Expert Knowledge, Unconscious Pattern Recognition and Trading Intuition
It’s also relatively fashionable to discount the value of unconscious pattern recognition or felt knowledge. Behavioral finance research has convinced us to doubt the type of expert knowledge which we commonly label as intuition. In contrast however, leading scholars in judgment and decision making say things like: “intuitive thinking underlies the most advanced thinking” (Reyna, 2012).
Research points to evidence that more sophisticated thinkers rely on the gist or essence of a situation rather than the literal, verbatim recounting of the factors to make choices. They cull the essence of the questions at hand rather than itemize and prioritize each possible outcome. As such this is what the exercise is aimed at, the basic question of which way price might move as opposed to a more detailed analysis of all of the factors that may be influencing price movement. An expert trader who listens for and parses their internal voice actually accesses their years of watching the dance of price.
The Bottom Line
In summary, engaging with the Bloomberg Tradebook Trader Exercise can reasonably be expected to tap into a trader’s the most useful neuronal “muscles”. Consciously working with the actual skill underlying performance – social cognition – should in effect warm-up the trader’s brain in a way that makes it more facile and effective in anticipating the likely development of price action. We hope you enjoy this exercise and we believe that with practice, it will benefit your trading.
Bruguier, Antoine J., Steven R. Quartz, and Peter Bossaerts. “Exploring the nature of “trader intuition”.” The Journal of Finance 65.5 (2010): 1703-1723.
Eagleman, David. Incognito. Robert Laffont, 2013.
Heider, Fritz, and Marianne Simmel. “An experimental study of apparent behavior.” The American Journal of Psychology 57.2 (1944): 243-259.Eagleman, 2011. Incognito, The Secret Lives of the Brain,Pantheon Books.
Reyna, Valerie F. “A new intuitionism: Meaning, memory, and development in fuzzy-trace theory.” Judgment and Decision Making 7.3 (2012): 332.
“The Brain with David Eagleman.” PBS. October-November 2015. Television.