Forex Trading: The Quantitative vs. the Qualitative Approach

Filed under: Learn Forex Trading |

One might presume that forex trading is all about having a mathematical system and carrying out a number of inflexible rules without letting your emotions get the better of you. While this, to an extent, is true, there is more to forex trading than this quantitative approach.


A lot of professional and experienced traders talk about having a ‘gut feeling’ with the markets. So what exactly is this gut feeling? Well, the human mind takes in vast amounts of information every day – so much so, that we simply can’t remember it all in our conscious mind. Think of the conscious mind as the hard drive on your computer. It can’t hold a lot of information – which is why we often need a massive external hard drive to store other things!


A lot of this gut feeling comes from information stored in the unconscious mind. We might look at a setup that fulfils all of our mathematical criteria, but we have a gut feeling not to take the trade. This could be because we have seen a similar setup occur in the past that did not work out. This is called discretionary trading, because it is done at the discretion of the trader – and it is a more qualitative and interpretative approach compared to the logic of a strict mathematical system.


So is it best to use a quantitative or a qualitative approach when trading? The answer is both. Follow a set of rules, but don’t be completely inflexible about using them. Use some discretion when making your trades, but try to keep it unemotional at the same time. This is a difficult skill to acquire – being unemotional but being in touch with your gut feeling. It is a skill that requires hours of screen time and a lot of experience.

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