Zaloom - 2012 - Traders and Market Morality

Traders And Market Morality
Oxford Handbooks Online

Caitlin Zaloom
The Oxford Handbook of the Sociology of Finance
Edited by Karin Knorr Cetina and Alex Preda
Print Publication Date: Nov 2012

Subject: Business and Management, Finance and Economics, Organizational Theory and
Behaviour
Online Publication Date: Jun 2013 DOI: 10.1093/oxfordhb/9780199590162.013.0010
Abstract and Keywords
Studying financial traders is a productive way to understand the distinctive morality that
emerges through the practice of exchange in global markets. Traders are fascinating
subjects for social analysis, not only because of the fast rise of their profession, but also
because, through their work, we can see how markets create cultural as well as monetary
values. This article examines the role and positions of traders in finance, discussing
among other things the transformation of their activities when computerized trading
became dominant, as well as their public perception.
Keywords: financial traders, financial exchange, financial markets, social analysis, computerized trading, public
perception
Studying financial traders is a productive way to understand the distinctive order that
emerges in global markets. The world of traders can appear to be separate and exotic,
and to hover above the everyday world. Through traders’ work, however, we can see how
contemporary practices of exchange create not only monetary, but also cultural values
that resonate far beyond dealing rooms floors.
One challenge in studying financial traders is that, in recent decades, and particularly
since the economic crash of 2008, they have become political, cultural, and economic
anti-heroes. Politicians, social critics, and a great many scholars routinely denounce their
unjustified earnings and their reckless risk-taking, especially when the economy is
sluggish, unemployment is high, and working people are struggling. But for social
scientists, it's useful to move beyond denunciation and to examine these financial players
analytically, since doing so allows us to understand the market moralities that have
emerged since the rise of global finance in the 1970s.
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Buying and selling financial instruments, traders reap personal profits from the internal
price fluctuations of stocks, bonds, currencies, and derivatives—but their individual
fortunes are linked to the wider spheres of economy and politics. The work of traders
brings financial markets to life, through practices that politicians and policymakers have
vigorously encouraged since the 1970s. Traders are, then, both the product and
beneficiaries of economic policies and trends that have driven finance to the center of the
global economy and yoked its fortunes to individual and national well-being. Financial
markets today represent both the outcome of a decades-old political gamble and the
culture that has grown up around it (Krippner 2011).
Prosperity is now linked to the vicissitudes of securities and to the rapid transformation
of the financial field; its demands press even those far outside the industry's formal
boundaries. As an extreme case of the anxieties and potentials of everyday finance,
traders (p. 170) can teach lessons about the demands of living in a market-based culture
and illuminate the values and dispositions its practices encourage. Sociologists and
anthropologists have labored alongside traders, observing their work, conducting copious
interviews, and even making deals themselves to understand the global economic order
and the contemporary financialized economy. Their works reveals the technological
framing of the market arena and the forms of knowledge, time, space, and virtue that
appear within to diagnose the cultural power of finance.
Topology of the trading field
What unites and divides traders as a group? The banking industry's professional
associations do not keep—or at least make public—demographic statistics about traders.
Trading's gender composition is no mystery, though. The ethnographic and journalistic
accounts show that trading rooms are overwhelmingly male and feature few women.
Other patterns—their numbers, ages, career paths, and most social demographics—
remain obscure, however. The oversight in which other professional associations traffic is
considered by traders an evil necessary, which is in place only to please sanction-armed
regulators.
Securities and derivatives industry regulators are currently seeking more individual-level
information identifying traders whose speculations can endanger markets. The Securities
and Exchange Commission is presently considering a rule that would register “large”
traders, dealing in more than 2 million shares of 20 million dollars per day, or ten times
as much per month. The Commodity Futures Trading Commission already tracks big
traders. Inside financial markets, size already indicates status, offering measurable
ability to use financial markets for their highest profitability; in regulatory terms, the
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same measure works to indicate a potential threat to the system. Each links market
personhood to the quantities of contracts, bonds, or stock a trader deals. Identifying
demographics is important for the liberal pursuit of inclusion, but market distinctions
revolve primarily around the dimensions of potential profit and systemic disruption.
The desks where both large and small traders work are located across a range of
institutional settings within the field of banking and securities; banks, hedge funds, and
proprietary trading operations all employ traders, and exchange trading floors and
arcades, and home offices also offer spaces, technologies, and institutional connections
for more independent dealers to trade financial instruments. Across institutional settings
a focus on the dynamics of financial markets unites traders. An old market adage claims
that a good trader can trade anything. The prices of commodities like oil, currencies,
copper, bonds, oats, and stocks all fall subject to similar price dynamics in the market's
folk wisdom. Although traders certainly specialize, their skills lie in the analysis of price
and the assessment of price-related risk, the likelihood of gain, and the (p. 171) exposure
to loss. In other words, they are experts on the internal workings of financial markets.
And in their hands, these markets, of whatever kind, can deliver vast profits, and deep
costs.
The question of whom these trades enrich or impoverish divides the field. Proprietary
traders (“prop traders” in market argot) deal with the money of the firm for its own
profit, whether a bank, fund, or private firm. In the wake of the financial crisis investment
banks’ proprietary trading has focused regulators’ attention, as the wagers traders make
with the banks’ own money often opposes the interests of their clients. Nonproprietary
traders buy and sell securities for those customers. Like demographic statistics, the
amount of proprietary versus customer trading remains ambiguous, a blurring that can
lower the risk profile of a bank's books. Perhaps the riskiest business lies in the accounts
of independent traders who make deals with their personal funds, placing their own
livelihoods directly on the line when they enter an order to buy or sell.
The everyday practice of trading draws on a variety of techniques; arbitrage, algorithmic

