For futures traders who make their living interacting with global financial power, the market is separate from and larger than its individual participants. It is "an object of attachment" that both provides profits and judges their personal worth.' Traders consistently describe the market as the highest authority, saying, "The market is always right." Joshua Geller, a manager at Perkins Silver, feels that the market acts as an instrument of the divine. "We don't know value. Only God knows value." Geller sees value as something absolute. Yet every day Geller and his trainees work to find the prosaic value of financial commodities by identifying their price. Joshua provided a potent description of traders' relationship to the financial domain. The market holds absolute truths. It determines traders' financial fates and acts as the arbiter of the speculators' moral worth. Joshua told me that in the market, "You test yourself every single day. You either made money or you lost money. I'm a good person or I'm a bad person." This common understanding leads traders to respect the norms of speculation that mediate their relationship to the market. To participate in the market and move into the transnational flow of capital, traders submit to the structures of the "discipline" of speculators.
Traders use religious language to describe their engagement with the market, expressing the commitment they bring to their financial conduct. Yet work in futures markets is consummately secular. Traders make them selves worthy of their profits by practicing a particular form of regimented action before the otherworldly force of the market. The faith, humility, and self-regulation that traders show us in their discipline reveals an economic ethic developed in and for global capital markets.
Traders use techniques of self-formation to create a risk-taking person that can thrive in the action. They call this set of techniques "discipline." In the discourse of traders, discipline is both an idealized state and a concrete set of internal strategies. Managing a trading self requires the artful application of disciplinary methods.' There are four core elements of discipline: first. traders separate their actions on the trading floor from their lives outside; second, they control the impact of loss; third, they learn to break down the continuities between past, present, and future trades by dismantling narratives of success or failure; and fourth, they maintain acute alertness in the present moment. Techniques of discipline are at the center of becoming proficient in speculation —of inhabiting the identity and practice of the risk-taker. One trader told me that with discipline, "You can experience the market and become a part of this living thing, intimately connected to it "
Traders' sense of vocation is anchored in the practice of discipline. At the heart of the financial system today, traders' ascetic practices of self-discipline create an ethical relationship to the domain of capital circulation. Examining the intricate work of discipline will expand our understanding of the modes of conduct that speculation produces.
Discipline works to remove each trader's concerns and desires from his economic judgments. The central virtue of the responsible trader isacute perception of financial information. Discipline demands that, while engaging with the market, traders purge themselves of affect and individuality, man aging investments and reactions with unobstructed perception. According to traders' professional norms, discipline enables them to coast with the uncertainties of the market and judge effectively when to enter and exit the game.
According to the Perkins Silver trainers, "The market doesn't care what you think or who you are." Discipline helps traders temporarily fashion a market actor in harmony with the impersonal and anonymous nature of the market. Philip, the Perkins Silver owner/director, told me that he has spent years trying to figure out a profile that assures that someone will be a good trader, but he does not believe that one exists. Philip's comments reflect the logic of discipline. A good trader must "get rid of [his] ego." The quality of a good trader is located not in personal characteristics but in the talent to transcend individuality'.
Traders are proud of their showmanship and seem to enjoy swearing, shoving, and indulging in language of sexual violence. Their performances of self are marked by excess and recklessness. Yet the answer to a standard question, "What makes a good trader?" yields a consistent response: discipline. Although discipline does not appear to have a place in their trading strategies, traders govern themselves with strict control.
Discipline separates traders from the guiding principles of the outside world by differentiating the time and space ofthe market and creating a spe cific market being. It breaks down the continuities that enforce obligations to people outside the financial arena. If a trader breaks from his internal codes, the market "punishes" him by causing losses. This discipline from above imposes norms of behavior on those who lack the resolve to do it themselves. Traders work to internalize this mode of control and avoid the consequences of a lapse.
