When you have been trading long enough, the dogma when it comes to trading education becomes obvious.
In fact, there are too many courses, books, and trading forum professionals using words like “should”, “must”, as if they are talking about the only path to success.
Having a belief that there is a certain way you must approach trading in order to find any success is a quick path to the opposite.
Yes, there are some core skills that every trader should have but we all think and function a little differently. It’s the same as trying to get a left handed hitter in baseball to start hitting right. Not only will it be uncomfortable as it goes against their natural movement, but they can be assured of being struck out.
Analytical and Practical Sides of the Brain
The human brain generally speaking has two major aspects to it. The left and the right side of the brain have different functions and the balance in different individuals can vary.
- The left side of the brain we are told is responsible for logical, analytical and the more practical sides to personality.
- The right side of the brain takes account of a person’s emotions, intuition and creativity.
When you think about the two side, I believe the different balances are mostly obvious in their benefits.
- Strong left brain advantages are very much about logical planning and discipline. Mechanical trading is a possible strength.
- Right brain dominance is about intuition and creativity. Seeing the market as a combination of forces and becoming synchronized with it is potentially such a powerful tool for a trader if they can harness it.
- A combination of both the left brain practical and logical nature with right brain intuition and creativity would surely be a force in trading the markets.
But while there are benefits to each, there are also negative aspects to contend with.
Traders who are predominantly left-brained are prone to being very rigid in their approach. Also they must think a great deal through, when sometimes the speed of the market requires virtually lightening quick skills.
A right-brained trader might struggle with consistency of execution despite having a good idea of where the market is headed. It’s not the knowing of where the market is headed that makes money, but the effective management of a position while it’s on its way that brings success.
So a mix of the two should bring about the greatest chance of success right?
Yes and no.
The problem with a more balanced type trader is often that they get conflicting messages. There is a need to be methodical, yet when they trade there is often the urge to satisfy their gut instincts about the markets. This will often cause these types of traders to deviate from the trading plans and jump on a trade that looks good.
Once they get rewarded with a win, that can lead to a different set of problems such as ignoring their trading plan altogether.
Acting in a purely methodical fashion only leads to the feeling of ‘missing out’ on the biggest moves and taking cues from the right side of the brain can lead to breaking of trading rules and discipline which ends in losses when trades don’t play out like they were expected to.
Where’s Your Balance?
Going back to thinking about baseball, to ‘bat’ in our natural way, we must first recognize where our left brain/right brain balance lies.
We must endeavor to incorporate our greatest assets into the way we trade and work on the areas where we are weakest. However, gut instinct and intuition are formed from practical experience and underlying competence in a method.
When you look at charts often enough, many traders try to find that their gut instincts about the market is correct. Curtis Faith wrote a book called “Trading From Your Gut” that is about right and left brain involvement in trading.
Without this, it’s often true that the feeling of what may happen is no better than tossing a coin or in many cases worse. But if you’re both logical and intuitive in nature, you must approach the market in a way which allows you not only to capitalize on your practical skills, but also gives you the freedom to trade with your instinct and enter “the zone”.
The market can be a raging river of activity at times and so you must either be mechanical in trading it or mechanically approach how you trade your intuitions. There is no room for uncertainty or indecision at these times.
I feel that so long as a trader has strong self-awareness, any type can experience great success. However, to trade with a left and right brain in harmony is something which I believe can potentially elevate a trader to the highest level of performance.