trading, spreading, high-frequency trading, and scalping are just some of the different
strategies traders use to pattern their buying and selling. These techniques signal
internal distinctions, signaling the expertise of a trader and pointing not only to the
different securities in which he deals, but also to the technologies he uses, the ways of
both establishing knowledge about the market and using it that he employs, the
timescales with which he works, and the uses of urban space in which he engages.
Ultimately, these techniques suggest what each trader values, in price and virtue.
Together they assemble a market culture from the everyday practices of those who tie
their livelihoods to the ups and downs of financial value.
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Technology
Traders gain access to the online world of financial markets through the technologies
that surround them. Just as the assembly line presents workers with car parts to join,
screen technologies present the materials—financial prices—which traders must connect.
By organizing networks among traders and simultaneously presenting the market to
them, trading screens harnesses the worker to the market's pace and constantly forward-
moving character. As on the industrial shop floor, these technologies’ qualities structure
practices of knowledge, time, and virtue.1
Each work day, traders walk to their desks and take a seat within a carapace of screens.
Information enfolds the trader: prices of multiple markets, in commodities, derivatives,
currencies, stocks; financial benchmarks like the yield curve; news wires; and prediction
models surround him.2 Work was not always organized this way, though. Computer
mediation replaces an older order of shouts and the manic hand gestures of the stock
exchange floor.
(p. 172) For much more than a century, financial markets in futures, options, and stocks
operated through bodies and voices fighting for deals on the trading floors of the world's
financial capitals. In the late 1990s, the Internet challenged this multigenerational way of
life and labor, promising speed, efficiency, and global connections. For traders both on
and off the floor digital technologies also marked a more subtle shift. Some traders, like
Forex dealers, laid fiber optic cable alongside their phone wires with little fanfare; their
deals already operated at a physical distance. However, online technologies changed
ways of working in a more subtle fashion, one experienced both on the floor and in
dealing rooms. Even before electronic trading, dealers observed information flowing
across screens. Prices, charts, and news blinked on individual monitors and blared on
enormous, overhead LED panels. Deals, however, involved talking to or gesturing to
another person, the screens and human action working together to complete a trade.
With the rise of electronic exchange, traders began working through complete deals on
screens—from monitoring market patterns to entering buy and sell orders, receiving
confirmation, and registering a gain or loss. Electronic trading then alters the interaction
order of financial dealing. Even over-the-phone transactions required grappling with the
human presence on the other side of the deal; a voice, a face, or a hand gesture required
reckoning with the embodied and human-built qualities of the market. Online trading
distills markets into the numbers of prices and patterns, a form that both consolidates the
many and varied participants into a single entity that exists beyond any of its individual
participants. Screen-based trading, then, raises a unified market that seems to act with
its own volition, from the actions of traders dispersed in key cities around the globe.
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Dispensing with human mediation spurred on many proponents of electronic trading. No

wonder, then, that in the securities exchanges where buyers and sellers met through
floor brokers, the advent of digital technologies was most jarring. How did these
organizations respond to the incursion? Just as organizational environments conditioned
the levels of individual opportunism that Abolafia (1996) found in New York's bond
markets, such environments also conditioned traders’ responses to the new technologies.
In some settings, online trading looked like a major opportunity, in others only a minor
sideshow to the main ring, the trading floor. Attachment to the traditional work
techniques and the pull of organizational politics divided those exchanges that adopted
online trading swiftly and those that lagged.
The Chicago Mercantile Exchange (CME) developed initial trading on its Globex system
as early as 1992; its organizational identity as an innovator in the field supported its
embrace of new ways of trading. In the 1970s the exchange had spearheaded the shift
from physical commodities like cattle to financial ones, like currencies; the membership
was primed to see the vast profit potential in innovations. The CME's voting structure
gave strong voice to those members more likely to support experimentation, the traders
in the newer index and currency markets. Rival exchanges like the Chicago Board of
Trade and the New York Stock Exchange remained indifferent to the novel technologies,
convinced that their floor traders would continue to make the surest markets and draw in
business. Secure in the lead position in futures and stocks respectively, the members
voted to protect their way of working, (p. 173) believing that their historical advantages
would continue to draw customers. Their position quickly became untenable, however, in
the new world of electronic dealing.
Digital trading proceeded hand in hand with another organizational change for the
exchanges. In the first round of transitions, many exchanges went corporate, abandoning
their founding forms as membership organizations and nonprofits, arguing that clear
hierarchies would help them move with the speed and flexibility of digital time. Once the
trader-members swapped their seats for stock, exchanges began to merge with the
promised alacrity, bringing global form to already transnational financial transactions.
Both the organizational and technological disruptions generated productive conflicts and
debates about the desirable functions and forms of markets. As the form of trading
changed, debates about the normative structures of the new social arrangements became
topics of intense debate and experimentation (Zaloom 2006: ch. 2). This transition is far
from over; in fact the exchanges are laggards in the financial industry where
organizational churn has roiled since the 1980s. Global interconnection and
organizational elasticity continue today with the merger of the New York Stock
Exchange, the preeminent symbol of American capitalism, and Deutsche Börse, firing
debates, once again, over the relationship between particular markets and the global
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economy. The necessity of digital connection is no longer, however, under discussion.

Now almost all traders engage the rise and fall of markets from swivel seats facing
computer screens.
The screens channel prices, news items, and chats to participants, joining the perception
and representation of the market, or “appresenting” it (Knorr Cetina and Bruegger
2002b). Screens assemble the material out of which traders build a “streaming”
interaction order (Knorr Cetina and Preda 2007: 117) that engages simultaneously the
epistemic and economic orders (Knorr Cetina and Bruegger 2002b: 395). Screens insert
traders into a set of interactions, information exchanges, calculations, and transactions
that define a virtual world on a global scale (Latham and Sassen 2005).
Constantly connected, financial markets constitute “virtual societies” that move as the
sun moves across the earth with traders rising, logging on, tiring, and departing for home
at intervals that periodically repopulate the global trading space (Knorr Cetina and
Bruegger 2002a). Fluctuating prices coordinate geographically distant competitors,
providing the material for exchanges with counterparts around the globe. The flow of
activity joins with the similar labor of other traders, bound together through the signals
surging through fiber optic cable. With the screens, coordinated actions of traders
establish a “global microstructure” (Knorr Cetina and Bruegger 2002b) and enliven the
market as an object greater than the sum of its individual trades. The network, tied to
city centers, gives birth to the global market.
The screens do more than establish a global microstructure however; they validate the
market they create. These “windows” onto the market world present prices and
information as legitimate records to be monitored, calculated, and acted upon, lending
authority to the world beyond the screen (Preda 2009). So, as traders watch and engage
the market they do more than gain profit (or acquire losses) for themselves and their
banks; they also justify the market as an independent system, one that displays its own
observable trends and rules organized around the price of currencies, securities, and
commodities.
(p. 174) Despite their initial sophistication, these observational systems always appear
insufficient to the traders that use them. They seem to fall short of optimally presenting
the market, since speed and efficiency drive competition forward and, by definition,
propose no endpoint. This aporia thrusts traders into an ongoing search for novel
technologies to enable smarter understanding and faster interaction. Facing such an
inherently imperfect system, traders and their digital designers constantly manipulate
technologies, since they ask a question without firm resolution: What constitutes the
market? And what technologies can represent it? It is a query relevant for practical use in
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trading room, but which engages a more philosophical set of market ideals: individual
autonomy, acumen, and competition.
Contemporary financial markets have built technologies around an ideal of “informational

