THE HUMAN
CHEMICAL TRADING MACHINE...
‘Munehisa Homma, originator of Candlestick trading… he was innately aware of hormonal influences.’
Some while ago I attended a Foreign Exchange conference. Nothing unusual…but in one of the Retail FX Market Sessions (I’ll deal with institutional speculation and hedging later) the speaker highlighted how subtle appeal to basic hormonal needs could assist in optimising not only the Retail Customer since been borne
out...most recently by a Nottingham Trent University survey.
It’s well known that over 80% of such traders lose money. In Retail FX, it’s actually close to 97% once taking into account cost of transactions and opportunity income loss (putting the Initial Margin onto deposit instead). At the time, I also learnt the Retail FX IM starting size - typically just under USD 5,000 and this is usually lost within three months plus... most interestingly and
surprisingly...the customer usually comes back once they’ve replenished funds… and repeats the cycle, though not always at the same brokerage. Nevertheless, well over half return. In the speaker’s view, Retail FX doesn’t primarily the taking on of risk by one party from another for a compensating price. Rather, it helps provide ndomorphin and (D)opamine for customers.
As a guide...Endomorphin is used by the body to mask physical pain. It’s the ‘runners high’ making them feel later. In trading terms this can be likened to the feeling of putting on a big trade and seeing markets move.
Dopamine is the feeling you get from
accomplishment...in trading terms...a winning trade! It’s also very visual and addictive. In life we may get little shots every so often but with trading screens one after
another...not something faced in pit trading days. So...if you get up in the middle of the night to check
screens...you may’ve a problem. It manifests in distracted behaviour, inability to complete things and generally short attention.
(S)erotonin and (O)xytocin are hormones designed to manage the former. This is for professionals and social
traders....these make us feel safe and part of a community. It might mean that when trading together we work best. It allows us to ignore minor and banal things.
Serotonin gives the feeling of pride and status... in a good way. It’s recognition – good traders are
important...for this they may receive awards and
nominations...not just the money.
12 | ADMISI - The Ghost In The Machine | March/April 2018
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32
