Trading by feel

One of the first ways many people begin trading is by feel. They watch the market and then try to sense an opportunity to buy or sell and take a plunge. This experience probably originates from our primal instincts, and often stays with us no matter how experienced we get. In fact, some good traders never go beyond this stage by looking for intellectual or complex trading methods, but instead have a good feel or sense of the market.

The few traders with this gift have a hard time teaching it to others, partly because it is instinctual and not easily learned. Either you possess this quality of feel or you don't, and most people don't.

It is important to acquaint yourself as much as possible with the market or markets you plan to trade because each market has its own personality. Some good traders do not believe this and feel all markets are the same. But operational factors can change the character of the market. For example, the currencies are a 24-hour market but the stock market is generally traded during normal domestic business hours. This can dramatically affect how a market trades. Currencies tend to open with large gaps more often than stocks because they have been trading continuously.

In between trading by feel and rigidly following a purely mechanical system is a vast realm of possibilities for which most traders strive. The trader may decide on using chart analysis, but only after observing the signals given by a mechanical system and trying to develop a sense of where the market is headed.