Is Intuition Real?
By Cliff Clark
Trading is a disciplined activity that tends to confuse even the best among us unless we have a trading plan and follow a set of strict rules. You have a trading plan, a set of rules dealing with everything from the style of trading to pursue, the time frame to trade, the patterns to use, the quality of the trend, sector relative strength, position sizing rules, risk/reward ratio etc. Then one day you come across a trader who handles the markets in a seemingly effortless way. You're in awe! We all put these trader's on a pedestal and assume that this trader deals with the markets in an intuitive way rather than following the rules you have to follow. How do they do it? Can you reach this level of intuitive performance?
Sorry to inform you that there is no magic bullet. That level of intuitiveness is usually only reached through a very systematic use of rules and lots of experience. When you see a trader immediately coming to conclusions in regards to a particular trade, it isn't because he had a vision. He processes the same information you do, but does it in a quicker and more efficient way. What takes you minutes or hours to process only takes him seconds to evaluate. He's probably using a very vast set of questions that run through his mind at warp speed. He likely has a trading checklist that he's run through so many times it's ingrained in his soul! He's run through ten's of thousands in not hundreds of thousands of charts to reach this level of competence.
This repetition helps develop a level of experience. There are the right experiences and the wrong experiences. You may have had the same experience hundreds of times, or you can have had hundred's of experiences. Which do you think is better? Obviously having the same experience over and over and over is going to make you an expert on that experience. It will give you a level of intuitive excellence that will make you the one that impresses others.
My advice, narrow the focus of your trading plan. You don't need to have 10 strategies and 7 time frames. Keep it simple and you will be make your trading a successful endeavor.
2 trades for me today with +1.5R total
1st Trade QCOM +2R
148.39/149.97 exit 143.25
12% gap down under pivot support and 50ma after a strong daily double top rejection,. I took it on a congestion breakdown with a fairly wide stop, leaving my 2R target 50c over its ATR, slow but consistent move down with great RW, hit my target on the penny before it bounced.
2nd Trade AQB -0.5R
9.40/9.70 exit 9.56
I rarely trade stocks under $10 and even more rarely short them. I liked this daily chart as it broke its uptrend channel and stayed under a strong 9.50 support line enough room to its daily 50ma. I entered after a pullback with a fairly wide stop but only 1/3 of its ATR used at the time. It failed to break down with the strong market open and stayed in a narrow range.
I actually broke my plan with this trade as I lowered my stop to a pivot where price made a big bounce earlier at 11am with a large seller sitting there. My thought was that if it breaks that level again then it will likely...
1 trade for (-1R)
I took a BD on QCOM. I was worried about the target being close to the daily range, so I took a tighter stop on the 2 min chart. I am looking through PTS right now, most of the examples have 2 options for where to put your stop. It looks to me like one of the stops would be at the bottom of the main consolidation area, and the other at the bottom of where there has been a shakeout or turnaround bar (if there has been one). Due to the daily range I took the tighter one on this. In hindsight it seems obvious to take the wider stop, but in the moment it looked ok.
I was then looking at the 15 min 3BP on QCOM, but the reason I used a tighter stop in the first place was because of the range. The 15 min 3BP would have needed to have gone even further than the wider stop on the 2 min BD, so I didn't take it.
