Q) I'm just trying to figure out what you mean when you say it's wrong to make money off a natural disaster. If I trade for a living, then am I supposed to ignore a pending natural disaster? Am I supposed to take a few days off of trading (or a few weeks) until the threat of the natural disaster has passed? What if I was long the dollar when I heard about the hurricane, would it be would wrong and unethical to change my opinion and close my positions out due to that news? If I trade professionally, and I don't, then I would be a fool to ignore any information that could change my opinion or the markets opinion and help me make money.
Just for the record I never considered shorting or buying the dollar based on the hurricane because I don't see the correlation in this particular case. But I think your statements about whether people try and trade this news or not were insulting and ignorant. Nobody is making money off the misfortunes of others. They are making money off of other market participants. It's a shame that natural disasters, and human caused disasters happen in the first place...but they do. And to ignore the potential consequences those disasters may have on a market would be totally and undeniably idiotic...and a recipe for disaster.
Ed Ponsi) Thank you for your question and comments. Maybe I'm being old fashioned here, but I think it's wrong to bet on Death, Destruction, and Disease to win, place, and show. I'm sorry to hear that you find my stance "insulting and ignorant" as you put it, but I guess we'll just have to agree to disagree. In my years as a Wall Street trader, my employer frowned upon such "disaster trading". He didn't want to hear his traders cheering as the body count rose, so I guess he was old fashioned, too.
I certainly never said that anyone should stop trading due to a pending natural disaster, or that anyone should ignore the consequences of such a disaster. That would be foolish. But that is very different from trying to profit from an anticipated disaster. For example, if you are short the USD due to technical or fundamental reasons and an earthquake occurs in the US, you were not trying to game the disaster. In this example, it's possible that you may have benefitted from a natural disaster, but that wasn't the specific intent. That would be very different from placing trades that were specifically designed to profit from an earthquake. There is a huge difference between those two things; one is passive, and one is active.
I'd like you hear from our readers on this one; what do you think? Is it wrong to create trades that are specifically designed to profit from disasters, natural or otherwise? Or as traders, is it just our job to place the trades and ring the register, regardless of the circumstances? Let me hear your opinions at info@fxeducator.com
