have you ever wondered how some people seem to have a gut feeling for what's going to happen in the market and always know the best call at the right time to make the most money well it's something you can develop yourself and I'm going to show you how welcome back everyone this is lesson six in the high high performance trading series and in this video I want to show you how to improve your trading instincts so you become a better Trader and to do that we need to take a look at your intuitive defensive systems
to start I want you to imagine yourself stirred right on the edge of a cliff looking down without any kind of safety harness your defensive intuitive system is primarily concerned with helping you avoid danger and it works like a friendly advisor to start with giving you a warning so it may do this by giving you butterflies increasing your heart rate or making you feel a bit uneasy but if you ignore the warnings and you move closer to the edge it would increase the volume of its advice to the point you might completely freeze and being
it unable to move at all in that scenario this powerful judgment and decision-making system is operating with your best interests at heart it stopped you going over the edge the reason you're still alive today is because of this system but what if you found you were uncomfortable standing on a chair is that irrational well you could easily be forgiven for thinking that your decision system was working against you and that something has broken but you need to understand what this system is trying to achieve your mind is never working against you now a lot of
houra Traders will disagree with that statement immediately and the reason is because every part of their life account trade in experience tells them otherwise logically they know to let winners run cut losses stick to their rules and yet they're unable to do it so it's easy to assume their own mind is working against them and it's a psychological problem it isn't in our brain there's a region called the amydala which is your intuitive defensive decision system it has a standard set of parameters that govern what it thinks danger is but if you get hurt in
any way shape or form it will assume that it got it wrong and it didn't warn you strongly enough to avoid a situation so the next time it sees a similar situation it's going to warn you earlier and louder it's a defense mechanism that is capable of learning if the last time you were off the floor at a height if you fell hurt yourself your defense system will learn from that the next time you step up on a chair or climb a ladder it's going to say to you hey you're off the ground this is
risky and the last time you did this you fell and broke your arm get down quickly that is not a mind but is working against you it's not being irrational it's doing its best to protect you and keep you out of danger now the problem for Traders is it can be over sensitive think of your defense system as it's smoke detector you've probably experienced cooking something and the alarm starts beeping and it can be annoying but we would all prefer to have an over sensitive smoke detector that gives us the occasional false alarm than an
UND sensitive one that fails to warn us the house is on fire when we're sleeping that's what your intuitive defense system is doing it's better to be over sensitive than under sensitive we just need to retrain it to be better suited for trading if we look at the example of of a fear of heights you might start to reunit by standing on a small box and jumping off just to demonstrate that you won't get injured by the impact and then progressively you move up to slightly higher Heights more often exposing your amida to the situation
of being off the ground as much as possible teaching it that these small Heights are perfectly safe the more it sees this the more it learns and the more it will increase its tolerance you're retuning its sensitivity and it's the exact same process with trading your defense system is over sensitive and the lot of any amount of money no matter how small is perceived as a risk you should be protected against so you need to repeatedly expose it to lower risk situations so that it progressively becomes retrained to feel comfortable at those risk levels you
need to teach it but losing $50 isn't a risk to your life for your well-being and then you gradually increase the risks until you've reged its sensitivity now moving beyond that you need to understand what intuition is what it isn't and more importantly when and when not to rely on it this is something that separates amators from professionals intuition is really just the sum total of your experience your long-term memory and the patterns it's seeing in those memories a beginner Trader has intuition but those intuitions will be wrong because less experienced Traders by definition have
less experience they have too few memories and too little information from which to recognize patterns if new Traders act on their intuition they will lose money the main issue is that intuitive thinking feels right even when it's not as you will remember from the question about the costs of the bat and the ball in the last lesson if intuition is not trained correctly or it doesn't have enough exposure to consistent information it will just bombard you with false signals if Traders are constantly overriding their trading systems intuition doesn't have enough consistent information to see the
real patterns that exist in the market in fact traders who are constantly overriding their systems are actually feeding their amigdala bad information they're giving it bad training and making their intuition worse and even less trustworthy and that's why post-trade analysis is so important methodically reviewing every trade trade and trading session is how you feed quality information to your mid dealer to build your intuition it's also why as a new Trader you must stick to your system regardless of wins or losses you need to have consistency to build a suitable memory case from which to identify