Speculators like those at the CBOT and Perkins Silver work on a second- by-second basis.They fill their accounts with skimmings from the vast flow of financial capital that circulates through futures markets. The demands of discipline are most visible in the actions of a subset of traders who practice a particularly risky style of trading. Scalpers buy and sell futures contracts outright; without hedging their positions, they buy in anticipation of a quick rise in price or sell in expectation ofa rapid fall. In the language of finance, they do not "offset" any risk by buying or selling products that will limit their losses.The financial consequences of scalping are immediate and stark,win or lose. In an ideal trade, the scalper observes the market and its motions, makes a judgment, and executes a sale or purchase. He monitors each price change and its effect on his stake, looking for the best moment to complete the trade and reap his profit or take his loss. If he gauges that the market is going to turn against his position he may "scratch" the trade, getting in and out of the market at the same price, only to reenter it seconds later.' This un complicated technique allows the scalper the flexibility to move in and out of the market in an instant, taking advantage of every rise and fall of a com modity's price. According to the ideals of discipline, the speculator should never look back, whatever the outcome. An effective scalper must maintain acute attention and responsiveness every moment he is in the market. He must move on to the next trade with a clear mind to evaluate market condi tions as they present themselves.
Traders learn this discipline in formalized and informal settings. On the floor of the C B O T , new traders learn it as part of the apprenticeship process, absorbing norms from the older members who sponsor them. In electronic- dealing rooms like the one at Perkins Silver, such opportunities are limited.
The Perkins Silver trainers knew that in London the new traders would not vet have learned the lessons central to the practice oftrading. Teaching the constraints of discipline was the key to creating a cohort of reliable risk-takers, and they created a formal training program to drive home these lessons. T h e managers claimed that they didn't care ifmoney was made or lost as long as each trader practiced obedience to the discipline. T h e trader's responsibil ity was to his technique of self-regulation, not to the profit and loss figure at the end of the day. With adherence to discipline,the managers believed that
traders would prove themselves responsible and profits would follow.
The two-week training at Perkins Silver focused a part of each session on creating a population of responsible risk-takers. This was a difficult task. \ndrew and Joshua used many techniques to ensure that their traders were developing discipline. They monitored the traders' activities through the on line risk-management system that allowed manager Andrew Blair to oversee every computer on the trading floor in both London and Chicago. In the patterns ofa trader's profits and losses,the managers discerned marks of self- management. The easiest thing to see was a weakening ofdiscipline. When traders are unable to maintain the division between their market and out side lives, their trainers believed their trading suffered. Adam Berger, a Perkins Silver manager, told me, "I can tell by watching trades come across my screen when someone has had a fight with his wife." According to the strictures o f discipline, dissolving those ties while inside the market is es sential to making oneself into an instrument that can receive market signals, act on them spontaneously, and take advantage of every opportunity.
Perkins Silver traders dreaded early afternoon phone calls from Adam. He arrived at his Chicago office at 7:00 a.m. (LOO p.m. London time], looked over the trading records for the day, saw who was letting his losses run, and dialed the offending trader's extension. To train traders to internalize their techniques, the managers required them to turn in weekly journals in which they analyzed their trading, giving reasons behind trades and confessing lapses in discipline or exulting in successes in maintaining a regulated trad ing practice.
A Separate Space
Traders use specific measurements to account for gains and losses. They segregate market currency from the money exchangeable for goods and ser vices outside the market, a practice that separates action in the market from consequences in their lives outside of it. Market money is specific to the time and space of trade. It is not exchangeable for food, mortgages, tuition, cars, and vacations that draw the trader into a web of relationships outside the market arena.
Discipline redefines the trading object. Traders transform the dollar bal ances in their accounts into the abstract market measurement of "ticks." A tick is the generic term for the price intervals of any market. The market moves up and down by ticks. In the futures market on the Dow Jones In dustrial Average (DJLA), ticks are measured in 1/100 increments in the price. If the price o f one contract moves from 110.80 to 110.81, the .01 increase in the price is a tick. In the DJLA, each tick equals $10 on one contract, but discipline directs traders not to calculate the sums of money at stake. They count their gains and losses in ticks. Because traders gain and lose ticks while they are trading, they separate their market actions from the space of monetary exchange outside the market. Distinguishing money from ticks allows traders to separate the consequences of good and bad hades from the necessities of everyday life outside the market.
Dividing ticks and dollars also segments space. The space of money and the space of ticks are physically and socially separated by their assigned currencies. Maintaining different names and accounting strategies for each currency divides the space ofthe market from the world outside the trading floor. An underlying tenet of discipline is that market and emotional mat ters are irreconcilable. Traders who bring family financial concerns to the domain of trading impair their ability to act and react in the temporal and physical space of the market. Accounting practices that separate market and social space allow traders to purify market calculations from outside considerations.
