The Ethics of Trading Psychology

[Antho]

What ethical considerations should be taken into account when applying psychological principles to the practice of trading, and how can traders ensure that their actions align with their values and principles?

 

[godfather]

I think it depends on the values and principles we put forward. Build the framework on that ...

APA Code of Ethics: APA Ethical Codes, Principles, Purpose, and Guidelines (verywellmind.com)

According to the APA Code of Ethics, psychologists should follow five ethical principles: beneficence and non-maleficence, fidelity and responsibility, integrity, justice, and respect for people’s rights and dignity1. These principles can also guide traders in making ethical choices that align with their values and principles.

Some examples of how traders can apply these principles are:

• Beneficence and non-maleficence: Traders should strive to do good and avoid harm to themselves and others. This means they should be aware of the risks and benefits of their trading strategies, avoid excessive leverage or speculation, and seek professional help if they experience psychological distress or addiction.
• Fidelity and responsibility: Traders should be trustworthy and accountable for their actions. This means they should follow the rules and regulations of the markets, disclose any conflicts of interest or biases, and admit and correct any mistakes or errors.
• Integrity: Traders should be honest and fair in their dealings. This means they should not manipulate or deceive others, use insider information or fraudulent schemes, or exploit the emotions or vulnerabilities of others.
• Justice: Traders should be fair and equitable in their transactions. This means they should not discriminate or favor anyone based on irrelevant factors such as race, gender, age, or religion, and they should respect the rights and interests of all parties involved.
• Respect for people’s rights and dignity: Traders should respect the autonomy and privacy of others. This means they should not coerce or pressure others to trade against their will or best interest, respect the confidentiality of personal or financial information, and acknowledge the diversity and individuality of others.

Of course, these are not exhaustive or definitive guidelines, but rather general principles that can help traders think critically and ethically about their trading behavior. Ultimately, traders must use their own judgment and conscience to decide what is right and wrong in each situation.