Scripts and Authenticity: Why We Make Bad Trades

I decided to lie down for a few minutes in the airline lounge at Heathrow prior to my flight back to Chicago. A couple took the couch behind me and began talking louder than I would have liked. The gist of the conversation was that the husband needed something from an airport store, the wife got it for him, but he was not happy with her selection. His tone was whiny, complaining, and not a little irritating. Her tone was clearly frustrated and curt.

A few moments passed and neither of them talked. Spontaneously, he resumed his complaint. As he went on, she became more hostile and the tiff picked up where it had left off. The whole affair sounded quite scripted: he had his role (nothing is good enough) and she had hers (it’s fine and if you don’t like it, go get yourself something else). The more he whined, the more she viewed him as unappreciative and responded with resentment. The more she addressed him in a tone of dismissal and contempt, the more he felt she was not listening to him. It seemed so well rehearsed that I easily could have believed that they had memorized their lines.

As I walked away—rest was clearly not going to happen in that section of the lounge—the thought struck me that the most important part of their interaction was the silence between their episodes of bickering. They had nothing positive to talk about. In the absence of any authentic conversation, they resorted to this scripted interaction. Perhaps any communication felt better than none.

Authentic communication is not scripted. It emerges spontaneously, based upon fresh perceptions, thoughts, and feelings. When a basis for authenticity is missing—when there is nothing fresh to bond the parties in interaction—the only alternatives are silence and the inauthentic. Interestingly, most of us choose to avoid silence. Keep kids inside on a rainy day, and they’ll cart out the old scripts: haggling with each other, trotting out old complaints. Anything is better than boredom.

There’s a scripted quality to much bad trading. One of the curious statements I hear from traders is that they often know they are making a bad trade as they are doing it. That’s a sign at some level that they are aware of an underlying script. Just like the couple’s argument, the trader is well practiced at the scenario of miss a move, get frustrated, and chase a trade. It’s happened so often that it seems staged.

The trader feels as though he’s sabotaging himself, and perhaps the couple feels the same way. The reality, however, is that they are probably taking the better of two unpleasant alternatives. It may feel better to make a bad trade than to not trade at all. In the absence of an authentic framework for decision-making, perhaps all that’s left to market participants are scripted behaviors.

It’s not the bad trade that’s the problem for the trader, just as it’s not the argument that’s the problem for my couple. Both behaviors are responses to the real problem: the absence of any authentic basis for constructive engagement. Without clearly defined and validated ideas, what is there to trade except for our emotional scripts?

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