Ticks are the currency of the market. Classically, from Simmel and Weber forward, money has been thought of as the ultimate tool of exchange ability. Assigning a price makes all things equal and exchangeable for money. Viviana Zelizer has written, in contrast, about the ways in which people assign specific functions and significance to money.6 Yet Zelizer's examples involve actors who are outside a formal market context. It deepens her in sight to see how traders, whose sole professional task is to create a market, decommensurate the money in the market in order to enter the market.
Traders must work consciously to strip money of its social connotations. It takes orchestrated effort to maintain the segregation of market and "out side" currencies.The market, where money should appear as most abstracted and depersonalized, does not obey a pure quantitative logic. Traders invent their own market currency to remove it from the realm of outside social re lations. Money's ability to foster and sustain social relationships and com mitments such as those between a trader and his family is so strong that it overrides its ability to add to the market state of the trading pits. Money must be transformed to serve the abstract context of traders' market decisions.
Taking Loss
Discipline manages the emotional effects of financial risk-taking while main taining air intense concentration and focus on the present moment. One ofa trader's greatest vocational challenges is to suppress his individual reactions, desires, and concerns in order to make himself into an instrument for read ing and reacting to the market. This is especially difficult when taking losses.
Even the best traders take losses repeatedly during the day. As Joshua Geller explained, "We are wrong all the time." Losing ticks is an inevitable part of speculation, but the emotional impact can be devastating. Joe Rose told me, "If you are losing money on a regular basis, it hurts. You feel like you can't trade. Ifeel like Inever even knew what Iwas doing. When 1lost money a couple ofdays in a row, I felt like I was just a fake." The repercus sions of losses can invade the trader's confidence and self-assurance, both of which are crucial intheir: rapid-fire work.
Ideally traders are able to forget about the consequences of each trade. Adam Berger told Perkins Silver trainees, "You can't ever make your money back. Ifyou've lost money have a funeral for it. You have to have closure. It is gone . . .you have to look at the next trade." But in a one-on-one interview he admitted the difficulties of containing the effects of financial loss. "You can't make that money back. It's gone. . . . And believe me, it is a lot like having a death. You go through that." Scalpers may take a hundred losses in a day.
Discipline as a principle covers all types of speculation, but each trader must come to understand his own personal limits. This requires a special kind of self-knowledge. The trader must assess how many ticks he can lose before he loses his composure. The disciplined trader commits himself to take his loss after the market has gone a certain number of ticks against his position. After, say, three ticks, he will complete the trade and take the loss. He will not allow himself to get to the point where he loses his cool and clouds his judgment.
Traders use discipline to control the emotional impact of losing ticks. Everett Klipp, an old-timer at the CBOT, was famous for his techniques for training young traders. He was utterly devoted to trading. Even after he re tired, he would walk the halls wearing his signature bow tie and a trading jacket that draped from his aging frame. One friend of his told me, "He'd say, 'You'll never become a millionaire ifyou don't learn how to take small losses.'. . . He didn't teach [new traders] how to win. He taught them how to lose." Klipp's belief in the salutary effects of discipline was unshakable. He would stand behind the neophyte trader under his care and force him to take small losses, a critical skill to learn. Discipline directs traders to exit the trade before the position moves against him more gravely. Klipp's theory was that taking small losses teaches traders to become familiar with losing and to gain control over the impact ofa loss. In May 1999,Futures magazine quoted him saying, "You have to love to lose money . . . to be successful."
Taking losses is so significant for traders' discipline that traders often claim that their "best" trades were the ones where they cut their losses be fore a situation became dire. They insisted on a distinction between the "best" trade and the trade that made them the most rnonev. The responses below show the premium placed on applying discipline and taking the loss that the market has doled out. The most important thing ... isyou have tobeable to take your loss. ...If you don't take your losses then you're just going to get killed. . . . And often times at the end of the day you'll remember the best trade you had was a loser, and you took your loss right away, and if you hadn't, you'd have gotten killed.
