Is trusting your gut more important than following your plan?

Discussion in 'Psychology' started by konviction, Jul 8, 2010.

  1. I raise this question mainly because Ive had some trades I've

    held way longer than I should have, when I knew days and days

    before I should probably cut my losses, but I hung in there


    1) All the books and "experts" on the forums say to "have a plan, and trade the plan", and "not get emotional"

    2) I had a plan for the trade, and I didnt get emotional, but I lost more money than might have been necessary.

    So with that in mind, is there ever a reason to deviate from the

    plan and say "ok f--k this, this isnt working", and sell?... because

    if thats the case, why bother with a plan if we as Traders will be

    cool-headed one minute, then "OMG! this thing is tanking, I need

    to cut my losses NOW!" syndrome the next. We might as well

    just trade from the gut. No need to have stops and targets, and

    all that other crap :p sinse those numbers could change any

    second... [sarcasm ] . I would like to know what others think. Is it

    wrong to stick to the plan, even when your confidence begins to


  2. I think its dangerous to trade only following your gut, as it is emotional you can loose your edge and wipe the account. But on the other hand I am a big believer in gut instincts :)
  3. parity


    If your "plan" is not working...i.e. your losing money...then you probably need to adjust it. Your plan should not force you into emotions, IMO. Gut feelings should only come through experience. e.g. There are some equities that I have followed and traded for years...through bull and bear markets, (and everything in between). I have developed a "feel" for how these equities react to news, earnings etc. through many years of trading them, but....I still implement proper risk management in case I'm wrong.
  4. I would submit that ultimately following your plan or system is paramount to success.

    HOWEVER, a good system should incorporate the more definable characterists of your 'gut instinct.'

    In other words, many times your 'gut' may tell you to buy or sell, but really it's your mind recognizing a pattern it's seen before, possibly just below the threshold of conscious awareness.

    A good trader should be subordinate to their well-conceived system, IMHO.


  5. All books and "experts" say that you must have a plan, so you don't begin asking if frequent trading can be profitable.

    Because if you do, you will soon realize that frequent trading can never be profitable, and their trading commissions will be gone.
  6. That depends on how good your intuition is. Keep 2 sets of records your plan vs results with your intuition. If you intuition isn't great then breaking your plan and winning is the worst thing that can happen. It reinforces bad habits.
  7. parity


    Well said.
  8. maxpi


    My gut helps me cut my losses sometimes but then I watch and I see that, to the plan, it was not going to be a loss, it was not going to hit the stops, it was indeed going to be the trade of the day....
  9. Some of you my wish to review the four stages of doing things.

    Driving a car is one that most can do from the viewpoint of stage 4.

    In trading most of the responders are not at stage 4. You can reviiew each post here and classify the stage of the trader (or presumed trader).

    Once you have though about this, then you will see that the answer to the question changes sucessful stage by sucessful stage.

    Good luck.
  10. bone

    bone ET Sponsor

    Which makes the consistent money, your "gut instinct" or your trading system?

    Emotions like fear or greed and instincts are not consistent - trading is the ultimate accountability game. Individuals can be impulsive or indecisive by nature. Physical factors like blood sugar levels and fatigue complicate things.

    #10     Jul 9, 2010