transparency,” a model that requires market information to be formatted as facts free
from the distortions of social information. The designers of electronic dealing systems
supply simple economic truths in the shape of financial prices, their histories, and their
relationships. These technologies then lay the foundation for traders’ calculations and
engagements with the market. With sheer economic facts visible for interpretation, a
particular kind of competitive arena can emerge. The virtual society promises that
dealers, separated from the contamination of social influences, would subject one another
to a purer form of competition and generate an efficient market at the same time as they
reeled in profits for themselves and their backers. Only the fittest—the most perceptive
and the quickest—will flourish, the logic proceeds (Zaloom 2003).
As electronic trading knitted together markets, another set of even faster traders rose to
take advantage of the new environment: quantitative traders developed algorithms to
draw profit from global price movements. Taking advantage of the lush informational
environment, algorithms detect patterns no human could compute alone, and with unique
speed. These observational systems do not remain on the sidelines, however; they whip
buy and sell orders through exchanges’ matching systems, and even exploit other
algorithms, buying or selling ahead of a detected sale (MacKenzie 2011). Sometimes they
also move markets in extreme ways.
On May 6, 2010, market indexes fell nearly 6 percent in five minutes. And recovered 20
minutes later. The “flash crash” was triggered by a program executing an extensive sell
order of stock index futures, instruments tied to actual corporate stocks. Algorithms
reacted to plummeting prices by shutting down under these extreme conditions,
accelerating the drop. Prices began to move back toward their previous levels only when
the Chicago Mercantile Exchange applied an electronic brake, also coded to trip under
particular conditions. Human traders then had five seconds to consider their positions
and decide to buy or sell outside the constraints of their automated avatars.
What were the factors that precipitated the flash crash? The consensus explanation faults
the algorithms’ bolt from the market (Easley, Lopez de Prado, and O’Hara 2011). The
flash crash raises more fundamental queries too: What is the relationship between human
traders and their machines in the electronic world? What vulnerabilities accrue to this
new system of observation and market action? And what responsibilities must these
systems carry? When citizens’ economic security is ever more tied to finance, this
(p. 175) is a pressing political question. These novel forms also demand fresh analysis.
The meshing of observational tools and profit-taking breeds a form of interconnection
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where traders react to machines and also to other humans reacting to the market. Close
observations of the relationship between human traders and their tools offers a starting
point.
Reflexive reason
In the enclosed world of the market, observational systems take on a reflexive nature.
Traders’ knowledge about the market's movements rests on its simultaneous existence as
the aggregate of participants and an entity apart, a dual character displayed in key
predictive tools, like the spread plot and the yield curve. With these devices in hand,
traders can assess their own positions relative to the market's judgment. Because
technologies give the market presence, the media of exchange gain particular power in
conditioning traders’ strategies and understandings. The construction of traders’
predictive instruments and their uses feeds back into professionals’ calculations and
ultimately their buy and sell orders. The interchange between the traders and the market
world shapes the tools of observation themselves producing a form of reasoning
characterized by its reflexivity.
As traders enter into an exchange of information with the market, they create and consult
models of its behavior, harvest novel information about it from their monitors, and enter
buy and sell orders to profit from it. Their calculative repertoire includes far more than
their most obvious numerical tools offer; instead, calculative strategies center on the
interdependence of the social and the technical. Traders delineate social groupings at
work in the market, and identify affective trends, such as fear or ebullience that might
drive prices (Beunza and Stark 2004; Godechot 2000; Zaloom 2006: ch. 4). The relation
between social composition, emotion, and reason generates reflection on both the
constitution of the market and traders’ own positions among participants—and even their
relationship to themselves as market actors. Traders must detect their own patterns of
elation and anxiety and, subjecting these reactions to conscious manipulation, either
incorporate their signals or abjure them. The social objectification of the market and the
objectification of themselves as actors within the market feed into trading acts.
Social objectification, especially, raises the issue of the tools traders employ to
understand price patterns. The spread plot and the yield curve offer insight into this
reflexive relationship between financial knowledge and tools of market appresentation.
Corporate mergers can offer traders profit, but the politics of regulation and of corporate
combination can derail a deal. The spread plot offers a view of the likelihood of two firms
combining as it draws a visual picture. A narrowing gap between the prices of the two
companies indicates a greater likelihood as the values converge, whereas a widening rift
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indicates skepticism as the prices migrate to their original, respective values. Monitoring
the spread plot offers the trader a view of the market's shifting assessment of the
merger's likelihood. Beunza and Muniesa describe this circular process: “Market
participants see themselves aggregated and take this picture into (p. 176) account for
further action—action that translates in a particular performative twist, into the spread
plot again” (Beunza and Muniesa 2001: 633).
Traders frequently make use of such reflexive loops in their calculations. Rather than
take the signals as given, traders often use models to suss out their own oversights,
“backing out” from the model rather than directly employing its judgments. Traders “take
as a point of departure the fact that financial actors go back and forth between models,
their understanding of what is being traded, and their ability to figure out what their
competitors are doing,” a process that Beunza and Stark (forthcoming) argue can
produce dangerous interdependencies as individual traders act in reaction to the same
sets of information.
Affect also loops through market reflexivity, engendering an anxious relationship

