Have you ever been in a situation where you had a strong hunch that a currency pair will behave a certain way but you didn’t feel gutsy enough to play that forex trade? And when price did move the way you predicted, did you feel disappointed that you didn’t trust your instincts?
Every experienced trader has probably found himself in this pickle at some point in his trading career and has wondered whether trading based on these kinds of hunches would be profitable or not. After all, much has been said against relying purely on one’s emotions or taking trades based on guesswork.
Well, let me go out on a limb here and say that you should trust your trading gut.
Of course this doesn’t mean that you should throw all fundamental and technical analysis out the window and simply rely on where you feel the markets will go. You may as well grab a Magic 8 ball and shake it for answers when coming up with a trade idea!
Not to be confused with taking impulsive trades based purely on gut feel, trading demands a special type of intuition that many refer to as “feeling the market” or “being in the zone.” This refers to that specific point in your trading career wherein you have gained enough experience to be in sync with market moves and quickly pinpoint which kind trading setup can tilt the odds slightly in your favor.
In this case, your forex trading intuition is something that has been developed over time and through the course of your trading experience. If you’ve spent enough screen time and conducted proper deliberate practice, you are able to get a feel of how markets behave at certain times, enabling you to get a better idea of how price will move later on.
More often than not though, forex traders would feel a little uncomfortable about entering a trade based mostly on gut feel. If this is the case for you, then you can start by keeping track of your trading hunches and whether or not your gut was spot on. This can help you develop trust in your trading intuition, allowing you to have enough confidence to actually make profits off it later on.
You could also consider taking a small position based on where you feel price will go. Just always remember to practice proper risk management and have an exit plan in case it doesn’t head in the direction you predicted.