Developing Gut Feel

Recently I was standing out front of my house talking to my parents who were over visiting. A car drove by and I casually mentioned “they’re lost.” That prompted the question, “how do you know?”

I told them that I knew because I’ve lived on this street for a few years. It’s not that I know the cars (I’m no stalker!), but rather that I’m just familiar with the neighborhood. There are efficient ways in and out, and those who live here know that. So, when cars drive right past the nearest side street, it’s clear to me that they aren’t familiar with the area and therefore don’t know exactly where they’re going.

Who cares!? And what does all of this have to do with trading, you ask?

A lot, actually.

Insignificant as it may seem, I learned what I just explained about my street from spending time outside and casually observing it while playing with our kids. Now, I trust my intuition when I see a car go by that doesn’t conform to the norm.

In the market, it works the same way.

You put in time, you develop some gut feel, some intuition, and you have a little more to base a decision off of than had you not developed that feel. You may not always be right, but you have something extra to rely upon when making decisions and it comes from the time you’ve spent observing and participating.

Here’s a relevant side note.  Just this week, I had a conversation along these lines with a Bandit member. He had recognized that he was not relying on himself enough and the work he was putting in each day for his trading plan. He is not at all new to the market, but had been struggling to take some of his plays alongside those of mine he liked.

I told this trader a couple of things…

First, the nightly service provided here is my trading plan for tomorrow, and it’s intended to supplement the work he is already doing – not replace it. When he wanted some additional ideas to add to his own, they’re readily available nightly. There’s a lot of value in not only having some additional ideas like that to turn to, but also noticing what kinds of plays are working best right now.

And second, he has been putting in the work to develop his trading plan and needs to rely on his work and trust that it will also produce.  His intuition of what comprises a quality pattern by now is absolutely valid, so that ought to carry some weight in his trade selection process.

Back to this idea of gut feel, it’s interesting that newer traders love to act on hunches when in reality they have so little to base those hunches on. Experienced traders don’t force opinions, they just pay attention to their intuition when it comes calling and they factor it in.  There’s no magical belly-rubbing involved (thank goodness)!

The more time you spend observing the market and trading, the more reason you will then have to trust your own gut feel and intuition. But it won’t happen overnight, so put in the hours if you want to have it.

Trade Like a Bandit!

Jeff White
Follow @TheStockBandit

P.S. Through the nightly service, I share swing trade setups with members here including my planned entry, stop, and target levels. Check it out today.