between traders and their tools. As a graphic representation of US bonds’ future value,
the Treasury yield curve is a powerful model of the future; it points to the health of
America's economy and therefore reflects global economic stability. The yield curve
unifies a field of market action, reflection, and emotion, bringing together the dispersed
and disparate actors who make up the credit market. Its varied and particular social
content raises questions about the yield curve's effectiveness as a predictive tool,
however. If the participants are rational, then the yield curve's signals about the future
should be valid and traders can pursue their strategies with more composure.
Bank traders and hedge fund managers assume their counterparts act as they do:
working to gather information about the forces that will shape the course of the economy
and then buying or selling accordingly. These individual rational decisions should draw
an aggregate picture of economic prospects. However, the market may include
participants whose intentions or “irrational” judgments distort the picture. The bond
market cannot be assumed to be composed of only judicious experts. Yet participants can
never know who exactly does what in the market. Rational prediction can proceed only on
the faith in the rationality of the players whose opinions sketch the economic forecast.
The techniques and technologies of reflexive finance are shot through with such fissures,
pointing to a conflict in the composition of financial understanding and to an intractable
problem of contemporary forms of knowledge more generally. Professionals’
engagements with the yield curve proceed through the uncertainties sustained within it—
uncertainties about both participants and the ability of the yield curve to provide a
convincing portrait of the economic future. The constant changes—of actors and their
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strategies—that make up the market transform the tool itself, drawing the instrument
into cycles of doubt, a process reflected in traders’ forms of reason.
The uncertainty of reflexive tools sends traders in search of information to confirm their
judgments and establish new associations among ambiguous messages. Combining sets
of devices, each with their own formulas of prediction, promises the ability to form
enough of a provisional judgment to draw profit from price fluctuations. Constantly
adapting their strategies to changing conditions, traders work within a “bazaar of
rationality” where profit results from strategies that link calculation and feeling,
including assembling different kinds of statistical reports, analyzing traders’ own “feel”
for the market, and speculating about the emotions of competitors (p. 177) (Godechot
2000). In relating a diverse array of information sources, traders practice a particular,
contemporary form of bricolage. That also includes the spatial and social elements of the
dealing room, and the specifics of the situations it draws together (Beunza and Stark
2003; Godechot 2000).
Physical location routes the paths of formal calculation (Beunza and Stark 2004;
MacKenzie 2008: ch. 6). Donald MacKenzie argues that even the mathematicization of
options trading works through the “dense, bodily, spatial social structures of trading
pits.” The exchanges’ social and spatial structures “affected the ease with which the
mathematical relation between put and call prices was maintained,” generating a
situation in which a model did or did not make sense in a given moment (MacKenzie
2008: 169–70). Bank trading rooms also draw together spatial and social arrangements
with abstract forms of financial calculation in ways that enable profit. As Beunza and
Stark point out, the physical organization of dealing rooms enables novel associations
that can lead traders to recognize and research evolving patterns. If “diverse principles
of valuation” are critical for establishing the cognitive basis for drawing future profits,
physical space organizes that heterogeneous order (Beunza and Stark 2003: 373).
When traders are displaced, the relationship between market reasoning, space, and
technology reveals itself most clearly. After the disaster of September 11, lower
Manhattan's trading rooms bivouacked to nearby sites in the region. New office spaces
forced traders to replicate the arrangements that supported their work. To reconstitute
their profitability under new conditions, arbitrage traders rebuilt their cognitive
environment from spatial, social, and technological materials. Entwined, networks of
traders and tools created the ability to make sense, which was especially (and literally)
valuable under such conditions of extreme uncertainty (Beunza and Stark 2003).
Reconstructing the trading room made productive use out of rapid change and
uncertainty, a task also central to traders’ everyday work and to their particular sense of
time.
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Time
Although screens and tools of financial analysis provide entry into a coordinated and
stabilized system of global exchange, time within that space moves with velocity and
volatility. The interconnection of traders through fiber optic cable enables the financial
markets’ particular and peculiar organization of time, one that exaggerates its unfolding
character. The pace and timescale of trading generates the conditions in which traders
learn to regulate themselves in relation to their work. In traders’ understandings, these
processes, when successfully managed, lend profit, and they also develop a sense of
market-based virtue.
As the prices of financial instruments move up and down, their irregularity, what
economists call the “random walk,” forces traders to direct unbroken attention to the
screen.3 The demands of continual focus on the immediate future heighten the power of
time's unfolding nature. Knorr Cetina and Preda (2007: 130) have described the quality
(p. 178) of trading temporality as one of a carpet “where small sections are woven and at
the same time rolled out in front,” establishing an “ontological fluidity” that places
traders at the always-emerging edge of the future.
The market's continual unfolding frames both calculation and the social form that emerge
from it. Continuous changes of prices and opinions direct traders’ improvisational
strategies and place the unfolding nature of market time at the center of traders’
calculations. To profit, traders must predict the pattern on the carpet being woven
beneath their feet, yet stay flexible in their interpretations and ready to lift their
judgments of market direction as conditions, participants, and as the market itself
changes. The ability to act within the future's emergent uncertainties directs the social
hierarchies and virtues that emerge in trading rooms.
On the trading floor, both status and self hinge on handling fast-paced volatility.
Arguments over traders’ “competence” point to triumphs or failures in this area. In both
pits and digital dealing floors, traders observe each other and take account of actions and
reactions under intense time pressure. Aggressiveness and assertiveness in “fast”
markets are understood to reveal a trader's self-confidence and fight, an attitude that
transforms stress into the sinews of success. For traders, such masculine virtues define
success and failure at the edge of the future (Levin 2001). Profit-making, then, marries
calculative acumen with character.
The social demand for masculine competence also raises more internal questions: How do
traders create these skills? How do they adapt to work at the edge of the future? Traders
cultivate marketplace selves to function under emergence and to exploit their chosen
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techniques. Each strategy—from scalping to spreading to arbitrage—generates its own

internal temporality. Organizing time strategies in varied ways, different techniques
produce distinct visions, of both the market and of dealers’ relationship to them.
Arbitrage, the technique of drawing profit from price inconsistencies across markets,
offers a view into the relationship between the temporality of trading techniques, traders’
self-fashioning, and the global financial order.
Arbitrageurs take advantage of discrepancies across markets, based on the assumption

