'Gut feelings' help make more successful financial traders
Financial traders are better at reading their 'gut feelings' than the general population -- and the better they are at this ability, the more successful they are as traders, according to new research.
'Gut feelings' -- known technically as interoceptive sensations -- are sensations that carry information to the brain from many tissues of the body, including the heart and lungs, as well as the gut. They can report anything from body temperature to breathlessness, racing heart, fullness from the gut, bladder and bowel, and they underpin states such as hunger, thirst, pain, and anxiety.
We are often not conscious -- or at least barely aware -- of this information, but it provides valuable inputs in risky decision making. High-risk choices are accompanied by rapid and subtle physiological changes that feed back to the brain, affecting our decisions, and steering us away from gambles that are likely to lead to loss and towards those that are likely to lead to profit. This can enable people to make important decisions even before they are able to articulate the reasons for their choices.
Traders and investors in the financial markets frequently talk of the importance of gut feelings for selecting profitable trades. To find out the extent to which this belief is correct, researchers from the Universities of Cambridge and Sussex in the UK and Queensland University of Technology in Australia compared the interoceptive abilities of financial traders against those of non-trader control subjects. Their results are published in the journal Scientific Reports.
