The Intuitive Trader

I think,due to the lack of extensive knowledge or deep study/research,’intuition’ or gut feeling has got bad reputation in the world of Technical Analysis.

I see,intuitive trading is discouraged in most articles or books written on TA. I myself had ignored it or avoided it for many years like a bad thing!!
But in recent years,after going through several research based ‘how to learn’ something ‘books’ like “The Talent Code”,”Peak”, “Bounce,”Make it stick”,etc,I now know,that there is a very strong link between ‘practice’ and becoming expert.

All experts do things from their ‘intuition’ or gut. From the fastest bowler to the greatest scientists,all do things ‘unconsciously'(or what we know as intuitively). Do you remember how Newton discovered the gravity from the falling of an apple? Actually,his brain did the discovery quite intuitively…But behind this intuition lies his thousand hours of study,research and deep thinking. Same goes with Einstein.

What is happening here is: when someone practices something hour after hour,months after months,year after year,the brain makes the skill ‘unconscious’ by sending the learned skill in the limbic system. When brain stores the skill in the unconscious part of it,the skill becomes so automatic that it seems too ‘magical’ or intuitive. The skilled person at that point doesn’t really consciously know why and how or when he has become so skilled/magical…….But behind all of his abilities/skills lie hidden years of practice! His years of practice has become intuitive and he has become too automatic.

Note that many great traders actually had years of practice in trading. For example,Jesse Livemore, Tudor Jones,Warren Buffet,to name a few. Jesse Livemore started trading before his 20th,so did Tudor. They practiced trading so much consciously or unconsciously,that it became automatic or intuitive for them in the later parts of their life.

If a trader has to consciously make a choice in trading,he is not yet a ‘skilled’ trader. Period.

The trader needs to practice trading so much that his trading becomes too automatic or intutive. And when you ask him why he has taken a specific move in trading,he would respond to you: I don’t know. I just felt that it was the ‘right’ thing to do,so I did.

This ‘intuition’ or gut feeling is a very very precious thing to achieve. Years of PROPER and MINDFUL practice can beat any mechanical system out there! Human brain is so clumsy and limited. Still,we can beat the computer in many aspects. Why? One reason is our ability to think in ‘holographic’ way,which computer is unable to do(till today).

Our goal should be to:

– Trade so much that our brain get accustomed to all types of patterns and the pattern recognition becomes very automatic,and intutive.
– And we have to be very mindful of our skill development.
– It is ok to make mistakes and a lot of errors. Brain is powerful enough to correct itself. So,have faith on it.
– And these three things matter: Desire>>Faith>>Actions

Government Sector

I am getting interested in Government sector. It’s been a while this sector is not moving….!!! The position of this sector looks nice,though the volume is quite dry….!!

 

Divergence in Index

There is a divergence of Price and Volume(TO) happening in index!!! Interesting to see that new buyers are not coming in much! Or,we have got a lot of ‘old buyers’ caught at the rise of previous tops! We may see a pullback in index led by banks? Or the opposite may also happen…..

There is no exit signal yet,btw,from any indicators!!

I am being cautious at the moment. Checking out sectors for trade. At the moment,except Government sector,no other sectors seem to be lucrative!! Banks might go for a pullback pulling the index down,though the opposite may also happen.

 

 

Making things automated!

One of my PC remains ‘on’ all the times. And it does some automated tasks at the specified schedules! I believe,we should automate our daily tasks in PC as much as possible. Otherwise,we will be stressed out due to the load of huge pressure of a lot of tasks!!

Most of the automated big extractions,ie from DSE, happen at midnight,so the download speed is faster!

 

Bank sector! Sell or hold!!

Bank sector getting to a resistance level. Probability is,we may see some weakness in it….Any short term trader may lock his(there is no ‘her’ in online community of traders….LOL) profits!!! That is a clean and clear cut way!!

See image#1!!

Trade over….Go to home!! 

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However,there is a twist!! For a ‘chance taker’,Bank sector is not a sell(yet). The ‘trailing stops’ has NOT been penetrated yet!!

See image#2!! The yellow line,which is the trailing stop, is far from the top price!!

So,bank sector is a hold(still)….

Well,at least,I am gonna hold bank till I get better confirmation. Even though,I know,I will lose some of my existing profits,but I would like to maintain my ‘rule’ of holding stocks till they penetrate my trailing stops!! I don’t ‘need’ profits! I want to see my profits vanishing…….. 😛

 

What an irony!! Last trading days’ Volume shows that a lot of ‘mango’ traders are entering this sector(what were they doing all this time!!!)….This signifies that the market has now got traps to entrap the traders!!

The irony is,we know that it is high time we prepare ourselves to sell to the new buyers entered. Still,we have to ‘wait’,because of the reason below:

Technically,bank sector hasn’t yet established a mid term uptrend. It needs to pullback and then start to rise again to show that it got ‘strength’!! If it pullbacks and then,start to rise again,that means,this sector has the potential to get to the top….pulling index higher and getting all other sectors ‘lower’!

Only time will now show what is gonna happen!!

 

 

Nature of the market!

In my view,when a trade in the market goes wrong,there are three possible reasons that may have caused the trade to go wrong:

 

1. Strategic

2. Psychological

3. Unpredictability

 

By strategic,I mean,the methods we use to enter/exit a stock. For example,one could use the method of breakout to enter/exit a trade. If we have made a mistake in a trade,it could be because we have applied a wrong ‘strategy’. For example,whereas we should use consolidation style of trading,we have used ‘breakout or pullback’ type trading methods. This is strategic mistake.

 

By psychological,I mean,our strategy is alright. Still,we haven’t maintained the rules that we are supposed to. For example,we haven’t taken a trade at breakout,because we are ‘worried’ that the price may collapse. Yes,the price may collapse after a breakout. And it happens most of the time. But we are supposed to maintain and execute the strategy we have planned to do. If we don’t,then why not? The reason is,psychological. Something in our mind has refrained us to execute our strategy.

 

The third one is,unpredictability. Market is always unpredictable. Yes,we have an edge in the market. And we trade that edge hoping to gain success in the long run. But still,there is always the element of ‘unpredictability’ that we can never avoid in the market. And even when our strategy is right and we have adopted the right mindset for a trade,still the trade goes wrong,it is the unpredictability nature of the market that is in play. And we should not beat ourselves for that. We just should tell ourselves: shit happens,get over it!!

 

I believe,strategy influences 30%, psychology influences 40% and unpredictability influences 40% of our trade!!

Longer term trend in DSEX

It seems Index is trying hard to stop its fall. Recently,index with the help of Finance and Bank sector showed a reversal, and showed buyers are still strong.

Index has shown a lot of ups and downs revealing the fight of bulls and bear. It has created a complex consolidation phaze. Such a move by index is significant. Because any trend is stopped and reversed either with “V” type pattern,or consolidation pattern.

It looks like,index’s fall is getting reversed. Technically,index has broken the trendline. This break of trendline has happened after a long six months of fall. Also,in the monthly chart,Index has gone to oversold level and now standing at a very significant level. Longer term trend seems to be getting bullish in DSE!

In August,Index usually remains bullish. This bullishness could last till november. Let’s see what index does this year!!