Praise for Trading from Your Gut

Pressure Relief
Likewise, in trading or in life, if you reduce the pressure on indi-
vidual decisions by leaving yourself some tactical flexibility and
maneuvering room, you will be able to make those decisions more
quickly and with a lower level of emotional anguish. This, in turn,
will make room for a more intuitive decision making process, a
quicker process, and a more decisive process.
Learning from the example provided by the Roman legions,
here are some specific actions you can take to reduce the pressure
on individual decisions and increase tactical flexibility:
• Don’t overcommit—so you don’t suffer as much if a deci-
sion is wrong
• Remain flexible—and adapt your tactics as events unfold
• Experiment—to test several ideas to get more information
• Have a plan B—to know what to do if an initial decision is
wrong
174
T
RADING FROM
Y
OUR
G
UT
From the Library of Daniel Johnson

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ptg
These are all actions that are second nature to a master trader.
They are also useful for managing uncertainty outside of the trading
context.
High Voltage—Keep Out!
One of my earliest memories is when I was alone in my room as
a child and I unscrewed the light bulb and placed a nickel into the
light socket. I don’t remember why I did this; I only remember
there were a lot of sparks, and then the lights went out. My parents
came in a few minutes later because they heard the noise and found
out what happened. The voltage of the lamp was normal 110 volt
U.S. household current. Still, by the standards of the U.S. National
Electric Code (NEC), that voltage was not true high voltage.
High voltage, the kind you are warned about in big signs in
industrial settings, is defined by the NEC to be voltage above 600
volts. The choice of this particular voltage is not arbitrary. At around
600 volts, air breaks down and ceases to be an insulator at short
distances. Sparks jump. Electricity is more dangerous at higher
voltages.
Had I been experimenting with true high voltage as a kid, I
might be dead.
You can’t avoid danger all the time. In trading, you must accept
risk to win. But there is no need to deal with high voltage risk that
can kill you when the garden-variety kind will meet your needs.
A
FTERWORD
• O
N
R
OME
, F
ISHING
,
AND THE
U
PSIDE OF
“G
UT
”
175
From the Library of Daniel Johnson

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ptg
Further, it is much easier to make a decision when you know
that if you are wrong it won’t kill you. Not over committing in your
trading takes the pressure off your decisions and makes it easier for
your intuition to shine.
Not over committing in other life decisions also makes it easier
to follow your gut.