Out of the Pits: Traders and Technology from Chicago to London by Caitlin Zaloom provides a good description of the transition from pit trading to electronic trading. It is a crafted story of what I called in my last passage personality trading. You get a true feeling for how many of the firms that have sponsored traders are run and how these individual went about their day. While it brought to life many of the details of trading in Chicago and London, the book was less than satisfactory in providing the details of how decisions are made and how traders dealt with the risk of their positions. It is one thing to tell the reader that traders faced risk and adjusted their personality to deal with it. It is another to describe the sick feeling of holding a position that is going against you and you are at a loss for what to do.
Zaloom, who is a cultural anthropologist, presents this material from the perspective of an academic who was studying a special subculture no different than someone who may have been living with a tribe in Africa. This framework gets in the way of telling the story of traders. Even though she worked in the pits and traded, her lack of finance knowledge or her unwillingness to provide details from this perspective hinders the study. I have always been looking for that combination of insight on the decision process with a description of trader behavior. You have these how-to books that give advice and may provide some stories of trading, all generally positive, yet there is not a book that describes the feeling of trading and what you have to do to get along with the culture of trading. Making generalizations about family ties in Chicago and the Essex man of London does not allow for the variety of personalities that have been supported by the pits and futures markets. There are traits and commonality to traders, but we are still left wondering what motivates some to take these risks. Saying that they are no different than the daredevils of extreme sports seems simplistic.
We will have to wait for another book on the topic to provide us the insight of how decisions were made and how personalities drove the profits for this business. This better be done soon because more of the traders in the pits are scattering in different directional soon we will only have a class of electronic traders.