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Coach's Playbook Posted by Team Topstep April 6, 2022

Gut Decisions In Day Trading

There’s a difference between impulse and intuition when managing a trade. This week, the Topstep coaches discuss the disparities between emotional trading and trusting the insight gained from years of trading experience.

Funded Trader Shoutout

While we’re on the subject of “Trader Intuition,” let’s talk about the market conditions on the day Topstep funded trader Michael A. added more than $3,000 to his Funded Account® trading the E-Mini Nasdaq-100 futures (NQ).

Traditionally, traders have defined a trend day as a 1% move in either direction; opening on the low, closing on the high, and vice versa. It takes a tremendous amount of intuition to recognize a trend day early enough in the trading session to get on board and ride it out for the rest of the day. And, as the coaches say in this week’s video, intuition is a product of experience.

Now, we don’t know Michael A. personally, but if he was able to string together a nice set of winners on a day when the NQ was trending higher, it’s pretty safe to say he has a good feel for the market he’s trading!

Gut Decisions in Day Trading

From our personal experience, a trader can usually attribute impulsive or emotional behavior to a lack of preparation or a fear of missing out. However, if you’ve already mapped out your risk parameters before you enter a trade, then the conviction of your analysis should prevent you from making any rash decisions.

Some psychologists will tell you that fear is a response triggered by danger or uncertainty. So, to combat the impulsive trading actions that result from fear and anxiety, wouldn’t it make sense to know where you’re getting out of a trade before you get into it?

Listen to this episode of the Limit Up! podcast featuring our old friend Dr. Andrew Menaker, a clinical psychologist and a professional trader. In this podcast, he talks about the difference between emotions and feelings and how they can affect your trading. 

Listen Now: The Impact of Emotions and Feelings on Trading

Hopefully, you’ll find it as valuable and insightful as we do!

Trade Well!