Psychopaths In The Trading Room - News and Current Events | futures trading

Go Back

> Futures Trading, News, Charts and Platforms > Traders Hideout > News and Current Events

Psychopaths In The Trading Room
Started:September 11th, 2014 (10:55 PM) by kbit Views / Replies:216 / 1
Last Reply:September 11th, 2014 (11:48 PM) Attachments:0

Welcome to

Welcome, Guest!

This forum was established to help traders (especially futures traders) by openly sharing indicators, strategies, methods, trading journals and discussing the psychology of trading.

We are fundamentally different than most other trading forums:
  • We work extremely hard to keep things positive on our forums.
  • We do not tolerate rude behavior, trolling, or vendor advertising in posts.
  • We firmly believe in openness and encourage sharing. The holy grail is within you, it is not something tangible you can download.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community. It's free and simple, and we will never resell your private information.

-- Big Mike

Thread Tools Search this Thread

Psychopaths In The Trading Room

Old September 11th, 2014, 10:55 PM   #1 (permalink)
Elite Member
Aurora, Il USA
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: futures
kbit's Avatar
Posts: 5,839 since Nov 2010
Thanks: 3,275 given, 3,321 received

Psychopaths In The Trading Room

At the University of St. Gallen in Switzerland, researchers have investigated the behavior of a group of traders and found them to be extraordinarily ruthless and destructively malicious. Most remarkably, a control group of actual psychopaths was not as bad as the traders! Whatever one thinks of this particular research project, there are some lessons to be learned here.

The Experiment
A total of 28 stock market traders played a simulation game that investigated their ability and willingness to cooperate, and other aspects of their behavior. A control group comprised of 24 "real" proven psychopaths from a Swiss jail, with comparable intelligence, also played the game for comparative purposes. The behavior of the traders turned out to be the lesser of the two evils. That is, the traders behaved considerably worse than the control group.

The head researcher, Thomas Noll, stressed that this does not mean the traders are mentally ill, but rather that trading on the stock exchange is dominated by the wrong group dynamics. However, the results are alarming and do not bode well for the financial world, or indeed the broader planet earth.

The impact of such dysfunctional egocentricity at both individual and societal levels is grave. Such trading is often not even rational. The desire to do in other traders financially and to make money right now, at all costs, ultimately drags everyone down into a financial abyss, including the traders themselves. Furthermore, the profits earned by such rogue traders are generally not even higher than those with ethics and more rationality.

The essence of the problem is that such traders sub-optimize their own performance, because their priorities are wrong. They are more interested in knocking out the competition than in conducting the best possible transactions and adopting the appropriate strategies.

Such self-destructive behavior is more common than one might think. In many aspects of life, people's psychology gets the better of them. Short-sighted impulsiveness, resentment, anger and pointlessly excessive competitiveness leads to actions that benefits no one, at least not in the long run. This research project indicates that traders may be particularly prone to such psycho-traps.

How do Investors Feel About the Research?
When this research was published, it created quite a stir and yielded some remarks that are as interesting as the study itself.

For instance, one cynic, or should one say realist, argued that "of course they behave like psychopaths. Unregulated, law-of-the-jungle organizational/social structures are like a theme park for these personalities."

Even more cynical was this one: "so what you are saying is that we should invest with psychopaths as opposed to stockbrokers." However, one might comment that the issue is whether the two are not often one and the same.

Yet another critic of the "system" concurs that "they (traders) are the perfect model of our society and what we have become. All over the world, nations are struggling financially, because their governments felt compelled to bail out their banks after a reckless round of speculation came crashing down. We bend over backwards to reward this kind of behavior. Why should we be surprised that the world is in a mess and getting worse?"

One anonymous commentator explained that his "previous broker made a number of wild trades without permission, lost money and as a result lost his client and his credibility. His personality matches the characteristics outlined in the study".

And there is this one: "This is why I have nothing in the stock market any more. I'll take my chances with real estate".

More coldly and dispassionately, however, one commentator drew attention to potential flaws in the research methodology. "Reporting on anecdotal evidence and one microscopic study, and then making generalizations is careless Ö This study (even combined with a few others) does not mean that one can draw some of these slanderous statements about an entire profession."

The Bottom Line
Controversial as this study may be, it certainly provides food for thought. Trading behavior can be not only ethically bad, but also psychologically twisted, irrational and dangerous. The consequences for all participants and the broader economy can be severe.

Trading should be a rational business activity, with the sole objective of maximizing profits though understanding the nature of markets and of the other traders. It should also be conducted fairly and ethically. There is no legitimate place for emotionally charged game-playing that undermines the efficiency and viability of the market processes for all participants.

Psychopaths In The Trading Room

Reply With Quote

Old September 11th, 2014, 11:48 PM   #2 (permalink)
Elite Member
Portland, OR
Futures Experience: Advanced
Platform: thinkorswim
Broker/Data: TD Ameritrade
Favorite Futures: Metal, Energy and Index Futures
Massive l's Avatar
Posts: 1,440 since Mar 2011
Thanks: 907 given, 1,753 received

Well what exactly did the game consist of? If the point of the game was to win and the traders did what was needed to win the game, then what's the matter with that?They played the game and they played it better than the psychopaths. Isn't that how you're taught to play almost every video game you've ever played as a kid/teen?

Also, it was a simulation. You can do things in a simulation that you obviously wouldn't do in real life. That's why they're called video games (simulators). The sad thing is the article doesn't really go into detail to tell us what the game consisted of.

Strategy ≥ Money
Reply With Quote
The following user says Thank You to Massive l for this post:

Reply > Futures Trading, News, Charts and Platforms > Traders Hideout > News and Current Events > Psychopaths In The Trading Room

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Upcoming Webinars and Events (4:30PM ET unless noted)

An Afternoon with FIO trader bobwest

Elite only

NinjaTrader 8: Programming Profitable Trading Edges w/Scott Hodson

Elite only

Anthony Drager: Executing on Intermarket Correlations & Order Flow, Part 2

Elite only

Adam Grimes: Five critically important keys to professional trading

Elite only

Machine Learning Concepts w/FIO member NJAMC

Elite only

MarketDelta Cloud Platform: Announcing new mobile features

Dec 1

NinjaTrader 8: Features and Enhancements

Dec 6

Similar Threads
Thread Thread Starter Forum Replies Last Post
Did Psychopaths Take Over Wall Street Asylum? kbit News and Current Events 3 December 25th, 2013 04:31 AM
Trading Room josiee Traders Hideout 2 March 18th, 2012 04:22 PM
[Article] 10% of people in the financial services industry are psychopaths Nicolas11 Psychology and Money Management 2 March 15th, 2012 07:19 AM
Forex and TF trading room review. What to look for in a trading room. MetalTrade Vendors and Product Reviews 5 September 21st, 2010 11:10 PM
Trading Room Michael.H The Elite Circle 10 April 20th, 2010 01:45 PM

All times are GMT -4. The time now is 11:37 PM.

Copyright © 2016 by All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts

Page generated 2016-10-23 in 0.09 seconds with 20 queries on phoenix via your IP