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Device Protects Day Traders From Emotional Trading

Posted by samzenpus on from the never-again dept.

Philips Electronics, a Netherlands-based company, has come up with a device designed to protect day traders from emotionally based trading decisions. The Rationalizer measures your galvanic skin response and lets you know when you are under stress. An online trader can then take a "time-out, wind down and re-consider their actions," according to the company. This may have come too late for us, but at least future generations won't have to live through the horror of angry day trading.

18 of 260 comments (clear)

  1. This is a great change by royallthefourth · · Score: 4, Funny

    Now all day traders will be making rational, informed decisions instead.

  2. I've known a lot of day traders. . . by Slicebo · · Score: 5, Interesting

    . . . and trust me, giving them a device that will tell them when they are stressed is about as useful as taping a stethoscope to their chest so they can check whether their heart is beating.

    Day traders are *always* stressed. Always.

    1. Re:I've known a lot of day traders. . . by TheRealMindChild · · Score: 4, Insightful

      Not only that, but the first time a trader can't make a trade because the device tells them to chill out, that sucker is flying through a window.

      --

      "When life gives you lemons, don't make lemonade. Make life take the lemons back!" -- Cave Johnson
    2. Re:I've known a lot of day traders. . . by tverbeek · · Score: 4, Funny

      Yeah, if they're behaving irrationally, expecting them to respond rationally to a device telling them that seems... optimistic. "Calm down!? Don't f*^&ing tell me to calm down!"

      --
      http://alternatives.rzero.com/
    3. Re:I've known a lot of day traders. . . by khallow · · Score: 3, Insightful

      Not only that, but the first time a trader can't make a trade because the device tells them to chill out, that sucker is flying through a window.

      First thing I thought of as well. When money is on the line, they'll find some way around the device. The thing to keep in mind here is that keeping a trader from making trades is the absolutely worst thing this device can do. And it doesn't protect from the worst mistakes: fat finger trades (where the trader makes some grossly expensive typo, though I suppose excessive stress makes this sort of error more likely, it can happen at any time) and double down trading (where the trader is certain they're right and keeps betting the wrong way, "The market can remain wrong longer than you can remain solvent.").

  3. Obvious: by fuzzyfuzzyfungus · · Score: 4, Funny

    "Look Dave, I can see you're really upset about this. I honestly think you ought to sit down calmly, take a stress pill, and think things over. "

  4. galvanic skin response = wheatstone bridge by smellsofbikes · · Score: 4, Informative

    Dunno why they'd have to invent something to do this: it's been known for almost 200 years. Build a Wheatstone Bridge with your body as one of the four legs of the bridge, and measure across the middle. I was building these when I was 10. Add a transistor to drive a meter and you have most of a Scientologist's E-meter. Use this as the input to an analog input channel of an Arduino and interface it via RS232 or USB to your computer and you can easily write something to automatically log you out of e-trade or whatever. I'm not really sure where the innovation is here, although Philips usually comes up with great ideas. I guess you could use a sparkfun xbee unit to make it wireless, since anything that contains the word "wireless" seems to be patentable these days, but that just makes me even more irritated.

    --
    Nostalgia's not what it used to be.
  5. Is day trading a good thing? by spun · · Score: 4, Insightful

    I'm wondering how day trading, as an activity, benefits society. Sure, if done right, it can benefit the individual, but what use is it to the average person? It seems to promote the tragedy of the privates. That is, privately owned resources will be used unsustainably and depleted because the owner can simply take the profits and reinvest them into rapidly depleting some other resource. Communally managed resources will be used sustainably because no one person can abscond with the profits and reinvest them in some other resource depletion scheme. Day trading seems the perfect example of this. Day traders have no connection with the companies they trade in, no commitment to them, no stake in them at all.

    With other industries, one can easily see how they benefit society, yet day trading seems to provide no benefit. Maybe someone who understands the function of day trading better than I do can explain what purpose it serves besides making a few individuals rich at the expense of everyone else. Day trading seems more like gambling than responsible ownership. Doesn't it create an unacceptable moral hazard?

    --
    - None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
    1. Re:Is day trading a good thing? by royallthefourth · · Score: 3, Insightful

      They make all their money by pushing papers around.

      They create no products and provide no services. I think that's all anyone needs to know about how capitalism supposedly rewards hard work.

    2. Re:Is day trading a good thing? by Shakrai · · Score: 4, Informative

      Day trading seems more like gambling than responsible ownership. Doesn't it create an unacceptable moral hazard?

      I don't think you understand what a moral hazard is. Moral hazard refers to the concept that people who are isolated from risk (i.e: mega-corps that get bailed out when they fuck up) won't behave as rationally as those that are fully exposed to said risk. I don't recall many (any?) day traders getting bailed out during our recent round of corporate welfare.

