What Makes a Good FX Trader? Instinct

Forex Market Education 

Moorgate: London: Essex Boys

A little digression with a moral: I remember when I was dealing interbank spot behind the Old Lady, at lunch break myself and my mates hopped across to Cannon St to find a pretty decent sandwich and a coffee and meet up with one of our friends who was a local red jacket  on the floor. Of course those days Canon St. was the home of LIFFE or the London International Futures Financial Exchange and it was a place where the hardest Essex boys cut their cloth. It was a place where people similar to Nick Leeson would grow up, although for the right reasons, because what Mr Leeson did to Barings bank was unforgivable. But essentially, that was the raucous atmosphere of the City of London sharply divided between traders from the mean streets and investment bankers from Eaton and various nice places. Of course there were some mentally tough traders also from Eaton because the public schools were a nightmare for young students who would always be bullied in a very harsh school environment that turns a blind eye. Hence the Jam song - Eaton Rifles! and of course the great movie by Guy Ritchie - Rocknrolla. When I was at a certain boys school I can remember as a 12 year old boy how 18 year old prefects would just push my head on the floor to lick a shoe and I would stubbornly refuse at all costs until the battle of wills would end up with me being thrown out and prefects getting tired of pushing me. You have to stand up with your own will power against the odds.

I can remember as we were standing outside the shop with our sandwiches along came this young man with a such a strut that my friend, the local for FTSE futures, just wanted to get into a confrontation and find an excuse for a brawl. But that was the city for you. so here he comes along, cock of the walk, with American stars and stripes in a colorful jacket for Bank America. Investment bankers just hated the sight of this Essex peacock but then I had to remind my friends that this young man moves about 200 million Sterling through his fingers. Needless to say I doubt very much the young man even knew where exactly Bank America was located in USA. But that didn't matter. It really didn't matter if he didn't even know where America was, and well; it really didn't matter if he never went to university too! What mattered was that he could count faster than a computer and could react faster than anyone else because of his street instincts. Trading survival is  all about your instincts to fight and win with an edge.

Ask yourself this question right here and right now; why do you think you have an edge? Because if you don't have an edge - please don't trade - because other people have other motives to say prices are going up and down and you want to follow other people? You need your own plan and the moment you understand your independence then truly, yes indeed; you have an edge.

An education  does not guarantee you success in trading. But instinct will teach you when to keep your head down when markets grind sideways. If you do not accept this premise then please take a look at the story of Lehmans or LTCM. so much for rocket scientists.

For those that doubt just take an early morning plod to Billingsgate or Smithfields markets and at 4am watch how those kids auction morning fish and meats and veg seamlessly moving prices. Then you would know why in the 90's and the 00's  (noughties!!!) some of the best recruitments ever done in the City were completed in those markets.

You can listen to people all day long. But if you did; you never develop your own instinct.  

Instinct can only be build by watching prices move each and every day and then using charts as support to reflect upon the days price action and the past. Instinct is learning how prices oscillate in waves and how you can move along subconsciously with the rhythmic tide, up and down, as buying pressure fades into selling pressure and so on. Your basic instinct gives you an edge than no other trader can have if you learn to feel prices by yourself and not listen to other people.You will make mistakes; but at least they are your own mistakes and you can think over your past actions and find a solution to adjust your trading plan. If you trade another person's plan then how can you correct other people's mistakes???

What I am trying to say is that the more you listen to people the less you actually are involved in your trading decisions. 

The young man who strutted with his colorful Bank America jacket thrived because of his instinct. Moreover, I doubt very much he would have had the time to listen to people. The most precious mind is the independent mind. Make your own plans and stick to it and refine it with a few adjustments if necessary as you learn to feel the pulse of the wave theory of prices in live action.

Pieter Bergli - Trader X16.

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