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Trading Instincts – How to Become a Master Trader

This book review is on Trading Instincts by Curtis Faith, the well known author of the book: Way of the Turtles. Most trading self-help books are incredibly drab. They are generally written by moderately successful and unsuccessful traders or by self-promoting pseudo psychologists. This book does not fit into that mould. Curtis Faith is one of the most successful Turtles of his generation.

The book itself is an engaging and insightful read. The main concept of the book centres on the use of both the logic driven left side and the intuitive right side of one’s brain. Perhaps the major beneficiaries of this book are traders who have accumulated some degree of market experience. The book argues the case that traders can make more decisive and effective decisions through a blend of the logical and methodical left brain and the intuition and gut feel of the right side. Too often traders attempt to rationalise the markets as if they were an exact science. Curtis Faith argues that the left sided brain paints an ideal picture of the market and those traders that are unable to grasp the reality that markets are not those ideal pictures that the brain paints will be left without the decisive edge it takes to become a truly effective trader.

The analogy that Faith uses is of Fangio the great F1 racing driver. The story he uses is from the 1950 Monaco Grand Prix when he led after the first lap, only to swerve to a halt ahead of a bend in the second, raising his hand to warn his rivals of trouble ahead. The trouble in question was a pile-up of eight cars competing in the race. Fangio’s quick reactions had saved the day for everyone else. But how could he have known about a crash hidden from sight on the other side of a bend? Fangio explained he would always expect spectators to focus on the lead car, generally his. At Monaco he said: “They were not looking at me leading the race, but were looking the other way.” Instead of a light-coloured blur from their faces, the spectators in the stand had gone dark, with heads turned to look at the crash. The impact was unsettling. Fangio’s intuition was to brake.

The book points out that we make sense of the world with the left side of our brains. We use it to analyse, categorise, theorise and rank things on a conscious level. The right side, however, is concerned with broader spatial relationships at a subconscious level. When you feel uneasy, but unable to pin down the reason, this is the right brain at work. Its ability to trigger a defensive reaction is part of the human survival mechanism. If you have not guessed, it triggered Fangio’s decision to brake. The priority is to reach a quick verdict rather than understand it. So right-brainers find it hard to explain why they need to act in certain ways, to the irritation of left-brained market participants.

Faith does not only introduce his ideas as a concept, he also provides some practical exercises to aid the reader to trust the intuitive side of his/her brain; something that I am now employing in my trading.

Learn to trade at Futex.

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