Is trusting your gut more important than following your plan?

money management and trading are the same thing, when floor traders learn,its without charts,news,time to research,its just trading your money and grabbiing profit opportunities and cutting losses,this is mostly gut and common sense,if the amount you are losing is uncomfortable, take a loss,you can always get back in...these forums talk ad nausiam about plans and stops and systems..i've made this comparison before...an architect can draw up plans,designs, plumbing,electrical,hvac specs and weight load psf requirements, but he couldnt build it, after you make up alll your reasons and plans and stops and entries,you have to trade and you have to listen to your gut , everything else is too slow

 

I agree with dandxg. Keep 2 records of your transactions using your plan and the other, following your gut feeling. The number will definitely tell you which one works better for you

 

Then you can always fade yourself - which of course could induce schizophrenia.

 

My plan makes me good money.

My gut makes me obscene money....when it speaks and I listen.

 

I'm confused. If you had a plan and accepted your stop loss as the cost of admission to the trade, why would you ever reach the point where you'd say, "OMG! this thing is tanking, I need to cut my losses NOW!"

 

I wasn't refering to myself necessarily , but rather the ever so common emotional swings of most traders, new or professional (jim cramer for example, and other fund managers). What I was trying to get across was this: If a trader has a plan, then that reduces emotional impulses.

But if traders are trading from their gut...and not much else (floor traders for example, and probably 99% of scalpers...and we all know how emotional and chaotic it can be on the floor) then yes, it is like "OMG...." because your making decisions off "Intuition", rather than a sound, and rational educated guess based off the PLAN that you trade from.

Take this chart for example http://www.elitetrader.com/vb/attachment.php?s=&postid=2891759 . I went long around 71.40 because my plan told me too, not because "Oh, well I feel like it's due for a bounce" or any of that nonsense. I had facts to back up my belief that a long trade was the right one to take.

Does that help clear up your confusion?

kon

 

Instinct coupled with a good plan, revisit and modify the plan when needed and as additional information becomes available.