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I got a comment from a long time watcher and subscriber, Gary Portugal 8035, which means he was probably born in August of 1935. That’s the only thing I can conclude. Thank you for being here, old timer. And the question regards, how does intuition play into your trading? Well, for me it’s huge, but again, it comes with aging. The wine in the oak caskets, right? So it’s like you can’t really get that early on. I had good instincts, but it was only from actually putting on trades in real time with real money holding positions overnight over the weekend and looking at the overall process that I was able to hone those instincts. So they can be a big part, but I don’t think it’s going to happen over a week. And then two, you have to figure out where do your instincts kick in? I was always good at knowing, and Jared Dian always kind of teases me on this is like I knew when I was a kid and in college when to leave the party.
It was always when the first beer bottle hit the wall because it typically doesn’t get better after that. So you can do it, but you have to really keep good records too, because your instincts might, I have a good sense of when to get into something, but I might really suck at knowing when the party’s over. So therefore I have to be purely systematic on the exit. Or I could be in a winner and then kind of notice that the market looks like it wants to turn or rollover. Again, I’m not looking at VIX, market breath, I don’t use any of those inputs. If I see something’s moving along, I don’t care about what the overall market’s doing. Your style might be different, more power to you, but I don’t really care about those broader data points. They’re not inputs that I use to make better decisions about trading.
I look at every instrument. It is its own market. So you might have great instincts. I want to get out of something, but be very poor about knowing when to get in. So you might rely on buying a five day breakout, something like that. And then using your instincts or your intuition to say, I think it’s either going to retrace a little bit here, which is nothing to necessarily fear. It doesn’t mean drawdown, right draw downs or measured from month over month. Two trades in a row doesn’t mean necessarily losing streak and three trades, losing doesn’t mean drawdown. So you have to be careful with the language that you use because the language that I hear oftentimes, at least the way I think is well in a nice way of saying it, it’s wrong. So you need to keep also good records, not just of the trades, but what was the intuitive aspect of the trade that you were using? Is it entry exit? Is it position sizing? Typically, I would be very systematic on position sizing because that’s where you make and lose your money to me more than exits and entries.

So I don’t really care about sniper like entries. They’re super accurate using indicators for hyper accuracy. I think that’s overrated. I think you can be like Jimmy Page if great solos be entirely sloppy and execution. So you can do that in your trading too. If your position sizing is right, you don’t have to be so crazy anal about your entries or your exits because if you’re trading, again, from my perspective and letting these things building into position so that you could walk away with a 5 to a 10R win, 20 cent move isn’t part of the equation. It’s not something that I freak out about. It’s much more, for me, it’s small potatoes, right? So I feel like can you systematize that? Well, yes, because you are the system. So it’s already part of you. The question is, do you want to turn that spigot on or not?
And then trust it because if you think you have intuition, you could also get into the mind effing part now and start overthinking like, did I do that right? Did I do this and that? And again, intentions, equal results, maybe the whole goal is to just continue to beat the living crap out of yourself. So you have to be, think of it from a micro and a macro standpoint. What is it that you want out of the situation? For me, the goal should be that you’re growing your account multifold, not 15%. You can buy and hold for that. Hire a financial advisor or buy the 0% fee S&P 500 fund and then go do something that you’re going to be really good at. So you want to use this as a vehicle trading meaning so that you can change your life and make outsized gains. So I think there’s a few ways to look at it. Where does it creep in, right? There’s three parts to the trade. There’s the entry, there’s the exit, there’s the position sizing. Once you’re in the trade, it’s like, okay, I have intuition. Maybe now is when I move my protective stop higher. When I’m long, I’m not one to use sell limits above the markets to take profits too soon. I don’t want to limit wins. That’s why I don’t sell calls.
So how do you take when it right, because then on the sell side you have protective stops to help you protect your capital. But then once you have unrealized gains, I don’t really look at that as my money until I lock it in. So then what’s your intuition and your scope on handling those trades when you’re in them? Again, it’s so easy to overthink stuff, especially when you want to go to something that’s going to make you feel safe. So don’t confuse intuition with the use of discretion, which I operationally define as you putting on a trade that’s going to make you feel good because you can’t deal with the discomfort at the current level. It’s why you go on tilt. It’s why you chase trades after you’ve missed them, right? You have to go back and say, okay, how did this happen in the first place? Why did I miss the damn trade when I shouldn’t? Why am I in this trade when I have no business being in the trade? So that’s all part of the education, and you really can’t learn that in a book. It comes from kind of doing it. You know what I’m saying? So you can do it. It takes time. The marketers want to tell you that you can learn it overnight. You really can’t. And you should really start to think about where does it kick in for you? Where do your instincts work or not? And document it in great detail. I had a hunch that X, Y, Z was happening when I was in the trade. Again, you’re watching in one minute bars. My gut is you’re going to see what you want to see so that you can feel good. Just to reiterate, based on a million years of evolution, we have a fight or flight mechanism.
Trading puts us in harm’s way. We’re inviting risk into our world. It’s a very unnatural thing when most people are heading the other way. So you don’t want to start looking at the chart in one minute bars and start to think that you can intuit stuff when your ultimate goal is to just try to feel good because you can’t take the burden of the abundance and the upside that you could have in the trade. You start to think this has to be a top. Then you can talk yourself into it. So you want to be super mindful of not only what you’re thinking, but what you’re feeling. What are the emotions that are running through your body? And realize that those feelings could be driving, they could be pilot and navigator, and if you don’t understand why, then you got to get some coaching. It doesn’t have to be with me because it could be coming from your subconscious. You could have this whole, I want to be very reasonable. I just want to be a reasonable guy. I don’t want anyone to love me, don’t want anyone to hate me. I just want to be the reasonable guy. Those people are liked, and I was like, I don’t care about being liked. You know what I’m saying?

The post How can intuition play a role in your trading first appeared on MartinKronicle.

The post How can intuition play a role in your trading appeared first on MartinKronicle.