“I go with my gut feelings,” says investor Judith Williams. Sure, you might think, “so do I,”— if the choice is between chocolate and vanilla ice cream. But Williams is dealing with real money in the five and six figures.
Williams is one of the lions on the program The Lions’ Den, a German television show akin to Shark Tank. She and other participants invest their own money in business ideas presented by contestants. She is not the only one who trusts her gut. Intuition, it seems, is on a roll: bookstores are full of guides advising us how to heal, eat or invest intuitively. They promise to unleash our inner wisdom and strengths we do not yet know we have.
But can we really rely on intuition, or is it a counsel to failure? Although researchers have been debating the value of intuition in decision-making for decades, they continue to disagree.
More here – Scientific American
PS: My view is that in some instances intuition is simply unconscious competency coming to the fore – that is we have a prior body of knowledge that sits below the surface and is accessed very quickly. This is useful up to a point if you have prior experience at something. Think of it as being akin to catching a falling object – this is a reflexive action and we have al caught objects hundreds of times throughout our lives. We do not need to sit and process the need to catch something if it is falling. The moment we do begin to process we fail.
However, with traders, my observation has been that all too often intuition is simply code for wishful thinking. There is a reason that complex acitivites are often shortened to algorithms. Algorithms beat people and act as a reminder of the steps needed to be taken. A prime example is CPR which when you do a first aid course is presented as D.R.A.B.C or danger, response airway, breathing and circulation. It doesn’t matter where the need for this arises be it football field or inside an ICU the basic principle and policy remains that same. It does so because it removes the need for making it up as you go along and too much of trading is simply making it up as you go along.