Yes, I have the book. Good if you want to day trade. There is another out that is receiving good reviews. I will look it up for you. But IMO I would be well-versed in charting, the price and volume action that you see on charts, and technical analysis before focusing in on daytrading methods. I am no daytrader myself. But I understand much more what I am looking at in the context provided by charting. Also it is very important to learn about tape reading. There are very few books available on this art form. The concepts about Market Profile is very worthwhile here since they apply to understanding the trading action within the structure of the market.
I think your idea in developing a move concrete understanding and approach is very good, and not rely on your intuition as your guide. I find intuition is a very useful tool, but a poor guide over the longer run. IMO intuition involves recognizing patterns on some level that you may not be intellectually aware of. If that pattern is found to be more basic to the market, than your intuition will prove to be useful over a greater period of time. Intuition that is useful comes form market experience, not the strong pattern recognition abilities that some people come with to the market even though this skill can give them an initial leg up in the market.
However, the market does change, and it can change in substantial ways. This can throw the person using an intuitive approach to the markets. The best a person can do is tell that something is "off" about the market. For instance, this can help in recognizing a market correction in the making. But this "feeling" can remain well after the market correction, because since the market correction happened, something significant in the market has changed. This was the case with the 1987 market correction. It does not do you any good by staying out of the market for this reason. So what do you do now? IMO intuition developed in the intellectual framework that charting can provide is even more useful, and places the trader in a position where they can in a concrete way recognize change and adapt to it. This is very useful particularly in changing markets.
I can think of one very intuitive player here at SI who has developed a system based on in part their intuition in what they found to work. This trader has had a recent history of doing very well in the market their their system. However, when the market changes, even for a short period of time, this trader tends to get burned. This trader has been doing better in getting out of the market when the market does not look "right", but there have been some false calls and one time at least where the trader did not recognize quickly enough that the market was ready to spill. If this trader was a charting, the evidence was there in the chart for a period of time before that the market was going to pull back. If the trader were to develop their charting abilities more, this could of helped in providing this perspective of the bigger picture instead of getting caught up strictly in the daily action of the stocks that this trader plays. Also learning how to read the tape better and how to use it as a tool to gauge not just stocks with but the market could of helped too. Now that the market has been changing, this trader's "system" has not been performing as well. This position trader now has resorted to flipping stock durng the day which is an entirely different environment to work in which requires a different set of rules and frame of mind.
You see, this trader simply has no perspective adn over time has not been able to develop this perspective. This trader does not realize how the market has changed and as a consequence how the performance of their "system" has changed. Intellectual level procedures like charting and other methods can facilitate a perspective that is very important when trading in the market. If the market were to continue to change, which it will, this trader may have to develop another system, but not after this trader has incurred losses and the eventual late realization of what is not working. Also following ones equity curve is very important here and would of been a clue to this trader that all is not well a while ago.
This is what can happen when an approach or "system" is based on and played by in a significant way a traders intuition, particularly the intuition not based on actual market experience. Since the trader does not recognize in any concrete way the pattern that they are trading off of, how are they to know when the market has changed and they need to change their approach to the markets now that the pattern is not there anymore?
Nothing replaces a more concrete and objective analysis of price and volume, and the tools that are based on this, to provide the trader with this needed perspective. Even the very experienced judgement oriented traders use or develop some form of charting or other means of objectively describing price and volume relationships to provide them with the framework they use to exersize their intuitive judgement. from
Makes sense? Of course just my opinions.
Bob Graham
PS: I am using words like "their" to mask the sex identity of the trader since we have both men and women here who are good traders. |
