Whole-Mind Trading

My new book, Trading from Your Gut, from FT Press will be available online in mid-December and in stores in early January. It introduces the idea of whole mind trading, which is using both sides of your brain for trading, to balance linear analytical intelligence with big-picture intuition.

The book bridges the gap between the two camps of trading. There are those who believe that one should only trade using very specific rules, ones which lay out the exact steps for entering and exiting each market position leaving nothing to the imagination or discretion of the trader. These are the systems traders. There are others who trade without the benefit of specific rules, those who enter trades based on much fuzzier criteria. These are the discretionary traders.

When I first started trading in the mid-80s as part of the famous Turtle trading group under Chicago trader Richard Dennis, I was firmly in the systems trader camp. I believed that having fixed rules was important and that discretion in trading was problematic because it allowed too much room for emotions and psychological influence.

Over time, I have discovered that each approach has its benefits and its drawbacks. That’s because each approach draws upon a different strength of human cognition.

The human brain has two primary modes of thinking, these have come to be known in non academic circles as left-brain and right brain thinking—because of the roles of the respective brain hemispheres. Left-brain thinking is linear and analytical. It is objective, consciously rational, and detail oriented. The right-brain, in contrast, is intuitive and subjective. It focuses on big-picture synthesis.

With my first book, Way of the Turtle, I covered mainly left-brain trading and analysis, the type of thinking that dominates systems trading. It made sense to concentrate on systems trading because as Turtle traders we were trained in those types of methods.

Nevertheless, I have always known successful discretionary traders, those who relied more on their intuition than on rules in their trading. My first trading mentor, Rotchy Barker was one of these traders.  Even Richard Dennis himself used his intuition in his personal trading account. So while I focused on systems trading in my books and in my early personal trading, I have always considered right-brain intuition to be an undervalued ability.

In the last several years, I have noticed that many systems traders and many readers of my first book have come to the conclusion that there is no role for right-brain thinking in their trading.  I believe these traders are missing out by neglecting an important part of human intelligence.

So with my second trading book, Trading from Your Gut, I set out to help traders see the benefits of each way of thinking, and to show how you can combine the two ways of thinking into what I call whole mind trading.

The best traders have learned to combine the benefits of left-brain analysis and logic with right-brain big-picture intuition. So the best systems traders have learned how to draw upon the intuition and pattern recognition abilities of their right brains in the development of new trading ideas and to build strategies that are impossible without the use of human intuition. And the best discretionary traders have learned how to use left-brain analysis and logic to build a better framework for their mainly right-brained trading methods.

In Trading from Your Gut, I show how both types of traders, systems traders and discretionary traders, can benefit from whole mind trading.

Tagged as: Intuition, Trading, Whole-Mind Trading