Cambridge-Judge Correlates Successful Traders with Gut Feelings
Cambridge’s Judge Business School recently published an article on its blog about new research offering valuable insight into the role “gut feelings” (or interoceptive sensations, if you want to get technical) play in the success of financial traders, published as part of a Scientific Reports paper entitled “Interoceptive ability predicts survival on a London trading floor.”
According to the article, “‘gut feelings’ are sensations that carry information to the brain from many tissues of the body, including the heart and lungs, as well as the gut, [which] 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.”
Cambridge researchers, along with researchers from the University of Sussex in the United Kingdom and Queensland University of Technology in Australia, proved that traders are typically better at reading “gut feelings” than John and Joan Q Taxpayer. Since “gut feelings” provide “valuable insights in risky decision-making…the better they are at this ability, the more successful they are as traders.”
The researchers surveyed 18 male hedge fund traders engaged in high frequency trading during the Eurozone crisis—a moment of great tumult and uncertainty. The researchers tested how accurately the traders, “when at rest, can count their heartbeats.” The heart rate detection tasks were accurate predictors of the traders’ ability to survive in the financial market, as well as the “numbers of years he had survived as a trader.”
Dr. John Coates—a former Cambridge research fellow in finance and neuroscience, as well as a former Wall Street trader—breaks down the overarching value of the research and its potential impact on (re)calibrating the mind-body connections of those working both in and outside the world of finance:
“Most models analyze conscious reasoning and are based on psychology. We’re looking instead at risk takers’ physiology—how good are they at sensing signals from their viscera? We should refocus on the body, or more exactly the interaction between body and brain. Medics find this obvious; economists don’t.”
About the Author
Jonathan Pfeffer
Jonathan Pfeffer joined the Clear Admit and MetroMBA teams in 2015 after spending several years as an arts/culture writer, editor, and radio producer. In addition to his role as contributing writer at MetroMBA and contributing editor at Clear Admit, he is co-founder and lead producer of the Clear Admit MBA Admissions Podcast. He holds a BA in Film/Video, Ethnomusicology, and Media Studies from Oberlin College.
