Instinctive daytrading

jackiesoon · Aug 6, 2006

I absolute agree that its more profitable with this way of trading. I also use 1 minute charts with simple moving averages indicators to trade the e mini russell 2000. Get in and get out within a couple of minutes and sometimes within seconds. So far I have been quite successful with this method than all other methods which I'd used in the past

sunggong · Aug 6, 2006

Ticketwatcher,

That was an excellent post.

I have experimented with multiple strategies when I started and found that even with all the plans, the most important factor, at least for me, in daytrading has been the confidence.

My confidence derives from knowing that the risk associated with purchasing any stock is less than the profit potential.

Over the last four months, staring at the charts for hours and hours has helped me to get a good feel for how the stock normally behaves, and I somehow managed to find some intraday patterns that works in my favor, and I can "feel" when these patterns are about to be formed. (In an idiotic way, it's somewhat like how Nash saw cryptic messages on newspaper articles from the movie "The Beautiful Mind." Just a pattern popping out to me.

I do realize that this may not be the most scientific approach to daytrading, but it works nevertheless. And actually, it's scientific in some ways since most institutions nowadays employ automated trading algorithms, and we all know that algorithms are based on certain set of rules, which can be repeatedly executed over time, thus generating identifiable trends over and over again.

Perhaps I got lucked out with being able to get a feel for these patterns.

I will undoubtedly have to continue to develop other strategies that work for me and I certainly don't want to be happy with 100k yearly potential. But for now, this "method" has been highly successful and I plan to keep trading this way until I accumulate more capital.

Once I build some capital, I can afford to raise the stake on each trades and even try out other methods, but it's a good feeling knowing that I found a method that allows me to consistently make money on a daily basis.

Spooz Top · Aug 6, 2006

Quote from Ticketwatcher:

This is a good thread for the Psychology Forum. This is an argument between those who operate best on the left side of the brain and those who operate best on the right side of the brain. The question is how much structure does a trader need to be successful. The answer of course is, it depends on the individual. That said, I would say from my own experience that I would like the least amount possible to be successful. Do not ever let the process supplant your purpose. If you tend to do this, you can have a succesful future in government bureaucracies but not trading the markets. The poster who started this thread is and can remain successful if he understands the big picture. First, he is trading for a purpose, and that is to make 500 hundred dollars a day. There are those on this forum who are strong on a plan and short on purpose. Right brained people are purposeful and tend not to lose sight of the bigger picture which in trading is the bottom line. Left brained people tend to get lost in the details and minutiae of process, which is the plan. At the end of the day, forget the plan, did I make any money? I would rather break my plan and make money than to say I stuck with plan and lost.In a sense the poster is not employing structure but avoiding employing it. The trader is consistently making entry points where he finds himself above water, not under it. He can afford to be intuitive. As long as he makes good entries, he can afford to be intuitive. The danger for intuitive trading lies when one is below the entry point and the trade is under water. This is where the structure and discipline that we tend to associate with the left side of the brain is required. But one of the ways the poster has found to avoid finding himself in a position where structure must be imposed is to concentrate his trading above the profit line. He understands that limiting the time on a single trade is a solid way of managing one's exposure to risk. He acknowleges that by controlling his risk in this manner he may be limiting his profit.When I was in college I worked in a produce department in a grocery store. The produce manager had to make decisions on risk and profit because the inventory that he was managing was perishable. If you came into the store on Saturday night there may not have been much product on the shelves or in the cooler. On the other hand since there was little product there was not any risk of perishables sitting around and spoiling which would mean a hit to the bottom line. He was controlling sales to stabilize and maintain the his profit. The supervisors at the corporate level frowned on this practice, but the local store manager accepted it because the store manager was rewarded by both sales and profit, but in the local manager's view profits in a produce department were more important than sales.By not holding on to trades too long, you may be giving up the opportunity for future gains, but you are also minimizing risk while stabilizing and maintaining your profit.The poster has done the wise thing in his money management of his PDT account. First this gives him a sense of urgency. Secondly, he is imposing structure. By not keeping much more in his account than is necessary to maintain PDT status, he has in a sense imposed a stop. A stop which is some sense is more important than a stop on a single trade, he knows that can no longer day trade if that 25k stop is violated.In response to the thread starter's initial question, I trade intuitively to some degree. I am a very right brained person. The advantage of being right brained is that you can usually operate on the left side if you choose to although it may not be as much fun. Those who are predominantly left brained usually cannot operate well on the left side of the brain. In other words those who thrive on the absence of structure can usually adapt to structure and those who require structure cannot easily adapt without it. I trade a plan and look to get about half of my profits from that trading. I also trade intuitively for the other half of my profits. I would have to add that those intuitive trades are made within very distinct boundaries that I have put down over the years.
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that,my friend,was a kick ass post........................great breakdown & the common denominator on what processes information on a second to second basis.........................i find myself straddling the two sides all day long & have found a comfortable common ground for the two without much conflict.

