Trading guilt

[md44]

Hi all,

I'm not sure if this is the right forum for this post so I apologise if it should be elsewhere.

I've been learning to trade Forex since September 2012 (I started live trading in October 2014). Ever since I have been trading live I have been overwhelmed by intense feelings of guilt. After spending quite some time trying to determine why I am feeling this way, I believe it is due to the uniqueness of this business model - specifically, the fact that I'm earning money without creating value, and the principle that if I win a trade the other market participant will lose (although of course it isn't always as simple as this).

Has anyone else ever felt this way? I'm hoping you can provide me with some tips/advice on how to manage these feelings/thoughts.

Thanks very much everyone.

 

[cynic]

Of the forex traders I've personally met, none of them were unduly concerned by the guilt of profiting from another's losses. All were (without exception) far more concerned about discovering a way to become consistently profitable.

This does of course raise the question:

"If all of the forex traders I have ever met are continually losing year after year, who is profiting from their losses?"

After having perused numerous PDS's from various FX and OTC derivatives providers, I suspect I already know the answer to just such a question.

In the event that someone is feeling morally challenged by profiting from an essentially "zero sum" gaming/speculating activity, perhaps one needs to consider that the counterparty is (presumably) also seeking to profit at another's expense and is therefore equally accountable for the outcome resulting from their decision to participate.

 

[skc]

I've been learning to trade Forex since September 2012 (I started live trading in October 2014). Ever since I have been trading live I have been overwhelmed by intense feelings of guilt. After spending quite some time trying to determine why I am feeling this way, I believe it is due to the uniqueness of this business model - specifically, the fact that I'm earning money without creating value, and the principle that if I win a trade the other market participant will lose (although of course it isn't always as simple as this).

Your 2 points...

1. Earning money without creating value.

Firstly you are doing something meaningful. The textbook answer is that all traders are providing liquidity and assisting price discovery. They are primary elements of a functioning market. So if you believe that markets have a role in the modern society, and recognise the fact that there is no such thing as a market without traders, then you have a part in creating and sustaining something that is of importance (and value) to a society. Sure, if you quit trading tomorrow the market is still going to function as usual. But that applies to most other professions. E.g. a police quitting tomorrow won't cause the collapse in law and order.

Now, assuming you have established that what you do is indeed of some value. The question then becomes personal... is that the sort of value you wish to contribute to the society. Personally, I think the vast majority of jobs are the same in terms of value creation / meaningfulness. The marketing director for Telstra mobile might have a sense of mission that he's providing quality communication to the public... and that's all good to him. But to me he's just trying to sell more handsets and data and minutes. I don't believe there is an absolute objective scale to judge whether what he does is more or less meaningful than a trader.

I do however believe there are professions out there that I respect a lot more than traders... e.g. police, community carers, educators, doctors etc. If you feel strongly that way, however, you can always contribute to their cause either via volunteering or making donations. In that sense, you are simply doing what you are good at, while also creating what you believe is the greater good. It's an efficient division of labour.

2. I think Cynic has a good point.

In the event that someone is feeling morally challenged by profiting from an essentially "zero sum" gaming/speculating activity, perhaps one needs to consider that the counterparty is (presumably) also seeking to profit at another's expense and is therefore equally accountable for the outcome resulting from their decision to participate.

No one is forced to play the game.

Another way to think about it... if you are in sports, would you feel guilty about winning a tournament or competition? You can only win by beating others...

 

[PennD]

specifically, the fact that I'm earning money without creating value, and the principle that if I win a trade the other market participant will lose (although of course it isn't always as simple as this).

Whats stopping you from creating value with the money you earn. That should clear your conscience

 

[Joules MM1]

...I have been overwhelmed by intense feelings .....

this has something to do with an inner dialogue that you can replace with a stronger dialogue

learn one, teach one

make a mission of something that is bigger than you, that adds value for someone else to take

learn one, teach one

 

[md44]

Thank you all so much for the fantastic responses.

This has been causing a lot of stress for me so I really appreciate the help you have provided.

