to
brake sharply, this driver, like Fangio, was not conscious of the
thought process that provided the urge to brake. Even though the
impulse to stop was initiated by a bottom-up notice from the right
brain, the interaction with the conscious left-brain thought process
came through what the driver felt as an urge. It did not come to him
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through a conscious process in which he noticed the crowd; thought
to himself, “How strange that they are turned away and not looking
in this direction”; and then thought, “There must have been an acci-
dent.” That would have taken far too much time.
Instead, what happened is that the right brain noticed the dan-
ger sign all at once and, bypassing the left brain, sent a signal
directly to his limbic system, where it became an urge—a strong
feeling—that then triggered his sudden and strong braking by
directly interacting with the part of his brain that pushed his foot
down on the brake. He had no time to walk the left brain through
the logical steps required before taking action. The body needed to
act now, and the right brain had enough information to force an
override of the normal process. So it did. Only in retrospect could
the driver determine what his right brain had noticed.
Had the driver been new to racing, or had this been his first
major race, his right brain likely would not have had enough infor-
mation with which to compare the behavior of the crowd. There-
fore, he would not have noticed the unusual way in which they were
looking down the track. His lack of experience would likely have
contributed to a serious accident.
This is one of the reasons traders need to train their intuition. If
you do not have enough raw experience or you have not supplied
your right brain with enough trading examples, you will not be able
to accurately and swiftly recognize the patterns that a more experi-
enced trader will see with ease. You will be more likely to encounter
problems without any warning from your right brain’s intuition. You
will be more likely to miss opportunities that an experienced trader
will notice without thinking.
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Intuition comes into play when conscious analysis
of the information is impossible because of
too much information or too little time.
Remember that Professor Hodgkinson noted that people expe-
rience true intuition where conscious analysis of the situation might
be difficult or impossible. When you are under severe time pres-
sure, you don’t have time to make a conscious analysis. When too
much information exists, making a conscious analysis of all the infor-
mation is impossible. So intuition comes into play when conscious
analysis of the information is impossible because of too much infor-
mation or too little time.
Sometimes the markets become so hectic that you won’t have
much time to make trading decisions. During a crash or after a big
unexpected market event, you might not have time for a full analysis
of what to do and why. During these times, if you have trained your
gut, you will be able to trust it. You will be able to rely on your intu-
ition to save you from impending danger.
In the case of the drivers’ sudden braking, the series of events
was initiated by the right brain noticing that something wasn’t right.
Because the drivers didn’t have enough time to consciously analyze
what was going on, the right brain induced a quick reaction by
bypassing the left brain’s conscious thinking. It went directly for the
seat of emotion in the limbic system, sending a strong “feeling” that
something was not right and that immediate braking was the best
option.
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