The Art of Feeling the Market

Interestingly enough, I’m seeing some similarities between trading and photography, my latest hobby. Sure, I’ve learned the fancy schmancy technical aspects, fiddled with the lenses, and figured out how to adjust the shutter speed and aperture. But, judging from the photos I’ve taken so far, all that textbook knowledge ain’t enough to make me good photographer.

It still amazes me how pros are able to produce awesome pictures from otherwise ordinary subjects. It probably took them tons of practice to know how to adjust camera settings to use the current lighting, background, or environment to their advantage. Even then, there are no hard and fast rules for each situation. Similarly, in trading, one has to learn to gauge market sentiment, listen to what the charts are saying, and adjust accordingly.

More often than not, it’s also about getting the timing right. That’s why intuition plays a huge role. Not to be confused with taking impulsive trades based on gut feel, trading demands a special type of intuition that many refer to as “feeling the market” or “being in the zone.”

I’m talking about that specific point in your trading career wherein you have gained enough experience to label market behavior (trending, ranging, breaking out, or consolidating) and know what trading setup you will take to tilt the odds slightly in your favor.

For instance:
• You noticed that the market is trending, so you used moving averages.
• You noticed that the market is retracing, so you use Fibonacci retracement levels.
• You noticed that the market is ranging, so you mainly use support and resistance levels.
• You noticed that the market is consolidating, so you wait for a break out.

Did you just turn psychic? Did this just magically happen? Heck no! Just like in any other art form, some are born with the natural talent while others acquire the skill. Either way, you arrived at this point because of constant refinement and deliberate practice.

Through these actions, you have learned to trust yourself and observe the market in an analytical and “artful” way, and not merely by guessing. You have found out that trading is more of an art than an exact science, and that there really is no clear “signal” or set of rules that indicate that the market environment has changed.

For those who have yet to reach this point, here are a few words for ya’ll…

Getting in the zone does not happen overnight. It takes time. Just like in photography, where it takes tons of practice to get the perfect shot, trading requires watching the charts every now and then before you get to the point where you can instinctively “feel the market.”

This experience is necessary because it will help you understand why the market is behaving the way it is. It isn’t enough to go through the manual and learn all the technical aspects. At some point, you need to put all this knowledge to work and try it out for yourself. By exposing yourself to the markets, you can gain the skills necessary to gauge market conditions and in the end, come up with your own conclusions.

  • sunglow

    I agree with all your sentiments. The only problem is putting it into practice. Yes, we have all had that feeling that we have seen it all before and we feel that we know where the market is going. However, how often does the market have the habit of proving you wrong? I thought of you when I placed a trade this morning. This trade was placed in accordance with my trading plan. My gut feeling said that the trade was flawed. I was buying when all my instincts said I should be selling. So, should I have done what you suggested and over rode my plan? I have learnt in the past to stick with the plan and this is what I did today, resigning myself to taking a loss. In actual fact, it turned out to be a classic trade and I quickly made my profit target. So, my plan was right and my gut instinct was wrong and that is the problem with trading on the hoof. Your judgement will vary from day to day and you have no consistency in your approach. After a few times of calling the market wrong, you will be emotionally destroyed and your chances of calling it right next time will be seriously diminished. So, I would say formulate a plan and stick to that plan. When you have finished trading, look at ways of improving or amending your plan, but do not attempt to make it up as you go along. The problem with your analogy is that the scene you are trying to photograph is static. On the other hand, the market is alive and you have no way of knowing which way it will go and the direction in which it goes is not always logical.

  • sunglow

    I agree with all your sentiments. The only problem is putting it into practice. Yes, we have all had that feeling that we have seen it all before and we feel that we know where the market is going. However, how often does the market have the habit of proving you wrong? I thought of you when I placed a trade this morning. This trade was placed in accordance with my trading plan. My gut feeling said that the trade was flawed. I was buying when all my instincts said I should be selling. So, should I have done what you suggested and over rode my plan? I have learnt in the past to stick with the plan and this is what I did today, resigning myself to taking a loss. In actual fact, it turned out to be a classic trade and I quickly made my profit target. So, my plan was right and my gut instinct was wrong and that is the problem with trading on the hoof. Your judgement will vary from day to day and you have no consistency in your approach. After a few times of calling the market wrong, you will be emotionally destroyed and your chances of calling it right next time will be seriously diminished. So, I would say formulate a plan and stick to that plan. When you have finished trading, look at ways of improving or amending your plan, but do not attempt to make it up as you go along. The problem with your analogy is that the scene you are trying to photograph is static. On the other hand, the market is alive and you have no way of knowing which way it will go and the direction in which it goes is not always logical.

  • husky_1

    While I think this post is a very nice observation, I was waiting for the point in which the author was going to lecture us in how to achieve the feeling of synchronization.

  • husky_1

    While I think this post is a very nice observation, I was waiting for the point in which the author was going to lecture us in how to achieve the feeling of synchronization.

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