The Current

What does gut instinct have to do with being a successful trader?

New research suggests those who trust their guts when making a decision may be more successful. Meet a former stock trader-turned-neuroscientist whose research looking into the science of gut feelings could help you reap dividends.
Neuroscientist and former Wall Street trader Joan Coates, whose research into the benefits of financial traders going with their gut, could help you reap dividends. (Brendan McDermid/Reuters)

Read story transcript

Whether you call it a hunch, a sixth sense, or just a gut feeling — new research suggests it's important to pay attention to it.

A Cambridge University study, published in the the journal Scientific Reports, delves into understanding that gut feeling by focusing on financial traders.

The study suggests stock traders who follow their own gut feelings make more profitable trades, and even have longer careers.

Canadian neuroscientist John Coates is a former Wall Street trader and lead author in the study. He tells The Current's Anna Maria Tremonti how gut feelings are a physiological response.

(Geneva Vanderzeil cc)

"Gut feelings can be in fact information or signals coming up from our body. It could be coming from the gut, the heart, the lungs, the immune system, the muscle tensions — pretty well any tissue in the visceral body."

The results of Coates' study suggested traders were much more sensitive to their body than the general population — including experiencing stronger gut feelings.

"Within the cohort of traders we found that [gut instinct] was predicting the relative profitability and strikingly, how long they were surviving in the markets," says Coates

"So we think the financial markets might be selecting for this trait."

Coates says that the common cortisol response that traders had to volatility didn't rely on trading — making or losing money.

"As long as they were just looking at the screens, they had this incredibly powerful physiological reaction to the volatility."

Coates tells Tremonti the bottom line for this study is to redirect attention from the psychology of high performance to the physiology — even in the workplace.

"We think that the real drivers of high performance aren't to be found at the psychological level they're being found to be found deeper down in their physiology."

Listen to the full conversation at the top of this web post.

This segment was produced by The Current's Shannon Higgins.