Do traders need to be aggressive to succeed? To be a successful trader you need to be forward, combative and aggressive, right? In our series exploring trading’s most widely-held urban myths, reflecting on the continually changing face of trading in a modern world, we find that this might not exactly be the case…
Trader Urban Myths #4: Traders Need to be Aggressive
Aggression is surely one of the characteristics most associated with traders in the popular imagination. Trading floors are assumed to be about noise, pushing and shoving, and bad behaviour in general.
“The stock-exchange floor was a bear pit of a place, a mass of humanity where men of every size and shape would scream, shout and wave their hands and arms in every imaginable direction,” says Alex Buchanan in The Game: How The City Really Works, his book about the finance world.
A trader, he says, might have to “fight his way through the throng” to ask a colleague, probably with “terrible temper and/or acidic humour”, for a price.
Famous trader Jordan Belfort – otherwise known as the Wolf of Wall Street – reports finding something similar when he entered the industry. “You’re lower than pond scum. You got a problem with that?” said a new boss to him on his first day, he reports in his memoir.
Perhaps the most famous example of trader aggression, however, is found in Michael Lewis’s book about Wall Street bond traders Liar’s Poker. This is the work where the use of the notorious phrase “Big Swinging Dick” to evoke extreme trader swagger comes from.
Liar’s Poker also features characters like “The Piranha”, who “didn’t talk like a person” and instead draws his vocabulary from a “world filled with copulating inanimate objects and people getting their faces ripped off”.
However, these examples – thankfully – don’t necessarily give an accurate picture of trading floors today. For a start, take more recent Michael Lewis book Flash Boys. It describes how technology has given parts of post-crisis Wall Street a very different atmosphere to what came before.
Today, Lewis says, there are “new kinds of financial cleverness”, masterminded not by temperamental humans but by “computers programmed to behave impersonally”.
It is also possible to argue that trading was not always particularly aggressive in the past either.
Former banker and Spectator business columnist Martin Vander Weyer has written that it only became a “seething anthill” in the eighties boom years. Its “bear’s-ass-biting” culture during this time was, he says, a clear contrast to its “gentleman-amateur past”.
The roots of this alternative and less aggressive way of working can be traced back to the earliest days of trading in the City.
London’s stock exchange was admittedly formed after a group of traders were expelled from the Royal Exchange marketplace for rowdy behaviour. But “gentlemanly” ideals of politeness and good conduct were key part of their aims for the institution they set up.
It was “desirous” that the organisation “should acquire and preserve the most respectable character” and “prevent the practice of every disorderly action”, they said in their founding documents.
And if are you still convinced that traders have to be single-minded, pushy and just plain nasty to get ahead, think about the most successful traders of recent years.
Ray Dalio, the legendary boss of Bridgewater Associates, says his transcendental meditation practice is the key to his success. Warren Buffett, meanwhile, enjoys taking his grandchildren to ice cream spot Dairy Queen, and playing the ukulele.
Aggression in trading, it seems, may have had its (short-lived) day.
Successful trading often requires a balance between aggression and discipline. Aggressiveness is useful in seizing high-probability opportunities, especially during strong market trends or when clear setups align with a trader’s strategy. However, over-aggression can lead to overtrading and significant losses.
Conversely, being too conservative might mean missing out on profitable opportunities. This highlights the importance of a measured approach: traders should act assertively when conditions are favorable but remain defensive to protect capital during uncertain or volatile periods. Developing this balance involves honing skills like emotional discipline, risk management, and adhering to a well-defined trading plan.
