CHARACTERISTICS OF THE MARKETS

The unique world of trading futures is one that encourages traders to reject objectivity and
logic in favour of the basic human emotions of greed, fear, hope and pride, with disastrous
consequences. Let’s take a closer look at the markets and the psychological problems they
create.

Operating in an unstructured environment.

Trading requires you to operate in an environment with few rules and little structure. Most
people need order and rules for guidance, it is the way their lives have been structured since
childhood. Man is brought up in a society that is held together by rules and laws that are
imposed by an external authority.
Society is structured, and it is its definitive structure that makes people feel comfortable.
Laws and rules are perceived as protection when our security and well being are threatened.
We can, for instance, go to the police or Courts to look into and act on our grievances.
In contrast, the trading environment has no clearly defined rules and no structure. It would
be, in society terms, total anarchy. The market moves where it wants, whenever it wants. The
society of trading has no governing body that makes or enforces rules; there is no judicial
body to appeal to should the investor feel prices are not moving in the right direction. This
anarchy can be extremely unsettling for investors if they think prices should go up and they
actually decline. There is absolutely nothing we can do about it. The market does not care
whether investors make or lose money, it has no conscience, and it is a natural phenomenon
and never has to justify its actions.