that prices will converge; even though there may exist momentary divergence, values
among financial products will return to a balanced state. Designing strategies to draw
profit from the “propensity of the market toward a future moment of
equilibrium” (Miyazaki 2003: 257), arbitrageurs fulfill the prophecy, lending the
technique the ability to bend time to its shape. Yet profit is not the only effect of
arbitrage's temporality. The technique's gap between the divergent present and imminent
rebalancing generates a “future orientation” (Miyazaki 2003: 261) based in a particular,
quasi-religious, faith: a belief in the market's inevitable return to price equilibrium.
Arbitrageurs knit together practice and conviction by buying and selling securities.
Arbitrage also works as a metaphor for understanding temporal relationships beyond the
floor. Traders live not only with their financial instruments and trading strategies but also
in workplaces set within nations. For Japanese traders in particular, the understanding of
arbitrage in which opportunities are “immediately foreclosed” resonates with their
understanding of their place in finance. US banking firms set the financial (p. 179) pace;
Japanese traders must play catch up, closing the gap between the emergent order and
their own lag. In both dealing techniques and national comparisons, the sense of a
foregone future generates both anxiety and hope (Miyazaki 2003: 256). Financial
instruments, then, create a temporal effect that shapes traders’ affects and
understandings of self and the global financial order.
Techniques of trading exercise influence over traders’ social imaginations, but their
influence also goes deeper within. Traders treat the self as a tool, developing techniques
to work within the market's temporal emergence and volatility. Manipulating emotions to
create more effective calculation, traders analyze their own departures from an ideal
form of market reason, under intense time pressure. For instance, both arbitrage and
other trading techniques, such as scalping, or position trading, require sustained
attention and consistent calm to attend to swift shifts in prices as their securities gain
and lose value sharply. On the dealing room floor, capital circulation produces a
particular form of attention that couples with ideals of virtuous market action. Traders
organize their self-conduct around the intricate dictates of “discipline.”
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Discipline is both an idealized state and a concrete set of internal strategies that remove
emotion and individuality from judgments, orienting the dealer to the unfolding future.
Discipline itself is a set of techniques for manipulating space and time. 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, traders learn to break
down the continuities between past, present, and future trades, by dismantling narratives
of success or failure; and, fourth, they create a stance of acute alertness in the present
moment. With discipline speculators train themselves to become embodied instruments
for reading the market and reacting to its every twitch (Zaloom 2006: ch. 6).
Discipline enables the state traders value most: the sense of total absorption, of entering
“the zone.” There, conscious thought disappears and an ultimate sense of presence takes
over. In the zone they are able to act without explicit thought; their trades flow with the
rhythms and sounds of the market.
Traders’ dealing techniques and flow experiences can illuminate sites far from the
trading room floor. For instance, the video poker players and slot machine gamblers of
Las Vegas prize a similar connection between time, technology, and absorption. Just like
prices on a trading screen, the fast-paced changes in video poker hands create a
structured chaos that helps induce the zone. Like traders at their peak performance,
gamblers lose any sense of space, time, and self during play. Completely captivated by
the swift shifts in their glowing cards, their sense of their own presence dissolves into the
smooth motion of poker hands through time (Schull 2012; Zaloom 2010).
Mihaly Csikszentmihalyi identified such absorption as “optimal experience,” and traders’

description of the zone aligns closely with the athletes of Csikszentmihalyi's formulation
(Csikszentmihalyi 1991). Jet pilots, Indy 500 racers, and surgeons also operate in
masculine arenas where the idea of optimal experience holds fast. The gamblers,
however, tell a different story, one which contains a key for reevaluating the absorption
of financial markets. In machine gambling, the convergence of time and technology leads
to literal addiction. Financial trading displays similar addictive qualities, and requires
(p. 180) remedies that address the particular features of technology and money that drive
forward destructive habits.
For now, though, financial trading still inhabits a special cultural space that identifies
profit at the edge with masculine virtue. Traders exemplify adventure capitalism for a
world in which time is the new frontier. Dealing on the prices winging into the future,
traders operate at a temporal edge. This risky business lends a charisma to speculators
as characters who crystallize and celebrate “individual freedom and force” (Weber,
quoted in Preda 2009: 233). The marriage of individual cunning and risky profit cuts a
figure of daring in a routinized world, and produces a mythical draw. Adventure
Page 13 of 23

capitalism, especially in the United States, has long linked heroism to the regeneration of
wealth. Once, the frontier accomplished the renewal of fortunes, at least in American
fantasies. Today, however, the territory for domestication is temporal. Both traders and
popular writers have built a moral relation to markets cast in familiar heroic terms, a
contemporary mythology that glorifies the taming of the future.
In the years leading up to 2008, dealers in derivatives and other financial instruments
became the hero-villains of popular novels and movies frequently adapted from the
broadsheets. “Rogue” dealers’ losses ripped holes in the sides of global banks’ (then)
seemingly unsinkable pleasure cruisers, generating fodder for fictionalized accounts.4
Other writers chose the new math prodigies recruited to Wall Street from physics
departments and backgammon tournaments, penning thrilling tales of financial gambles
most corporate workers could only imagine. These new wizards of Wall Street broke the
house in The Predictors (Bass 2000), Fortune's Formula (Poundstone 2006), and The
Quants (Patterson 2010) among others. Upon their exit from the industry, another set of
authors composed tales confessing the outrageous locker-room behavior married to
financial manipulation.5 Even today as such stories assume a distinctively contemptuous
color, traders remain alluring symbols of our financialized economy's excesses as they
link us to powerful iconography and the glamor of speculation.6 Traders, inhabiting this
paradox, illuminate the necessity, need, and desire of intimate relations with markets, for
better and worse. Taking profit draws both traders and everyday citizens into the nexus
of gain and goodness. Playing against the unknown future, profit draws the distinction
between the virtuous and those the market has deemed lacking.
In both these public tales and the stories that traders tell each other, the market creates
a moral arena for contests among financial strivers; inside each proves his worth against
the others.7 The market also stands apart as a moral force, assuming the qualities of an
all-seeing judge, an entity both apart and above. Traders routinely describe the market as
the generator of ultimate truth and the judge of human value. Working in currency
markets, Karin Knorr Cetina and Urs Bruegger (2002c) show that the market becomes an
“object of attachment,” the arbiter of traders’ sense of lack or wholeness. Discipline
offers access to the transcendent power's embrace. One trader described how, with
discipline, “you can experience the market and become a part of this living thing,
intimately connected to it” (Zaloom 2006: 128).8 As the market delivers a sense of
absorption, virtue, and completeness, it also seems to demand allegiance to principles
beyond individual profit.
(p. 181) Service to the market defines the value of traders’ work, particularly to what
traders identify as its essential functions. Directing their focus, it also provides
justification for their occupation. Market-makers, those traders who continually post bids
Page 14 of 23

