Praise for Trading from Your Gut

Plan B or C
Every experiment can have positive and negative results. It does
what you want, it doesn’t, or something in between. In trading,
knowing ahead of time what you will do if the market turns against
you should be part of the plan before a trade is initiated.
This simple practice makes it much easier to make trading deci-
sions. When you have concrete bounds on the worst-case scenario,
you know what it will cost to be wrong. 
In other areas of uncertainty in life, having a plan B is an effec-
tive way of dealing with uncertainty. Developing a contingency plan
is a way of acknowledging the reality of the existence of the uncer-
tainty itself. If you don’t know what the future will bring, it makes a
A
FTERWORD
• O
N
R
OME
, F
ISHING
,
AND THE
U
PSIDE OF
“G
UT
”
179
From the Library of Daniel Johnson

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ptg
lot of sense to plan for the possibility that the future brings some-
thing other than what you expected or hoped. Uncertainty means
that contingency plans are needed.
It is much easier to make a contingent decision. When you have
a plan B in mind, it leaves you free to go with your gut.
Less Fear More Intuition
These four means to reduce the pressure on a decision—not
over committing, remaining flexible, experimenting, and having a
plan B—are also ways of reducing the fear of making the wrong
decision.
Less fear makes room for more intuition in your decision
making.
In thinking about the benefits of the wind tunnel in training for
skydiving formation flying that I described in Chapter 8, “Techno
Traders,” I left out one important benefit: the reduction in fear.
When you jump out of a plane, you have, at most, 60 to 70 sec-
onds of time before you have to pull your main chute—if you want
to leave yourself time to pull your reserve chute in case your main
chute doesn’t work. If you are working with others, you need to
leave yourself an additional 10 seconds or so to allow the group to
spread out so each skydiver is at a safe distance from the other
divers when their parachutes open. So, you have perhaps 40 seconds
in which to perform your actions. If you take too long or find your-
self spinning uncontrollably at the wrong time, you might die.
180
T
RADING FROM
Y
OUR
G
UT
From the Library of Daniel Johnson

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ptg
There is always a certain element of healthy fear in the back of
your mind as you make maneuvers. That fear disappears quickly
once you get inside a wind tunnel and realize that it is a compara-
tively safe place to practice. With the reduction in fear comes an
increased willingness to experiment and to fail. These experiments
and failures, in turn, increase the rate at which you learn.
As you begin to feel safe practicing, your conscious mind begins
to let go. Your left brain stops wanting to be the safety police. It
stops telling you to be, “Careful! Careful!”
As the left brain lets go, the right brain can start to take over.
This is the reason that Astrid’s game of tag worked so well. When
you are playing a game and having fun, you are generally not afraid.
So as I chased her around the wind tunnel and lost my fear, I lost the
deliberate control I had previously required when performing a
maneuver. The reduction in fear allowed me to use my intuition
instead.
You don’t over commit, so you know a mistake will not be fatal;
you remain flexible so you can adapt your approach as reality
unfolds; you experiment so you can uncover the best approach; and
you have a plan B so you know what to do if you primary plan does-
n’t work out. If you take these steps, you will have less fear in your
decision making process.
Less fear will leave room for greater intuition.
Less fear will leave room for greater intuition.
Take the pressure off. Drop the fear. Learn to let your intuition
drive.
A
FTERWORD
• O
N
R
OME
, F
ISHING
,
AND THE
U
PSIDE OF
“G
UT
”