      --
      I want peace on earth and goodwill toward man.
      We are the United States Government! We don't do that sort of thing.
    3. Re:Is day trading a good thing? by ragethehotey · · Score: 4, Informative

      Google "liquidity" and you'll realize why having it is such an important thing. (and why gambling day traders provide it)

    4. Re:Is day trading a good thing? by Korin43 · · Score: 4, Insightful

      I think day traders probably have little power over what the industry is doing, since they don't stay investors long enough to go to board meetings or anything. What's more important are the people who buy into a company, pressure it into insane business practices for short term profits (or simply go along with short-term profit motivated plans), then cut and run and get away with it because they have no liability when the company goes bankrupt.

    5. Re:Is day trading a good thing? by Anonymous Coward · · Score: 4, Interesting

      You can think of it as short term investing. Sure, an investor produces nothing and earns money seemingly from nothing, but you're ignoring the fact that he's supplying the investee with the ability to produce a product/start a business, etc.

      Day trading's the same on a micro scale. Any consential transaction benefits all parties. So in the end it's positive.

    6. Re:Is day trading a good thing? by Hognoxious · · Score: 3, Informative

      In fancy speak, they provide liquidity. Having said that, so do lots of other people & institutions.

      --
      Confucius say, "Find worm in apple - bad. Find half a worm - worse."
    7. Re:Is day trading a good thing? by Shakrai · · Score: 3, Informative

      Stock trading is meaningless for day to day operations of a company?

      Actually yes, it mostly is, unless (as I said) that company is seeking to raise more capital. The stock price has no direct bearing on how much cash the company has in it's bank accounts. It has no direct bearing on whether or not their products will succeed in the marketplace. It has no direct bearing on whether or not a tornado will level their factory.

      Being useful certainly isn't required. But being useless shouldn't be respected, should it?

      Please explain to me why day traders are "useless". As I said in another post, if nothing else they provide needed liquidity in the marketplace.

      How many people can't retire now, because the value of their 401k has dropped?

      That's their own damn fault for having so much of their nest egg in volatile investments so close to retirement. For every story you can came up with of someone who can't retire I can counter with a story of someone in his 20s, 30s or 40s who is making a killing. I'm currently up 65% on the investments that I made as the market was tanking. My 403(b) is still down, but why would I care about that? I'm not going to retire for 40 years.

      Are you saying day trading can not affect the value of people's 401k?

      Day traders and short sellers can't drive down the price of a healthy company over the medium to long term. In the short term they can have an affect but nobody (who is sane) is holding stock investments in a 401(k) for the "short" term, are they?

      It sounds as though you are claiming that all this hair trigger, instant trading has no effect outside of the parties involved, no externalities that affect individuals retirement or other accounts, or even entire economies

      No, I've claimed nothing of the sort. I've only claimed that day traders can't "kill" an otherwise healthy company. I'm still waiting for you to produce some evidence to the contrary. Am I waiting in vain?

      And yet, we've all seen lots of articles regarding automated day trading, and how it does exactly that.

      Automated trading does some stupid shit. I recall the price of an airline being driven down to almost nothing over automated trading when a false report of their bankruptcy was published. I don't think it happened that long ago either. Would it surprise you to learn that even though the airline's stock dropped 99.92% that they remained in business? This would seem to run counter to your notion that traders can "kill" an otherwise healthy company.

      --
      I want peace on earth and goodwill toward man.
      We are the United States Government! We don't do that sort of thing.
  6. Does it come with black hair dye? by entrice · · Score: 4, Funny

    "Users wear a device called the EmoBracelet that senses stress and makes an accompanying lighted bowl, or EmoBowl, change color and flicker from yellow to red as emotions become more intense." Something makes me think this is being targetted towards a younger market.

  7. Re:Contribution to society? by Bootvis · · Score: 5, Informative

    Day traders create and provide liquidity.

    --
    Read, refresh, repeat.
  8. That doesn't sound useful by CrazyLion · · Score: 5, Insightful

    I'm a trader by profession (although not a day trader) and making emotional decisions is about the worst thing you can do. The only worse thing is NOT making a call because you happen to be excited.

    It's a learned behaviour, but a trader needs to be able to abstract away from the trade. You almost need to pretend that somebody else is doing the trade and you're just watching. I think any trader who stays in the job learns this skill eventually. The first time I traded a few million dollars of risk, I was down to few last red cells in my adrenaline stream. If I kept going that way, I'd be either an unemployed or an alcoholic (or most likely both). Instead I learned not to take it too personally. Now a large trade barely increases my pulse.

    I don't think a device can replace this behaviour. In a fast market my heart may be way up due to working on several things at once and trying to keep up with the information. I still need to make trades, I just need to stay rational. A glorified heart rate monitor won't help with this.