and offers, express commitment to “liquidity.” Buyers or sellers can view their quotations
and, as their title suggests, come to them at any moment to make a deal. The market's
constant forward motion depends upon their presence and willingness to trade at any
time. Liquidity also moderates volatility—an object lesson relearned during the flash
crash—and facilitates matching exchange partners. When buyers and sellers meet,
another feature of the market emerges. Price discovery uncovers what traders consider
the “truth” of the market. The cross of supply with demand defines the value for a
commodity or security, naming the value of oil, corn, General Motors cars, even the US
government, by establishing a price. Each trader plays a tiny fractional role in this
ongoing drama of changing values, each moment a revelation that offers a reward over
and above the profit that it can also yield. Traders’ moral allegiance is rooted, then, in a
commitment to the market as vital source of truth about the material world.
Space
The market's essential verity relies on traders’ continual use of their expertise, a routine
configured at once through technology and through urban space. Finance's urban
“command centers,” such as New York and London, amass symbolic analysis that
produces both the materials and motion of the virtual space (Sassen 2000). Cities also
offer the means for traders, and other financial experts, to display their success in the
virtual world—and for those who remain outside, cities offer arenas for claiming inclusion
in finance. Urban space both organizes global trading networks and offers a platform for
the performance of financial aptitude.
Paradoxically, even as online technologies have obliterated the constraints of distance, a

few critical sites of finance have emerged, in part to support the luxury lifestyles such
workers seek. As high-level computing and online connection have elevated trading, and
other banking activities, in economic importance these key cities’ significance has also
increased. New York and Dubai, Singapore and London display their own importance as
entry points and expressions of the global network.
In finance, cities organize agglomerations of experts to answer questions of value. Urban

resources become materials for financial market professionals, such as architects,
managers, and software designers, to build market infrastructures. In order for traders to
answer questions like “How much is the Japanese yen worth right now?” and “How much
will a US Treasury note be worth in three months?” designers engage in “practical
experiments” to fulfill the ideals of autonomous market competition by combining
physical spaces and technologies. Under conditions that can enable “true” prices to
emerge, traders act as critical infrastructure in establishing cities as “value loci,” and in
Page 15 of 23

virtualizing the urban qualities of centralization, agglomeration, and calculated exchange

that establish the market qualities of online exchange (Zaloom 2009).
(p. 182) Urban propinquity also fosters such expertise, particularly in price and profit-
making. For traders, exchanges with financial dealers both within the same firm and in
nearby firms help generate the novel associations between sectors and techniques
essential for profiting in a constantly changing field. However, concentration in cities also
creates vulnerability. The attacks on September 11 took a particularly heavy toll among
traders, many of whom worked in the towers for firms like the bond dealer Cantor
Fitzgerald. The urban geography of financial markets demands that financial firms
balance necessary proximity with desired security (Beunza and Stark 2003). Following
the disaster, The New York Times printed pages of faces, names, and occupations that
both recorded the tragedy's personal toll and, at the same time, revealed the particular
geography of financial trading, a concentration that launches New York City into the
virtual world of global finance and secures its importance in the network.
Urban command centers coordinate more than the transactions that make up the daily
commerce of finance; city spaces offer finance a particular public stage. Traders highlight
the legitimacy of finance by using urban space for displays of success. Cities are critical
in generating “the perfect lifestyle” that traders and other bank employees seek out, a
balance between such “self-won” urban luxury consumption and stable home lives often
based in nearby suburbs (Ho 2009: 52). Market survivors deserve urban luxury: elaborate
meals, trendy clubs, fashionable hotels, and clothes of fine design and fabric. Raunchier
pursuits offset such domesticated pleasures. Bad behavior in nearby high-end strip clubs
and hushed-up sprees in Las Vegas offer offsite opportunities to display the prerogatives
of primal, market man. To the rawest, most competitive, and most willing to breach
decorum in the search for success, go the spoils. In sum, cities operate as stages for
consuming the deserts of market success. Because discourse about market winnings
poses these profits as the results of fair contests, urban consumer bacchanalia stages
meritocratic deserving.
Cities also offer materials—their urban histories and built environments—for claiming
social inclusion and a right to employment in the financial field. In London's early days of
currency and derivatives trading in the 1980s, “barrow boys” came to populate the
dealing floor of the City of London, Europe's most powerful financial district. With roots
in the working-class East End these traders drew on the hard-bargaining tactics of the
street trades and the raucous manners of the London docks that once provided material
sustenance for the district's young men. The East End's history aligned effectively with
the designs of the rising global market trade in financial goods. Moving from physical
commodities to more abstract ones, the task, they argued, was the same: to best your
opponent for the best price. This was a new version of an old market character, one that
Page 16 of 23

