Trading on Instinct or Logic

Discussion in 'Trading' started by garfangle, Jul 31, 2003.

  1. I'd like to know what trading style works best for you: trading on instinct or logic (to those who use both which is greater)? Although it seems that trading by a set of strict rules may seem to be the more rational way of trading, sometimes you can just "see" a bargain and want to scoop it up even though it may break your prior criteria.

    Other times those who trade on instinct sometimes get too involved in a particular security and either wait too long to dump a losing position (cause they "know" it will bounce back up) or cannot put the trigger when your system says to because you fear how it will turn out (aka opposite outcome).

    So which method do you trade and which method from your experience is better? (two different questions).
  2. ttrader


    Using instinct in order to find logic. :)

  3. TGregg


    That's a fair assessment. I use logic with an instinct gate - if my gut says no, I don't enter the trade.
  4. taodr


    I do believe anyone who relies on sheer logic will end up with zero. There's very little logic in the stock markets, just millions shooting every which way.
  5. What about when instinct says SHORT....logic also says SHORT, but you still don't take action?



    Instinct is a by-product of education, experience, maturity and discipline. Instinct in its intial form, or left unimproved is "gut".

    Logic is developed by education, strategy and respect for what the senses have reported back to the brain.

    I find that I trade on both, I am in and out of the trade before I realize instinct and logic were ever present, I don't even realize they were there. Amazing how the brain just takes over, and it doesen't have the time to tell the heart what's going on.

    If you have a cat, start observing it over the next few days, you'll see what I'm talking about.

    The domestic cat has many of the gene's of a tiger and lion. Newborn wild animals raised in a domesticated environment are far less dangerous. Domestication cannot change the instinct, but it alters the logic which regulates the instinct.

    We as traders need to alter both since we need both to trade. :)
  7. Casey30


    Well stated post. I agree.