As far as great trades, the best trade that I can recall was scratching Igetting out of a trade with no gain or loss] and then seeing (the market] go just totally against [the position I just left]. And had I stayed in it [I would have lost a lot of money], like wow, that was great. S o I used the discipline, I stuck to my guns, and it just totally worked out. . . . So I was trying to become really aware of just doing the right thing, making the right trade, . . . following the rules. And that's very tough.
Breaking Down Narratives of Success and Failure
Isolating events in time—separating past and present—helps traders to form and sustain economic judgments in the maelstrom ofthe market and rein forces the boundaries between market and outside space.8 lb observe the quick movements of the market and maintain discipline, traders must im merse themselves in the market and block out external influences. They treat each trade as if it has no effect on the next. Traders deconstruct the on going narratives of success and failure that might accrue to them by break ing time into small segments that bear little relation to one another. A dis ciplined trader leaves every trade in the past, isolating one decision from the next. He reacts to the market and leaves his own judgments quickly behind when the market proves him wrong. He does not build stories about his suc cesses or failures that would provide a sense of weakness or invincibility that could affect his decisions and timing in the market.
One good trade never guarantees the next. Developing a sense of ongo ing success or failure is a trader's Achilles heel. Traders segment time in the market to accentuate the constant regression to the mean that is a necessary part of discipline.9 In the trade, there is no past and no projection ahead: the present moment takes precedence. One veteran trader lectured me, "Once the trade is done, it is history." Part of discipline is learning how to separate the consequences of each trade from the next to limit the psychological effects of success or failure.
Dissociation from each decision is accompanied by dissociation from the circumstances of the individual decision maker—that is, whether profits are up or down for the day, week, or year. Traders must work to break down any- narrative that might arise from a series of successive losses and gains. It takes active effort to ignore the sense of continuity that comes with repeated suc cess or failure.
When traders are unable to separate the consequences inside the market from the potentials for wealth and possibilities of devastation outside the market, they may bring their personal desires into their economic decisions. Traders whose discipline has lapsed may also invest themselves in a given position, personalizing the success or failure of that single decision. Joshua Geller warned against what he considers to be one ofthe greatest dangers of trading. O n the days when Geller would wander the Perkins Silver trading floor, he would stand at a trader's shoulder and watch the rhythms of his trades. If a trader increased a position that was already posting losses or hung on minute after minute in a trade that was running against him, Joshua would hiss into his ear, "Wishing, hoping, and praying."
Wishing, hoping, and praying break discipline's cardinal rule, bringing personal desires and convictions into market judgments and clouding a trader's view of the market's objective movements. These desires then me diate between the trader's actions and his reactions to the constantly chang ing information before him. To structure the self as an instrument of per ception and reaction, traders must give up their desires.
Scalpers' ability to skim a profit from market fluctuations relies on a con stant clarity of vision. In their second-by-second time frame, they must main tain a reactive sense of what is happening in the market. With every extra moment spent on a losing trade, opportunity for reevaluating and taking a profitable position is lost. For a self that is disciplined to be an instrument for reading the market, taking the loss removes a constraint that would block a quick move into the next opportunity. Joshua Geller warned us, "If you are hoping for something to change or come back you are missing an opportu nity. You are not taking advantage of opportunities." Traders discipline them selves to push away their own judgments, desires, opinions, and concerns to absorb the rapidly changing information that the market conveys.
Successful discipline allows traders to act instantly. Wishing, hoping, and praying undermine the ability to react quickly, extending the present mo ment forward in time. A trader who attaches hope to an individual trade is no longer responding to the information available at the moment. When a trader breaks his discipline, the consequences of an individual trade begin to matter. Wishing, hoping, and praying can easily slide into an attachment to an individual decision.
After a few minutes in the same position, watching the gains or lossestick up and down with the market, a trader's neighbors may begin to heckle him, "Are you married to it yet? Hey, I think Charles has gotten married." The unlucky groom may elicit a spontaneous recital ofthe wedding march from the other traders. "Marriage" betrays a trader's weakness. He has formed a connection with his position that goes beyond the moment and the explicit purpose of making money, investing himself in the object. W hen a trade has gained some value in its own right, it loses the status of pure instrument. "Getting married" to a trade is a way to say that a trader has abandoned his senses. The inability to separate market reason from personal attachments has undermined his craft.
