"Ideas pull the trigger but instinct loads the gun."
author -Don Marquis
"When Mr. Soros [the billionaire hedge fund Soros] was actively managing his fund, he would suffer from backaches, and said that he “used the onset of acute pain as a signal that there was something wrong in my portfolio.”
author - John M. Coates
I think all of us have "gut" instincts. That moment when 1+1=16 but we don't know how we got there. When we know what we should do but simply can't explain why (much to the dismay and agitation of an angry spouse).
All of us rely on instinct to one level or another but is it a good idea? Well, according to the journal, Scientific Reports, it is. They have published a study, "Interoceptive Ability Predicts Survival on a London Trading Floor", that states: "Our results suggest that signals from the body - the gut feelings of financial lore - contribute to success in the markets."
Let me state clearly that prior to reading the above title, I had never heard of the term: interoception. Neither has this blog platform as it challenges me as to whether there is such a word. There is indeed and it means a sensitivity to your body's messages. In the case of this study, what happens when individuals are aware of their own heart rate.
Here is how New York Times author, David Gelles, puts it in his article on the findings, "‘Trust Your Gut’ Might Actually Be Profitable Advice on Wall Street, Study Says": "In a study published on Monday in the journal Scientific Reports, a group of researchers suggest that high-frequency traders who were more sensitive to their own bodies routinely made more profitable trades, and had longer careers in a notoriously unforgiving profession."
A former Wall Street trader, John Coates, is the study's lead author. He and his team tested the ability of 18 Wall Street traders to control their heart rates without touching themselves. He used a control group of 48 non-traders who were also tested to see if they could monitor their heart rates.
Here is how New York Times author Gelles describes the results:
Over all, the hedge fund employees were substantially more accurate than the control group, suggesting that on balance, the high-frequency traders were more attuned to their own bodies than the general public.
And among the traders, more accurate heartbeat awareness was correlated with profitability. That is, the better a trader was at sensing his own heart rate, the more successful he was at high-frequency trading.
What is more, the longer an employee of the hedge fund had been working as a trader, the more accurate he was at counting his heart rate.