When trading, I use a technical trading system. This system is solely based on the numbers shown on the chart. Those numbers are filtered by other tools in the software, but all calculations are based on the price and volume of stocks in those tracked indices.
In trading this type of system, my job is to scan an index. If the system says that the trade fits all requirements, I go to step 2, which is following the systems parameters for how much to buy, and where to put my stops. There’s no critical thinking to be done on my part. It removes the emotional aspect of trading, which I believe often causes significant harm to a trading account. Although I understand the need to stick to the system, my judgement sometimes takes over.
Last year I received a signal to buy stocks in a company that I was familiar with before I ever began to trade. In my mind, this company embodies the characteristics people have in mind when they picture the “evil” corporation. On top of facing litigation for questionable business practices, they profit from products that I think the world may be better without. I simply don’t like this company’s business practices. It’s a large company, big enough to be listed on the S&P 500 index. A lot of people buy and sell their shares, so what’s my problem?
The ole’, “If you don’t do, it somebody else will” argument comes to mind here. Yes of course, if I don’t get in on the action, someone else will surely buy in. This will also happen if I do buy in. In the broad scheme of things my small share purchase won’t pump in millions of dollars that can be used to fund research in more exploitive practices. I’m just a small time investor after all.
The problem is, I know that money used to buy shares or stocks in a company are used to fund their capital. Knowing that I’m giving even a dollar to aid in operations would bother me, and make me feel like a hypocrite. I am a hypocrite for overriding my trading system, since I call myself a believer in systematic trading. I can live with that, but would be quite bothered by trading against my values.
Of course there are all kinds of decisions that we make that go against our values. We buy things that may come from exploited workers. This computer I’m typing on may have come from a less than ideal factory. The fact that so many of our transactions could be the product of abuse or exploitation is overwhelming. The scope of the problem makes it look completely unmanageable. We do have choices though. Sometimes the sacrifice is more than we can afford, but in many cases a choice can be made.
Conscious costs. I may have missed an earning opportunity when I passed up that trade, but I feel better for not having taken it. In doing so, I have the knowledge that I didn’t feed into a cycle I oppose to. There are a lot of people in this world. Each person doing a bit helps. I believe that although we may not see the results, our decisions all matter.