Entering the Zone
From the point of view of the scalper, the market resides in the present, in the agreement between a buyer and a seller that is in the process of closing. By the time a price has been made and a trade settled, the market has moved. On the floor ofthe CBOT, the market is the agreement that is being made between traders in the pit at this very moment. In online markets, it is the trade that isnow matching buyer and seller.Asthe CBOT traders explained to me, once the clerks record a trade and the result is printed on the elec tronic screens that hang in red, yellow, and green lights above the trading floor, the market that they represent is history. And history is gone. Scalpers constantly attempt to grasp the direction of the market. Because it is always moving forward in time, it always remains uncertain. Scalpers exist in a flex ible relationship to the just-emerging future. -
On the CBOT trading floor, the space and time ofthe market are local ized in the pit. Anything outside the pit is outside of the market. W hile "out side events" (as traders refer to them) affect the flow of orders into the pit and the price of the contracts, attention remains focused on the time and space of the present. For floor traders, the sense of being "inside" the market can happen in only one place.The action in the pit links the time and the space of the market and creates the feeling that the market is a living thing.
: This bias for the present lends itselfto Zen-like aphorisms. Joshua Geller advised,"Acceptthemarketasitisandfey-tobewithit."Apopularbookthat outlines the path to success counsels traders to follow its title, The Tao of Trad ing. 1 0 Traders speak of their best trading moments in ways that make them sound like mystical engagements. They need to abandon self-consciousness to gain full access to the market's interior and use discipline to block outside contexts from their conscious thoughts and to enhance their abilities to read, interpret, and ultimately merge with the market. Traders often speak of being "in the zone" or of a "flow" experience.1 1 In the zone, economic judgments and actions seem to come without effort from the instincts of the trader. The market and the trader merge, giving him special access to the natural rhythms of financial fluctuations. Traders most value a sense of total absorption in the market. In the "zoni. ' conscious thought disappears and an ultimate sense of presence takes over They are able to act without explicit thought. Their senses are heightened to the rhythms and sounds of the market and the flow of trades. Achieving oneness with the market can wipe away thoughts beyond the moment. V Joe Rose, said, "The only time in my life when I am not anxious iswhen I'm trading. I am just out there making money, losing money. And it absoluteh wipes out all anxiety. I live in the moment when I trade."
This absorption in the present echoes descriptions of the athlete's and mu sician's crafts. Joshua Gellerattributed the successof one ofhis traders to his musician's access to the rhythmic flow of the market; the man had been a drummer in a jazz band. "He sways with the market," Geller said. He fol lowed the market cadence, switching his positions with the changing tempo of trading, moving his positions in and out with an improvisational technique.
A disciplined scalper always remains in the moment. He is flexible and reacts to the market situation immediately at hand. He cannot put too much confidence in his own judgment, or have a sense of weakness. This paring down of the selfleaves only the part that can become absorbed in the market with no outside commitments. The technique allows a feral sense for market action to develop that bears little resemblance to strict calculation.Scalpers react to each move of price regardless of their own judgments and desires about what the market "should" do according to their individual estimates.
Pit traders speak of living within the heart of the market. They must have the physical discipline to remain in the market through the adrenalin spurts of active markets and the deadened tempo of trading lulls. In the pit, this means standing shoulder to shoulder with hundreds of other men, hour upon hour, without sitting. Physical aches and pains cannot distract a trader from focusing on the market and its movements. The physical immersion in the market is both a challenge to his focus and a powerful force for draw ing him in. On the CBOT floor, the collective excitement of the trading pits, the rousing noise, and the jostling bodies draw traders into the market. They are surrounded by and soaked in the sweat of exchange.
The CBOT traders had the advantage of this physical immersion in the market, but the Perkins Silver traders were distanced from their dealing partners by electronic networks and trading screens. The need for discipline, both of body and spirit, is heightened in online exchange. In the electronic dealing room, the market does not surround the trader. He trains his attention on the numbers on his screen that represent the market. Online traders do not have much visceral stimulation to spur them into action and to reinforce the norms of financial action. Joshua Geller stressed the importance of constant physical readiness in our training. He demonstrated the disciplined crouch that brought his eyes inches from the screen. His in dex and middle fingers rested lightly on the right and left buttons on his mouse. "Have your cursor over the relevant hot button so that when the op portunities happen you are there to act on them immediately." Mustapha, the most profitable scalper at Perkins Silver, visited the hospital because the tendons in his hands were throbbing. The physical therapist there told him that clicking the mouse (indicating the frequency ofhis trades) was not to blame for his injury. Rather, the damage came from the holding his index finger slightly above the mouse, poised to click. Hours of hovering each day damaged his hand.
