Then youll need a market methodology.

Unlocking your own personal Market Methodology is a time consuming and sometimes frustrating pursuit. But a worthy venture nevertheless.

Some time ago in my career as a professional trader, I worked with a group of traders headed up by a maverick individual who had fathomed out his very own key to the door of trading success. An intelligent man, many of this gentlemans ideas were both interesting and enlightening but many were also somewhat off the mark.

His ultimate idea was a trader training conveyor belt, with traders coming off the production line every few months. Not a new idea, this has been done before most notably by the Richard Dennis and the Turtle Traders, likewise Trading Arcades abound in many major cities.

Interestingly enough, despite the mavericks key to the door, not one profitable trader ever came off the trader training train. This point is worth noting, as he himself was successful, this raises several questions.

Given all the teaching that goes into these trading trains, and preparation for the market, is general ability in other spheres linked to trading ability? Can trading ability actually be taught? Perhaps the training is incorrect? Can trading ability be measured in any way prior to embarking on a career? Can you be tested for trading ability?

Statistics tell us that some 90% of people who trade financial markets lose money. How can this be and why is this so? Consider that many of the people who trade are highly qualified or highly intelligent individuals, who are successful in other fields, does this tell us anything?

Many of you will have read some of the books by well known technicians and traders, you will also have studied various in depth commentaries on how to trade markets, again books written by well known names and yet you will at best still be facing a position of break even in your trading. Is trading so hard that even after all the time spent, the technical analysis, charts and methodology consumed and digested that it is normal to be sitting at break even after this level of comprehension and understanding. Is this a normal situation?

Trading Intelligence appears to have nothing or very little to do with the way we view everyday subjects or situations. This has to be so, if you consider how many people who fail at trading who have succeeded to a certain level in other fields. You can very easily read about highly qualified people such as successful doctors, dentists or businessmen who start trading Stocks or Futures who wipe out a USD50K account in a matter of weeks. The story nearly always seems to end with the message that these people are very surprised about their losses. Normally for those concerned it is their first failure in their lives so far. The conclusion must be therefore that whatever skills helped these people to succeed in their normal professions is of little or no use to them when trading.

So what is trading Intelligence?

Perhaps I should state what trading intelligence is not. Trading Intelligence is obviously not related to being able to read or interpret a myriad of conflicting technical analysis charting patterns which normally give the trader analysis paralysis syndrome, nor is it about the best kept secrets of a company balance sheet.

If it was either of the above, then given the amount of work generations of traders have spent studying these two areas, then far more of them would be winners. Likewise they would be winners in a much shorter time frame. Lastly, overall the percentage of winners would also be greater.

Trading intelligence is, understanding other traders reaction to market activity and price action. It is being able to understanding how other traders will react to price action or movements in the market. Understanding other traders reactions enables you to be able to take advantage of their positioning in the market. This is especially so when we know that the majority of them will be pointing in the wrong direction.

Let me make this quite clear that when I state understanding trader reaction, do not confuse this with reaction to news events and guessing what traders will do if the FED hikes rates for example. Understanding trader reaction is seeing other traders reactions to their analysis of market activity and price action.

To take things one step further this means knowing or understanding when traders are entering or exiting a market and understanding their rationale for doing so.