fit well with an ideology of market competition. The association of East Enders with
market-making created grounds for the barrow boy's legitimate inclusion in the City, a
space long dominated by a clubby set of elites (Zaloom 2006: ch. 3).
Women, too, have used urban materials to mount similar arguments. For instance,
women who entered Wall Street as behind-the-scenes analysts in the 1960s and 1970s
were systematically locked out of the men's clubs that for many decades organized the
social lives of Wall Street's brokers and traders. Groups organized to advance women's
(p. 183) leadership in finance have used New York's emerging spaces of professional–
managerial culture, like art galleries and museums, as stages to launch bids for
increasing the female presence in Wall Street firms’ upper tiers. These women's groups
employ “material spaces to work out new discourses and images of gender relations,
finance, and women's status” (Fisher 2010: 265). For instance, events of the Wall Street
organization, the Women's Campaign Forum, dramatize finance as aligned with a
meritocratic culture that should be gender-blind according to the logic of the bottom line.
In doing so, they use spaces of the city to challenge the exclusively masculine character
of finance and elite levels of politics (Fisher 2010).
As traders and other bankers use public space to display their winnings and marginal
groups dramatize the liberal imperative for their inclusion, cities then also offer the
materials to debate the distribution of goods connected to the financial economy. For
instance, what does it mean for New York City that the wages average of the securities
sector was $347,000 in 2010, binding the livelihoods of service workers to the industry's
welfare (Lowenstein 2011)? Such imbalances in the organization of urban industries raise
squarely political questions. Cities, then, operate as stages for the dramas that establish
and can also question the social legitimacy of finance.
Conclusion
Finance crystallizes contemporary forms that also operate beyond its boundaries: an
essentially reflexive knowledge, a heightened sense of time's unfolding, and a system of
virtue defined by service to the market's truth. Interconnected screens establish the
infrastructure for an online world, erecting the arena in which traders improvise
strategies that are at once cultural and financial. Most significantly, electronic
technologies shape the temporal structure of financial work. The unfolding future defines
the emerging contours of the market, the arena of competition in which the individual
trader must take decisions and, he hopes, profit. Joining the market's emergence with
temporal unfolding creates a new kind of edge where masculine adventurism takes hold,
a threshold where the pursuit of money and moral standing merge. The market, in
Page 17 of 23

traders’ work, becomes not only a source of gain or loss but also an essential ethical
commitment.
Examining traders can illuminate cultural patterns in arenas that draw in far greater
numbers than those who deal on trading room floors. The online world of traders offers a
contemporary exemplar, one that crystallizes not only the workplace relations of a global
knowledge economy, but also the realm of leisure pursuits, as online media become
defining features of both work and play. Online communications technologies and their
constantly shifting information have come to dominate our technological landscape. As an
extreme example of everyday processes, traders show what constant engagement with a
volatile information environment looks like.
The combination of screens and emergent information heightens awareness of temporal

emergence, no matter what their specific content; commonplace technologies, like
(p. 184) smartphones, create windows onto unfurling and volatile information
environments. Mediated through screens on pockets and on desks, social media like
Facebook, Twitter, and even email structure similar qualities of attention that traders
evince. Unfolding information, and even the simple possibility of novelty, exercises a
compelling force. Constant monitoring of the shifts in social information establishes a
form of social connection that mimics market linkages and exchanges. This
transformation of daily life is not simply a change in transmitting information, but also in
the values that accrue to its pursuit. Traders assign moral significance to the ability to
operate at the edge of the future; in the wider online world, the constant search for novel
information has emerged as its own ethical pursuit.
Like online interaction, markets, too, have become an object with which to understand
human interconnection. At the same time, and under today's contemporary political
conditions, the market has become a key object that citizens generate collectively—the
entity that is simultaneously made up of the interactions of participants and that creates
another entity beyond and above them. A valued, governing force, as well as a description
of transactions, the market seems to demand fidelity to its principles of operation.
Traders’ uses of knowledge, perception of time, and sense of virtue show how market
interactions can become moral endeavors. Those cultural qualities may or may not be
compatible with other, perhaps more essential, values. Discovering an answer to those
questions requires collective reflection available only outside the market's thrum.
References
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Page 18 of 23

Bass, T. A. (2000). The Predictors: How a Band of Maverick Physicists Used Chaos Theory
to Trade Their Way to a Fortune on Wall Street. New York: Holt.
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Beunza, D. and Stark, D. (2003). “The Organization of Responsiveness: Innovation and

Recovery in the Trading Rooms of Lower Manhattan.” Socio-Economic Review 1/2: 135–
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——— (2004). “Tools of the Trade: The Socio-technology of Arbitrage in a Wall Street
Trading Room.” Industrial and Corporate Change 13/2: 369–400.
——— (forthcoming). “From Dissonance to Resonance: Cognitive Interdependence in

Quantitative Finance.” Economy and Society.
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Monopoly Capitalism. Chicago: University of Chicago Press.
Clark, G., Thrift, N., and Tickell, A. (2004). “Performing Finance: The Industry, the Media
and its Image.” Review of International Political Economy, 11/2: 289–310.
Csikszentmihalyi, M. (1991). Flow: The Psychology of Optimal Experience. New York:

Harper Perennial.
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Flash Crash: Flow Toxicity, Liquidity Crashes and the Probability of Informed Trading.”
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Geertz, C. (1973). The Interpretation of Cultures. New York: Basic Books.
Godechot, O. (2000). “The Bazaar of Rationality: Towards a Sociology of Concrete Forms

of Reasoning.” Politix, 13/52: 17–57.
Ho, K. (2009). Liquidated: An Ethnography of Wall Street. Durham, NC: Duke University
Press.
Knorr Cetina, K. and Bruegger, U. (2002a). “Global Microstructures: The Virtual Societies
of Financial Markets.” American Journal of Sociology: 107/4 905–50.
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——— (2002b). “Inhabiting Technology: The Global Lifeform of Financial Markets.”

Current Sociology 50/3: 389–405.
——— (2002c). “Traders’ Engagement with Markets: A Postsocial Relationship.” Theory,

Culture and Society, 19/5–6: 161–85.
Knorr Cetina, K. and Preda, A. (2007). “The Temporalization of Financial Markets: From
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Cambridge, MA: Harvard University Press.
Latham, R. and Sassen, S. (2005) (eds.). Digital Formations: IT and New Architectures in
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Leeson, N. (1997). Rogue Trader. New York: Warner Books.
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——— (2011). “How to Make Money in Microseconds.” London Review of Books, 33/10:
16–18.
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255–65.
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Patterson, S. (2010). The Quants: How a New Breed of Math Whizzes Conquered Wall
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Poundstone, W. (2006). Fortune's Formula: The Untold Story of the Scientific Betting
System That Beat the Casinos and Wall Street. New York: Hill & Wang.
Preda, A. (2009). Framing Finance: The Boundaries of Markets and Modern Capitalism.
Chicago: University of Chicago Press.
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Jungle. New York: Warner Books.
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Princeton University Press.
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Princeton University Press.
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Frontier, 1600–1860. Norman, OK: University of Oklahoma Press.
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Financial Markets.” American Ethnologist, 30/2: 258–72.
——— (2006). Out of the Pits: Traders and Technology from Chicago to London. Chicago:
University of Chicago Press.
——— (2009). “The City as Value Locus: Markets, Technologies and the Problem of
Worth,” in I. Farías and T. Bender (eds.), Urban Assemblages: How Actor-network Theory
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Notes:
(1.) For a classic treatment, see Michael Burawoy's (1979) Manufacturing Consent:
Changes in the Labor Process Under Monopoly Capitalism.
(2.) The vast majority of traders are male and I will use masculine pronouns to reflect
both the social composition, and also the gendered character, of trading rooms.
(3.) See Burton Malkiel (2011) for a plain language synopsis of this perspective and why
economists believe that short-term trading strategies produce profits only for the lucky.
(4.) Nick Leeson was the first trader to gain fame through his massive, and hidden,
speculations gone awry. From the bank's Singapore trading operation, Leeson built up
Page 21 of 23

