Trading Narratives

Abstract

This paper is not particularly about trade in goods, nor specifically about trade in the different forms of money that allow us to purchase those goods. Rather, it examines trade in those derivatives of goods and money that attract and enable the activities of three types of traders: hedgers, speculators and arbitrageurs. And it is in these traders themselves that the paper shows greatest interest. Hedgers apparently use derivatives markets to avoid exposure to an adverse movement in the price of an asset that they hold or expect to hold; speculators to take a position in the market that effectively constitutes a bet (that the market will go up or down); whilst arbitrageurs seek to profit from price differentials between two markets in which the entities that are being traded are, in the light of the arbitrage opportunity, mispriced relative to one another. For hedgers and speculators particularly, that which is being traded is seemingly ‘risk’, with the former selling and latter buying. But what does the buying and selling of risk do to those who engage in it? Who makes the markets in which risk can be traded? How do those who construct and trade in markets for risk make sense of themselves and their activities? And who pays the price when things go wrong? These then are the ambitious questions the paper seeks to address. It does so through consideration of accounts by and of traders themselves and by those limited numbers of scholars who have conducted ethnographic study of them. For the subjectivities of those who construct, trade and inhabit the markets for risk are, in an increasingly interconnected financial world, central to the fortunes of those of us who inhabit the more pedestrian economy. From the perspective of the pedestrian economy, the world of high finance and its inhabitants appear as other, whilst we, with our pedestrian concerns, seem other to it and those that live there. And thus we attempt to bring back tales of and by the natives of those strange lands of risk so that you can see what living there is like.

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