A trader must react neither to boredom nor excitement. One of the greatest challenges, especially for online traders, are periods when very little is happening. These "flat" markets can be deadly. They tempt speculators to "over trade," to take a position for the sheer stimulation of being in the game. Discipline is equally important for deciding to enter or stay out of the market. Each day, a flurry of activity surrounds the market opening, but that burst soon wanes. Depending on external events, or other market activity, there may be more spurts of activity or simply a steady drone of trades that carries the traders into the second period ofconcentrated action around the closing bell. The temporal rhythms of the market try the patience of speculators.
Discipline supports a trader as he stands in the pit or keeps his eyes glued to his screen, resisting the quicksand of boredom, which dulls the senses and tempts the trader into chatting, taking long lunches, and making telephone calls. Traders thrive on tire high-stakes game. Dead periods challenge the dis ciplined trader to resist his desire for action. Josh Geller held up a coworker in the five-year pit as the greatest example of this aspect of discipline:
The guy was a trading machine. He would make one, maybe two trades a day. He would just stand there waiting to pick off a perfect trade. Put the entire stake on one moment where he was sure. He never left the pit. He didn't eat. He didn't go to the bathroom. I don't think he even blinked. He was an awful human being but he was a great trader.
Despite his own inaction, this trader was able to stay totally focused on the market. In Josh's portrait, his successful neighbor was able to excise the human urges that lead others into trading traps. The neighbor's machine like quality reverses the usual notion of mechanistic motion. To be a trading machine in this case was to follow the dictates of discipline to inhuman extremes of inaction. In his role as a Perkins Silver trainer, Joshua's goal was to produce such human machines.
The Discipline of the Speculator
The immediacy of the market forces traders to focus on each price movement. Traders act as if they are tracking an animal. Calculations or elaborate strategies that take them out of market time are seen as an impediment. Traders ultimately value reactive speed and perceptive clarity rather than complex calculative skill. Sean Curley Jr., who was trained as a lawyer, explained how his legal training sometimes impedes his trading abilities:
Sometimes I think [my legal education] hurts me. Because I'm more prone to get set in my ways. I'll reason to a particular conclusion based on assumptions that I've got built into the market, whether it's based on fundamentals or its based on some technical thing. You know, just like I'd craft an argument . . . There are a lot of guys who may never look at a chart, they never read a newsletter, they don't care. They just want to know what's bid and what's offered. And they just trade ... A lot of those characters aren't the kind ofguys who went to dental school or have a law degree. Maybe they didn't get out of high school but they're damn good traders because they trade the market. They know the market. The market has been their education.
Tom Walsh,who holds an MBA in finance from MIT, agrees. He believes that his university education makes him consider situations too closely. Neil Marks, a veteran trader, acquired the nickname "Don't tell me anything" Marks early in his career because of his belief that knowledge of events or analyses outside the immediate market are a distraction. When he began trading at the CBOT, he canceled his subscription to the Wall Street journal. He said that the minute he started listening to the information, he started losing money. Marks believes the traders' advantage lies in their presence in the heart of the market. He says that "traders have the pulse of the market. They are on top of it every second." For him the adrenaline rush of trading and the feeling of being in the zone come with the gut-level immediacy of being directly inside and surrounded by the market.
Discipline checks the instinct to outthink the market. One danger for traders is having too much conviction in their own assessments of the market because their second-by-second time frame scalpers continuously assess and reassess their positions. The Perkins Silver trainers instructed us , " Don't think." Traders must remain flexible and ready to react immediateh to changes in the market. As one trader told me, "It doesn't pay to have too much of a view." A trader with too much confidence in his judgment may come to see a losing position as a temporary problem. He may decide that his original judgment is correct, that the market will soon turn around and go in his favor. Discipline places a limit on the role of explicit calculation. If a trader persuades himself that he has "figured out" the market rather than sticking to his discipline, he risks becoming tied to his decision and exposing himself to further losses. Setting limits for losses helps a trader to separate himself from the fear of losses and from calculations that place his intellect above objective movements of the market.