enough losses to cause Barings, the oldest merchant bank in England, to collapse. See
Leeson (1997) for a self-report of the events written from prison.
(5.) Examples of this genre are Fiasco: The Inside Story of a Wall Street Trader by Frank
Partnoy (1999); Monkey Business: Swinging through the Wall Street Jungle by John Rolfe
and Peter Troob (2000); and Liar's Poker: Rising through the Wreckage on Wall Street by
Michael Lewis (2010).
(6.) I agree with Clark, Thrift, and Tickell (2004) that finance has become entertainment,
but popular media, on television or online, are never just that. Clark, Thrift, and Tickell
argue that the significance of finance as entertainment lies in the seriousness with which
financial institutions receive these transmissions. I argue that financial entertainment
also serves as broader cultural commentary, delivering moral messages for living with
markets.
(7.) Like the Balinese cockfight, the market constitutes a “focused gathering,” as Erving
Goffman called it, an assembly that draws participants into a common activity that directs
their relations with each other. Also like the cockfight, the market is a “combination of
emotional explosion, status war, and philosophical drama of central significance” (Geertz
1973: 417).
(8.) Karin Knorr Cetina and Urs Bruegger show that the market becomes an “object of
attachment” where the “uniquely unfolding character of the market-object uniquely
matches the structure of wanting by which we can characterize the self” (Knorr Cetina
and Bruegger 2002c: 153).
Caitlin Zaloom
Caitlin Zaloom is a cultural anthropologist and Associate Professor of Business and of
Social & Cultural Analysis at New York University. Her research examines emerging
forms of knowledge and practice related to financial risk. Her book Out of the Pits:
Traders and Technology from Chicago to London (2006) showed how traders,
managers, and technology designers enact formal ideals of economic reason in
trading screens and dealing rooms. Zaloom is currently working on a book about the
practices of household finance (around education, housing, health care, and
retirement) in an age of debt.
Page 22 of 23

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Traders And Market Morality

Oxford Handbooks Online

Print Publication Date: Nov 2012

Abstract and Keywords

Subscriber: New York University; date: 09 June 2016

Topology of the trading field

Subscriber: New York University; date: 09 June 2016

The everyday practice of trading draws on a variety of techniques; arbitrage, algorithmic

Subscriber: New York University; date: 09 June 2016

Subscriber: New York University; date: 09 June 2016

Dispensing with human mediation spurred on many proponents of electronic trading. No

Subscriber: New York University; date: 09 June 2016

economy. The necessity of digital connection is no longer, however, under discussion.

Subscriber: New York University; date: 09 June 2016

Contemporary financial markets have built technologies around an ideal of “informational

The meshing of observational tools and profit-taking breeds a form of interconnection

Subscriber: New York University; date: 09 June 2016

Subscriber: New York University; date: 09 June 2016

Affect also loops through market reflexivity, engendering an anxious relationship

Subscriber: New York University; date: 09 June 2016

Subscriber: New York University; date: 09 June 2016

Subscriber: New York University; date: 09 June 2016

techniques. Each strategy—from scalping to spreading to arbitrage—generates its own

Arbitrageurs take advantage of discrepancies across markets, based on the assumption

Subscriber: New York University; date: 09 June 2016

Mihaly Csikszentmihalyi identified such absorption as “optimal experience,” and traders’

forward destructive habits.

Subscriber: New York University; date: 09 June 2016

Subscriber: New York University; date: 09 June 2016

Paradoxically, even as online technologies have obliterated the constraints of distance, a

In finance, cities organize agglomerations of experts to answer questions of value. Urban

Subscriber: New York University; date: 09 June 2016

virtualizing the urban qualities of centralization, agglomeration, and calculated exchange

Subscriber: New York University; date: 09 June 2016

Subscriber: New York University; date: 09 June 2016

The combination of screens and emergent information heightens awareness of temporal

Subscriber: New York University; date: 09 June 2016

Beunza, D. and Stark, D. (2003). “The Organization of Responsiveness: Innovation and

——— (forthcoming). “From Dissonance to Resonance: Cognitive Interdependence in

Burawoy, M. (1979). Manufacturing Consent: Changes in the Labor Process Under

Csikszentmihalyi, M. (1991). Flow: The Psychology of Optimal Experience. New York:

Geertz, C. (1973). The Interpretation of Cultures. New York: Basic Books.

Godechot, O. (2000). “The Bazaar of Rationality: Towards a Sociology of Concrete Forms

Subscriber: New York University; date: 09 June 2016

——— (2002b). “Inhabiting Technology: The Global Lifeform of Financial Markets.”

——— (2002c). “Traders’ Engagement with Markets: A Postsocial Relationship.” Theory,

Leeson, N. (1997). Rogue Trader. New York: Warner Books.

Lévi-Strauss, C. (1968). The Savage Mind. Chicago: University of Chicago Press.

Miyazaki, H. (2003). “The Temporalities of the Market.” American Anthropologist, 105/2:

Subscriber: New York University; date: 09 June 2016

Slotkin, R. (1973). Regeneration through Violence: The Mythology of the American

Zaloom, C. (2003). “Ambiguous Numbers: Trading Technologies and Interpretation in

Subscriber: New York University; date: 09 June 2016

Subscriber: New York University; date: 09 June 2016

Subscriber: New York University; date: 09 June 2016

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