 

[banco]

I don't know why you'd feel any guilt trading against willing participants.

What was done in the US energy markets by Enron and others is a different story as they were essentially pushing up prices of commodities (electricity and natural gas) that everyday people have no choice but to consume. They should have been taken out and shot.

 

[AverageJoe]

I don't know why you'd feel any guilt trading against willing participants.

What was done in the US energy markets by Enron and others is a different story as they were essentially pushing up prices of commodities (electricity and natural gas) that everyday people have no choice but to consume. They should have been taken out and shot.

It is a guilty feeling I love to have EACH time I take a trade. Suspect most traders are yet to discover those guilty feelings.

 

[Craton]

I like the sport/game analogy, which reminds me, isn't Forex the biggest game in town?

Speaking strictly in trading terms, I've felt guilt over a loss (how dare I blow my earned like that!) but never from a profitable one (yeehaa!).

There's a reason I/we are in the market/s, to make a profit right?
So let me put it by way of a simplified sobering thought, profit divided by one's tax rate = tax to pay. Gotta keep the cogs and capitalist wheels turning ya know.

 

[md44]

Thanks again to everyone for the fantastic responses.

Unfortunately no matter how hard I try I still cannot seem to overcome these feelings.

My thoughts always return to the following situation:
One of my ultimate goals is to purchase an exotic car. When this happens, will I truly feel as if I deserve it, knowing how many people had to suffer for me to get to that point? Although I'd never know, I could have taken someone's entire life savings.
Furthermore, whilst purchasing the car, if the salesperson was to ask me about my business, and I explained to them that I was a Forex trader, would they "look down" on me? I know I shouldn't care so much about the opinions of others, but in certain situations it would feel horrible to not have the respect of others.

On the other hand, technically one could apply this level of guilt to stock investors. Even if someone buys and holds for years and years, they are technically still trading. Should they feel guilty too?

Thanks so much again for your help everyone.

 

[barney]

Thanks again to everyone for the fantastic responses.

Unfortunately no matter how hard I try I still cannot seem to overcome these feelings.

My thoughts always return to the following situation:
One of my ultimate goals is to purchase an exotic car. When this happens, will I truly feel as if I deserve it, knowing how many people had to suffer for me to get to that point? Although I'd never know, I could have taken someone's entire life savings.

Out of curiosity md44 how do you feel when you have losing trades?

To feel the depth of guilt you speak of I assume you must be very successful at FX trading?

There are many here including myself who would appreciate any positive advice on how to improve at Forex trading. Giving advice may even help alleviate your feelings of guilt ... win win situation

 

[skyQuake]

Seems to be guilt as result of ur actions (making money off others)

Would you also feel guilt as a result of your inactions?

 

[md44]

Out of curiosity md44 how do you feel when you have losing trades?

To feel the depth of guilt you speak of I assume you must be very successful at FX trading?

There are many here including myself who would appreciate any positive advice on how to improve at Forex trading. Giving advice may even help alleviate your feelings of guilt ... win win situation

Thanks very much for your reply barney.

I consider a losing trade a business expense, so I don't really stress over it too much.

Unfortunately I wouldn't consider myself to be very successful at FX trading at this time. I haven't traded for several months because of this guilt . Before that my profits weren't consistent (I think this was again due to the problems with my mindset).

 

[md44]

Seems to be guilt as result of ur actions (making money off others)

Would you also feel guilt as a result of your inactions?

Interesting point.

In the general sense I would feel guilty about not taking action to achieve my goals. However, my desire to achieve my goals won't override the feelings of guilt from trading.

 

[hhse]

As others mentioned, you are providing a service - liquidity.

Also, you don't know who the counter party is. Sure there are speculators, but there are also many who seek to hedge out FX risk from their business - because their core business may be in manufacturing, import & sales, export sales and not "FX".

People only get hurt, because they get too large, which is beyond your control.

 

[Wysiwyg]

Unfortunately I wouldn't consider myself to be very successful at FX trading at this time.