cashmoney69 · Aug 6, 2006

sunggong

If a trade goes against you, at what point do you tell yourself that your instinct was wrong?

FITENOB · Aug 6, 2006

instinctive daytrading is good, but can lead to burnout

Focusing on pattern recognition, disciplined systematic/mechanical approach will keep you in the game, more importantly build wealth consistently.

S2007S · Aug 6, 2006

sunggong how many lots are you trading when you trade to make an avg of $400 a day with a 25-26k daytrading account???
How do you determine to take a loss or not, for instance if you add a position and within 30 mins your down 100 bucks do you cut your losses or wait for it to snap back?

I started swingtrading/daytrading about a year ago, on average im trading anywhere between 100-300 share lots. May not be a lot but right now im keeping my risk extremely low.

bl82 · Aug 6, 2006

Quote from FITENOB:

Focusing on pattern recognition, disciplined systematic/mechanical approach will keep you in the game, more importantly build wealth consistently.
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I agree with the above as well as the increased risk of burnout too.

Making the transition from doing things instinctively to being able to decribe those instincts in terms of patterns, rules, etc. is the big step you will have to make.

I suggest developing a detailed log of each trade where you try to describe your setups, reasons for entry, reasons for exit, etc. -- then when you study those you will in all likelihood find that your instincts are merely unwritten rules. Codify those rules, tweak them, continue to learn from your trading log, etc. and you are on the way to making the transition from an instinctive discretionary trader who risks a rapid burnout...to a better disciplined semi-mechanical trader whose codified 'instincts' can provide a relatively emotion-free income stream.

Good trading!

ivob · Aug 6, 2006

Quote from cashmoney69:

sunggong

If a trade goes against you, at what point do you tell yourself that your instinct was wrong?
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You probably already gave the answer. As soon as the trade goes agains him..

Ivo

ivob · Aug 6, 2006

Quote from sunggong:

Sometimes I hold the stock for several hours because I know that the stock will break the way I want it to and I just need to wait around for that to happen. But for some odd reason, if it doesn't, I exit promptly and wait for the next signal.

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I found this to be useful: To focus on what a stock doesn't do.

Get out if it doesn't do what you thought it would do allows you often to get out at a good price or even with a small profit.

regards.
Ivo

sunggong · Aug 6, 2006

FITENOB and bl82,

Maybe I haven't daytraded long enough yet, but so far based on my experience, I must disagree that there is a risk of burnout with my method.

Like I said, the current method offers very little to no stress because I pick a very good entry point in most cases (VERY IMPORTANT by the way).

If I get it wrong, I exit. I never avg down. I figured if a stock is going down, I can sell and get in lower. If I get fooled by a quick fake drop, so be it. I really don't care. I have stuck to my rule of getting out quickly and I can wait for the next opportunity.

The idea of analyzing my trades more in-depth to better understand my instinctive trades however is a very good one. I have a degree in computer science, so I should certainly explore this option of semi-automation or even full-automation. Thanks.