Ethics of Intra-Day Trading

Authority is a sort of power to order things to ends, when it is an authority over people it constitutes a moral power, that is to bind people morally to some end.

Ownership is an authority both over some object as well as over other people with respect to that object.

The bounds of the authority are bound by the end of that over which the authority has power. The gardener is bound in different ways and degrees than a king, specifically as one is an authority over properties and the other over people.

These bounds both determine the extent of the demands the authority can place, i.e. the ends to which he directs, but as well as the demands he ought to make, i.e. the ends that are needful of the object. A father can bind a son in many ways, but the father himself is bound to direct the son to particular ends and if not he is morally negligent in the least.

A stock in general is an ownership claim over a business.

Businesses are generally ordered to some common good that is not only a benefit to owners and employees but to society in general.

Frequent and rapid trading of stocks takes no account of the many ways in which the stock ownership claim binds the stockholder. The trader in purchasing the ownership claim is bound in ways, particularly in the of businesses, which are ordered to the common good both in their production and the members they employ.

Given the governance structures of most business, frequent trading does not impede the business from attending to the common good. In the case of small businesses where there is generally one or few owners, frequent trading of ownership would impede this.

However, even though frequent trading might not impede end in a direct way, it does abandon the obligations that are set upon the owner. This may be diminished by the size of the claim, but nonetheless there appears to be some sort of negligence on the part of the trader and the obligations demanded of ownership. The focus is rather on his rights to do as he pleases with his property rather than the obligations and duties he has for that property from which his rights actually proceed.

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3 Responses to Ethics of Intra-Day Trading

  1. halt94 says:

    This is interesting. So is your claim that Intra-day trading might be wrong because it actually is negligent of the owner’s obligations, or because it encourages negligence in the owner? For a large corporation, I don’t see how intra-day trading would be negligent of the good of the company, but I can see how it would encourage negligence, such that if the trading were really to have a negative impact on the company the owner, being previously encouraged to seek profit before recognizing his obligation, would make the harmful trade anyways.

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  2. The argument here is with respect to the negligence of the owner’s responsibility which is culpable upon the owner. That intra-day trading encourages negligence is probably also wrong, but it is the competent authority that permits it that is culpable in that case.
    Ownership obliges the owners to the will the good of the company. Whether or not his negligence has a negative impact is an independent concern which reveals his negligence and its gravity. A negligent father acts wrongly, even if his child is not negatively impacted, for example by the mother picking up the slack.
    In general intra-day traders are not concerned with the good of the company as such and it would not be possible in such a short period to effectively will the good of the company as such.

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  3. halt94 says:

    Ahhhh I see. Thank you for your explanation. I look forward to more of your posts.

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