Don't feel alone with that fact. The news/no news price spikes are killers.

Question v. question = does the financial system feel guilty when honest people lose hard earned investment monies?

 

[skyQuake]

Interesting point.

In the general sense I would feel guilty about not taking action to achieve my goals. However, my desire to achieve my goals won't override the feelings of guilt from trading.

I think you are worrying too much about who/what your profits can potentially hurt

Perhaps there is someone long, waiting on the ask to get out, your inaction prevented you from hitting that ask, and thus costing him many $$$ as he did not have a stop loss...

Alternately, your non-donation to Doctors Without Borders resulted in a distress case that couldn't be handled which resulted in permanent disability.

Maybe that crappy trader your just bankrupted turns out to be a brilliant medical mind and goes on to cure cancer. If it werent for you he'd be a mediocre portfolio manager in 20 years time...

Or that sneeze which was in right place at the right time to subtly shift an air current 0.0001 degrees off course, thus brewing a super hurricane in 9 years time, devastating Florida.

Don't get caught up in the might have beens!

 

[Gringotts Bank]

Interesting point.

In the general sense I would feel guilty about not taking action to achieve my goals. However, my desire to achieve my goals won't override the feelings of guilt from trading.

It's a competition, but you're really aiming to beat yourself, not others. No one can lose without giving some kind of permission for that to happen. I know that sounds vague, but I reckon that's how it works.

Closely related to guilt is the feeling of unworthiness which will cause a trader to sabotage himself after a string of wins. I was doing that for a long time.

 

[md44]

As others mentioned, you are providing a service - liquidity.

Also, you don't know who the counter party is. Sure there are speculators, but there are also many who seek to hedge out FX risk from their business - because their core business may be in manufacturing, import & sales, export sales and not "FX".

People only get hurt, because they get too large, which is beyond your control.

I was thinking about this aspect of trading today. Hypothetically could the Forex market exist without speculators? Would the businesses hedging their FX risk provide enough liquidity on their own?

Don't feel alone with that fact. The news/no news price spikes are killers.

Question v. question = does the financial system feel guilty when honest people lose hard earned investment monies?

I feel that the financial system (markets) are neutral. They simply provide opportunities and it is up to individuals to interpret what they see - (A lesson from the book "Trading in the Zone").

I think you are worrying too much about who/what your profits can potentially hurt

Perhaps there is someone long, waiting on the ask to get out, your inaction prevented you from hitting that ask, and thus costing him many $$$ as he did not have a stop loss...

Alternately, your non-donation to Doctors Without Borders resulted in a distress case that couldn't be handled which resulted in permanent disability.

Maybe that crappy trader your just bankrupted turns out to be a brilliant medical mind and goes on to cure cancer. If it werent for you he'd be a mediocre portfolio manager in 20 years time...

Or that sneeze which was in right place at the right time to subtly shift an air current 0.0001 degrees off course, thus brewing a super hurricane in 9 years time, devastating Florida.

Don't get caught up in the might have beens!

Definitely a good point. I think the problem here is that it is known the Forex market is typically the worst in terms of people using ridiculous leverage and trying to scalp the small timeframe charts. The majority of these people lose all of their money.

It's a competition, but you're really aiming to beat yourself, not others. No one can lose without giving some kind of permission for that to happen. I know that sounds vague, but I reckon that's how it works.

Closely related to guilt is the feeling of unworthiness which will cause a trader to sabotage himself after a string of wins. I was doing that for a long time.

Agreed. Self sabotage is a big problem for traders. That is exactly why my guilt has caused a few losses for me over the past 6 months or so.


Thanks again everyone. Perhaps it's just going to take time until the guilt goes away?

 

[Craton]

md44, r u OK? Have you considered or spoken to a shrink yet, or sort counselling?

I'm no expert but if you have such strong feelings over FX trading and what others "might" think of you, I would assume you have these underlying issues in other areas of your life too. My worry is that what you're feeling could lead to some very dark consequences.

If it bothers you that much, please seek professional help.