Many novice traders placing their one-lot e-mini orders dream of becoming the next financial superhero. So, presumably, did Nick Leeson with his increasingly desperate large orders. Perhaps the model is flawed.
In the course of his sociological study of financial markets (Framing Finance: The Boundaries of Markets and Modern Capitalism, University of Chicago Press, 2009), Alex Preda recalls two fictional portraits of speculators. The first is the speculator as gambler, set in stark contrast to the earn-and-save accumulator of wealth. For instance, in The Gambler Dostoevsky’s narrator counterposes the amassing of a family fortune that takes generations with the quick money that can be won at the roulette table. The gambler wants money for himself, not for his great grandchild. He sees himself as an individual “against the gods” trying to beat the unknown and be free. He does not place his bets randomly or idly; he works at his passion—observing, calculating, and memorizing. These acts of cognition, however, are trumped by irrational compulsions: “the narrator can neither leave the table (true gamblers, he explains, never leave) nor control his joy or fear. He is bound, attached to the table by invisible chains.” (p. 201)
In a variation on the theme, according to Preda, the speculator gives up the mantle of the gambler and, if he is truly fortunate, puts on the cape of the superhero. He enters a hierarchical world in which the top speculators, the superheroes, rely on a “vital force” that few traders possess. For instance, Edwin Lefevre described Sampson Rock, the hero of his novel Sampson Rock of Wall Street this way: “Rock’s friends often spoke of his habit of thinking in lightning flashes, of the marvelous quickness with which he abandoned old and settled on new policies, and, at the same time, of the systematic, von Moltke-like manner in which he planned some of his market campaigns. In their heart of hearts they sometimes doubted that any human mind could think so much and so quickly, or see so far and so clearly. Their minds did not.” (p. 207) Rock was viewed as a superhero because he was brilliant. But speculators can also be seen as superheroes because of the size and strength of their adversaries: consider the media portrait of George Soros as the man who single-handedly fought and defeated the Bank of England, as St. George who slew the dragon. And continuing the metaphor further, think of the title of the book I reviewed some weeks ago: When Supertraders Meet Kryptonite or Van K. Tharp’s new book Super Trader.
Superheroes need to have extraordinary powers and achieve outsized results. In the financial world the so-called superheroes engage in acts of derring-do that, unlike those of their fictional counterparts, rarely have social goals. They are not trying to save planet Earth from meteors or protect Fort Knox against the evil schemes of Auric Goldfinger. They are simply trying to make the kind of money that dwarfs the efforts of others and preserves a permanent space for them in the speculators’ hall of fame.
The problem is that the “true” superheroes are fictional, and in most instances it is ludicrous to hold them up as models. Who says, except metaphorically and perhaps ironically, “I’m on the path to becoming a financial Superman” or “I’m just one trade away from being Wonder Woman”? These superheroes have powers that we don’t possess, and they are the creations of a writer who keeps them away from fatal exploits. Nick Leeson wasn’t so fortunate.