Posts tagged trading,
Intuition vs. Systematic Trading
Is trading an art or a science?
One crucial component of science is reproducibility. It is described as the ability of a test or experiment to be accurately reproduced, or replicated, by someone else working independently (Wikipedia.org, 2009).
The reality, though, is that if one novice trader sits next to an experienced one and mimics his trading patterns, somehow the success will not be duplicated.
Trading involves a lot of math and psychology. Each of these disciplines are well established in the scientific world, but knowing when and how to apply those rules requires a lot of intuition. That’s why I believe that trading is more of an art than a science. I would compare a trader more to a musician than a mathematician.
Are great traders also artists at heart? Who is a better trader: a scientist or an artist? And should a trader forget about rules and only trade on intuition? As for the latter, I don’t think so. There are days when a trader is in the “zone” and all the trades seem to be profitable, but the majority of trading days will challenge the confidence of a trader. Rules and discipline are the only tools left to keep your emotions in check.
Knowing the rules of trading is easy. A couple of books and seminars will teach you all of it. It’s like poker or chess. It takes 10 minutes to know the rules, but a lifetime to master them. A good trader should spend a lifetime improving the craft and never be satisfied. The markets are not static; the moment we think we have it figured out, it is the moment we become irrelevant.
That’s why I think automatic trading systems cannot work over the long term. They need to be implanted with market models by their programmers. It can work for a short time, but due to the ever changing nature of the markets, a static model cannot survive. We are not at a point yet where the computer models are self adapting and become better at predicting behavior economics.
So, which one is better: Intuition or Systematic trading? Giving a universal answer would be contradictory. What ever works now for you, keep doing it. If your trading P/L is not as high as you hoped, then you should consider changing something.
Good luck in your trading.