patents this is especially true for training our intuition to understand thinking in probabilities as I've said in previous videos our lack of understanding about probabilities and the random distrib of results is one of if not the biggest causes of failure for new Traders we can't help but think that after a string of four or five back-to-back losses that something must be wrong with the system so we change the rules or we at filters or we look for a new system altogether that is a classic case of our intuition being wrong simply because it hasn't had
enough exposure to a probabilistic environment whether you like it or not trading is a game with probabilities and if you want to succeed you need to understand them you've got to follow your system long enough without any changes to build an accurate picture of how wins and losses are distributed so your intuition can learn what is normal and what is not and that will allow you to identify when something is legitimately wrong and you do need to step in and change something or that everything is absolutely normal and you'll make more money sticking to your
system the challenge for Traders trying to get better at decision- making is that defensive and intuitive thinking is initially very hard to decode the messages we get are mixed up with feelings emotions habits and so on and without fully recognizing or understanding what defensive and intuitive thinking is and what its objectives are we are easily Swept Away on a wave reacting without thinking and start in a chain reaction of events that we're not entirely in control of now institutional Traders benefit from Role Models or discussion with other Traders on their desk collaborative decision making managers
watching over them and people to talk to to discuss their strategies and thinking retail trading is quite Lely and Low's benefits are largely unavailable so the potential for decision confusion between logical intuitive and defensive thinking is much higher that's why I like to work onetoone with my clients rather than sell courses the personal interaction and back and forth discussions of what help accelerate the learning so as a retail Trader you have to be especially aware and deliberate in your processes particularly with your after trade analysis and recordkeeping so now let's look at six common trading
myths or misconceptions within the trading community and hopefully you will have a better appreciation of why they're not true or at least not accurate in light of what we've covered on the intuitive defense system so number one you just need to be more disciplined that's basically telling yourself to disregard all of the messages that your intuitive system is sending you in order to keep you safe that's a terrible idea what you should really be doing is listening understanding and respecting those messages and using them to your advantage number two you just need to stick to
your system that is true for new traders in the short in in order to gather memories and calibrate your intuitive system but the system does not make your decisions it advises you on what is likely to happen not what is guaranteed to happen and therefore you need overall control and the final say number three all you need is a good system now of course success does depend on having a system that exploits a real Edge in the market but to execute the system even if it was mechanical and all you did was turn it on
and off when real money is involved you need to understand your own role in judgment and decision- making as I just said the system is an advisor as to what is more likely to happen under set conditions you need the skill to make the final decision and happy intuition to know when something is wrong number four you just need to be rational and logical well that's just impossible your intuitive and defense system is thousand times more powerful and much faster than your logical system and it never rests you can't can't turn it off you need
to work with it not without it trading shouldn't be a battle it should be effortless and number five hand inand with that is the opposite extreme of saying you just need to go with your do instincts your intuition you do feel surrendering to every urge thought and feeling that your defensive and intuitive system offers up will always be a disaster your logical system has to step in in a kind of supervisory role and ask additional question questions to confirm if the intuitive decision is the best in this situation the two systems have to work cohesively
together you cannot trade successfully without both and number six you just need more experience experience is basically feeding your intuition with many trade outcomes for experience to build proper high quality and trustworthy intuition you need to teach it good lessons and the way to do that is by having long periods where you trade consistently in line with your system rules and by conducting good trade evaluation after each trade remember my analogy in the last video about how driving is comparative to intuitive trading so remember how you built intuitive driving skills you drove the same car
every day you adjusted your suit to the same position every time you got in the car your mirrors were angled the same way every time you drive and you follow the same sequence of putting on your seat belt starting ignition looking where you going in select the gear hand breake off and finally drive it's the same sequence repeated consistently over and over and over and eventually it's automated into your intuitive system that is high quality experience can you imagine how bad your driving would be if you tried learning in a different model car each week
or switched from Left Hand to right hand drive or from automatic to manual systems you could get thousands of hours of experience like that and still never be good enough to pass a driving test but 30 or 40 hours of good quality experience is often all it takes to pass your test the quality of your experience is what counts and it certainly counts in trading if you want to have that intuitive gut feeling but you can rely on in your trading that's how you do it I hope you've enjoyed this video and you found it
helpful I've got two more videos to upload in this series so please keep your eyes open for those if you want to support the channel please like comment and share this video and if you haven't already please consider subscribing thanks for watching and I'll see you next time
