Become a Successful Trader

September 19, 2012

A Traders Value to Society

What does a trader bring to society?

The role of ‘trader’ has evolved considerably over the years, most notably since the 80s. Since that time computerized trading has taken over. Gone are the days of over-the-counter (OTC) spread arbitrage. We’re now faced with highly efficient electronic markets. The pits are thinning out and floor traders moving to the screen.

In the beginning, trading was a way for farmers to hedge their risk of fluctuating crop and livestock prices. As the trading pits grew arbitrage came into play. A trader’s edge was determined by the speed at which you received the news. Once the electronic futures contracts like the E-mini’s came about in the 90s the game changed once again and arbitrage became a smaller and smaller edge due to much tighter spreads and more efficient markets.

The Results are In: Survey Says…

So what exactly is a trader’s value to society? Nowadays, it seems trading is no longer about making markets, it’s primarily about speculation. About a year ago I conducted a survey to see what some of my readers thought. Here are my findings…

  • 80% of readers surveyed said they felt traders added value to society (granted my survey sample was made up of primarily traders and thus biased)

Their reason’s being that:

  • Traders provide liquidity
  • Reduce spread size leading to more efficient markets and
  • Help to determine fair market pricing

Traders provide a transfer of risk from hedgers, farmers, and investors. Without traders, the markets would not exist.

Here’s the original Traders Value Survey.

What do I think?

I believe the answer lies in each of us and what it is that we do with the money we extract from the markets. If you feel trading is an unjust profession, try donating some of your profits (and time) to charity, or helping others in some way. That makes it all worth it.

Doctors and nurses add value to society by helping save lives. Fireman and police men and women protect us from harm. Athletes and musicians bring smiles to our faces and brighten our spirits. So what value is it that traders bring? Leave your thoughts below…

Thanks for reading!

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About Tim Racette
Tim Racette is a day trader of 15+ years in the E-mini futures and swing trader of stocks. Mountain biker, lover of the outdoors, and explorer. Tim is an ASU Sun Devil and a Chicagoland Native now living in sunny Scottsdale, AZ.
  1. Traders are people who choose to chase a dream. They see how trading can make their money work FOR them, rather than working for their money. Don’t get me wrong, trading is a job that requires an immense amount of work and personal commitment. Those who are able to make it, I find, gain more fulfillment out of life BECAUSE of what trading allows them to do. More time with family, freedom from a 55 hour a week desk job, travel, etc. Whatever it was that trading opened for them, makes them happier people who will contribute more to society than those who live an unhappy life.

    • I think as traders we operate with the same mindset as an entrepreneur. Goal oriented and driven by success. Persevering in all that we do, regardless of the obstacles. Quite frankly, I’m happy to spend 40+ hours a week thinking about the markets, to me it’s not work. Do what you love because you’ll be better at it.

  2. A trader is one that stands for things we all hold high… dedication, hard work (in research), perseverance, self control… the list is long, and you can’t just pick a few from the list you need to be good at them all, that’s why many don’t arrive. They get stuck on perseverance or self control or money management and are never able to push through to the end, which is becoming a successful trader. A trader to me in society is like a football star or a great leader, one to look up to…one to hold up a glass high and toast… and one you someday hope to be, like I do.

    • Yeah Paul I agree. It’s one thing to work hard, as long as your focused on the correct areas. There’s no shortcut for that screen time. Traders provide that transfer of risk from hedgers, farmers, and investors. Without traders, the markets would not exist.

  3. The way I see it, a job- in the modern sense of the word- is, in itself, a sign that civilization has made modern man sick…moving him away from his real purpose.

    Our “job” used to be to find enough resources, off our own efforts, in order to allow our families to survive then prosper. Hunting, harvesting etc. We never used to provide value to our society with our job. We provided for ourselves and THEN created value through friendship and ritual etc.

    Trading is (for me) a modern day solution to civilization. A way to hunt for our own survival prosperity, be done by noon and get out and LIVE (which includes providing value for others). Just like our ancestors used to do.

    The guilt many feel is a symptom of modern living and the inability to see where we came from and where we are going IMHO.

    My 2 cents!

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