Noise : Living and Trading in Electronic Finance

Alex Preda is an ethnographer, but unlike many of his tribe, his fieldwork was done, not with the dispossessed, but with white-collar entrepreneurs. The result is an ethnography of noise in electronic finance. What this means is not ?noise” as the uproar and commotion of trading pits, nor as something annoying, irrelevant, random, or incomprehensible. Neither the literal nor the mundanely metaphorical are his starting point, although both merit a closer look. Preda’s starting point is the conceptual: namely, the notion of noise (and its empirical manifestations) as defined in an American Finance Association presidential address: noise trading provides the essential missing ingredient to the whole structure of financial markets. People who trade on noise are willing to trade even though from an objective point of view they would be better off not trading. Perhaps they think the noise they are trading on is information. Or perhaps they just like to trade. These retail traders are Preda’s subjects, active in electronic financial markets. Amateur trading is known as noise trading, distinct from informed or professional trading. Preda lets us in on how ordinary people trade electronically, sketching the institutional and technological setup that makes these activities possible. He also uncovers the links between professional and amateur traders, along with the impact of online groups and online communication upon trading, as well as the ways in which traders relate their activities in electronic markets to their personal lives. This is the first ethnography of its kind, relevant to sociologists as well as to finance and management scholars.

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.