Noise: Living and Trading in Electronic Finance

We often think of finance as a glamorous world, a place where investment bankers amass huge profits in gleaming downtown skyscrapers. There's another side to finance, though the millions of amateurs who log on to their computers every day to make their own trades. The shocking truth, however, is that less than 2% of these amateur traders make a consistent profit. Why, then, do they do it? In Noise, Alex Preda explores the world of the people who trade even when by all measures they would be better off not trading. Based on firsthand observations, interviews with traders and brokers, and on international direct trading experience, Preda's fascinating ethnography investigates how ordinary people take up financial trading, how they form communities of their own behind their computer screens, and how electronic finance encourages them to trade more and more frequently. Along the way, Preda finds the answer to the paradox of amateur trading the traders aren't so much seeking monetary rewards in the financial markets, rather the trading itself helps them to fulfill their own personal goals and aspirations.

About the Author :
Alex Preda is professor at King's College London. He is the author of Framing Finance: The Boundaries of Markets and Modern Capitalism, also published by the University of Chicago Press, and coeditor of the Oxford Handbook of the Sociology of Finance.

Review :
"In this brilliant study, Professor Alex Preda extends our understanding of the sociological significance of 'noise trading, ' an important concept in financial economics advanced by Fischer Black in the 1980s...Preda's research demonstrates how sociology can be fruitfully applied to discover hitherto unrecognized patterns of social dynamics that has relevance for better understanding the context of financial economics."--Paul Miranti "Technology and Culture" "An intriguing ethnography of a critical but understudied segment of the financial market: day traders."-- "American Journal of Sociology" "Sociologically, Preda draws attention to the communicative conditions of economic action and experience. . .It is this investigation of cross-linkages between technical and social processes which makes Preda's analysis sociologically valuable."-- "Symbolic Interaction" "What leads normal people to trade stocks with their own money, even though they are likely to lose? If they keep losing, why don't they quit? And how do we connect with people for whom some of their most important actions consist of tapping at a keyboard and staring at a screen? Preda reveals the hidden abode of the 'noise trader' in a sympathetic first-person account of this durable and even essential part of our financial markets."-- "Jerry Davis, author of The Vanishing American Corporation" "In Noise, Alex Preda immerses himself in the world of retail traders, amateur investors who seem to be the ultimate lone wolves, seeking money from the comfort of their homes, but who are nevertheless intimately connected with each other and with the professional trading world. . .Preda shows that the worlds of professional and retail trading are not as distant from each other as others have made it out to be."-- "Public Books" "Preda's Noise is a most rare volume. In elegant writing, Preda is able to explain the complexity of electronic trading, revealing that what has often been described as random perturbations, enacted by ignorant traders, is, in fact, highly organized, intensely social, and fully cultural. What might be described as mere noise, seemingly unintelligible, is integral to how markets operate, and, in Preda's telling, markets could not operate efficiently without such seeming inefficiency. This book is truly eye-opening in its willingness to overturn the assumptions of a rationalist market fundamentalism. It is a most important contribution to economic sociology and the understanding of finance."-- "Gary Alan Fine, author of Players and Pawns: How Chess Builds Community and Culture" "With keen insight and elegant style, Preda takes us into a memorable exploration of twenty-first century electronic finance. Challenging stereotypes of atomistic financial markets, Noise captures with fascinating ethnographic detail the connected social world of traders. A welcome contribution to the sociology of economic life, the book will also engage a general audience eager to understand how finance really works."-- "Viviana A. Zelizer, author of Economic Lives: How Culture Shapes the Economy"