Praise for Trading from Your Gut

Fear of Uncertainty
The ability to make decisions under conditions of uncertainty
does not come naturally. For most people, making decisions under
uncertainty is hard—very hard.
When you don’t know what the future will bring, normal deci-
sion-making skills falter. Human beings are not very good at think-
ing in probabilities. Uncertainty implies probabilities rather than
certainties, so it is hard for most people to make decisions under
uncertainty. They can handle logic that says, “If A, then do B,” but
they can’t easily handle logic that says, “If maybe A.”
As humans, we have an innate desire to be right. We are pro-
grammed to avoid error. So when faced with decisions where there
is a significant likelihood that the decision might be wrong, most
people freeze. They don’t want to make a decision where they might
be wrong, so they prefer to not make any decision at all.
Successful trading requires decisiveness. You must be able to
pull the trigger with conviction and confidence. You must likewise
be able to exit positions when the time is right. Hesitation can kill
you. Panic can kill you.
You need to stop analyzing and use your intuition to make quick
decisions with imperfect information at hand, knowing that your
decision might turn out poorly. And you must do this without losing
your confidence when it does turn out poorly.
A
FTERWORD
• O
N
R
OME
, F
ISHING
,
AND THE
U
PSIDE OF
“G
UT
”
171
From the Library of Daniel Johnson

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ptg
Most people find this difficult because there is too much pres-
sure on the decision itself. So one way to increase your decisiveness
is to reduce the pressure on the individual decisions you make.
One way to increase your decisiveness is to reduce the
pressure on the individual decisions you make.