The Ethical Practice of Discipline
Most important, discipline requires traders to acknowledge that the market itself is the only authority. The movements of the market represent financial truth. It is not surprising that traders" attitudes to the market take on a quasi-religious aura. Their discipline is, in a way, a technique of the sacred. Practicing discipline allows traders to attain the proper state for engaging the force of the market, a state that parallels the social ideals of the market. Traders speak about the market in religious ways that make this analogy ap propriate. "The market is always right," assigns ultimate truth to the market. Men must fit themselves to its requirements.
The market is the traders' moral authority, and it monitors their discipline. It judges their worthiness for profit. It is both the single truth and the arbiter of
a trader's work,him any of my discussions at the CBOT traders returned often to the idea that the market disciplined them. When a trader becomes too confident from recent successes,he says that the market "knocks [him] down." Traders' action is based on a belief that "you can never be smarter than the market," an assertion that the market is a mysterious and powerful force that can be apprehended only if approached with the correct humility.
Discipline is an ethical system and a profit-making strategy. It is a method both for engaging the market and being accountable to it.Maintaining discipline allows traders to allay the dangers of acting in the market. Overconfidence brings punishment.
You become very opinionated on the market, instead of just trading it and scalping in and out. I go in with a set feeling that I'm right. Sometimes I just don't want to give up. And that is when it happens,after I'm doing really well and I'm feeling omnipotent. You think you're bigger than the market and then you just ask for it . . . You get killed whenever you start thinking like that .
Humility in relation to the market demands recognizing that success can be perilous. A trader's claim to special knowledge or access to the mysteries of the market invites retribution. There is a fine distinction between maintaining a basic confidence in one's ability to interact with the market and an arrogance that will draw its wrath. A disciplined trader knows that the market takes away the earnings of the arrogant trader: loss is the penalty for the breakdown of discipline. The trading journal of one Perkins Silver trader stated bluntly, "Just when you think you're starting to figure these markets out, they come back and squash your ego like a peanut." The market seem to insist on the complete remaking of the trader in accordance with its requirements. It does not give out subtle hints. As Adam Berger said, "Anycrack or psychological weakness, the market will find if and will put a chisel in there and bang, bang, rip it apart."
When discipline breaks down and the trader's mastery of the game is called into question, he begins to use the language ofdeath. Common descriptions of losing money include "getting killed" and "getting burned." These physical metaphors draw attention to the danger of close contact with the market. The break from discipline lends these losses moral meaning. One trader, David, described to me the unraveling of his proper trading technique:
There have been [trades] that I just got killed .. . just everything goes against you. You sell it when you shouldn't, you buy it when you shouldn't, all day long and its a busy market, you're trading numbers you shouldn't, value down, trying to get it back, so you're trading bigger. When you have a profit, normally you'd get out, but because you're down money, you're trying to squeeze it, get more out of it. [You] turn it into a loser. Hate yourself. Hate yourself. Consumed with self-hatred. I'd still be down money but instead I tried to squeeze it for another five hundred and now I lost seven hundred Hate myself, threw my pen. Oftentimes I'll throw my pen. Just hate yourselt
When he cannot manage his profit-making strategies and emotions with discipline, David's downward spiral of loss gathers force. The more losses he incurs, the greater his self-loathing, and the more losses he takes on. He is consumed by emotion and unable to divest himself with techniques of discipline.
Discipline is an ideal that traders work to enact. Yet even those who can successfully lose themselves in the market encounter significant obstacles to maintaining discipline over time. The greatest challenges to practicing disciplined trading are the pressures that impose themselves on traders from beyond the market frame. The strains of money and family tempt traders to allow their thoughts to wander beyond the market present and, therefore, to break the ethical imperative to separate economic and social spherts. Shaping the self into an instrument that can read and trade in the market is a vocational practice that is difficult and painful to maintain. Adherence to discipline waxes and wanes. Traders operate under the constant threat of losing their discipline and with it their focus and trading skills.
