Is stock trading a wrong livelihood?

Stock trading is no different from any other investment. The objective is to maximize profit and minimize the risk. Unless you are the major shareholder only way to protect your share portfolio is to buy and sell. If you invest in a stock and do not trade eventually you will lose your money through liquidation, merger or compulsory acquisition.

Against our believes there is no wrong doing or wrong livelihood per se. For that to be the case, there must be a common purpose that is undeniable (which I still have not seen).

Therefore, you cannot answer that question without defining what that purpose is and bringing all living beings to agree on it.

Stock trading is not a wrong livelihood. However, beliefs of its users must often bring wrong livelihood to them. Because profit for just profit cannot be proofed wrong or right, and therefore does not bring any action.

Under my view, they are pawns of money, as money uses them to change between hands. If that was their purpose, people practicing stock trading wouldn't have any more chances to anyone else to have a wrong livelihood. However, although I might be wrong, it looks to me that the dominant trend is that they do not want to move money between hands, but to get all the money on theirs.

That said, stock trading is not a livelihood. It has become a major trend because it moves money fast, between hands. What brings wrong livelihood is what people try to use it for and what they believe when doing it.

Traders, like myself, justify their trading by saying that they add liquidity (narrower bid/offer spreads), meaning there is a net positive value from trading (not completely zero sum).

This is true, but practically it is outweighed by pursuing gain with gain and engaging in speculation many fold. In my opinion it is pure hunter gathering for a modern technological world.

However, it offers the individual a very strong incentive to abandon putting oneself into the equation. Because doing so - engaging in one's fears/cravings when 'working' - only leads to loss from my experience.

For me trading is a learning experience in letting go. For many - my brother included - it is a crash course in suffering and further suffering, psychological self destruction - but not in the calm way - because they stop to or never learn to see the market in a detached way.

Interestingly, it has become popular amongst prop traders to practice a lot of meditation, as it improves profitability. I would certainly agree.

Stock traders and/or organizations that release misleading advises to capture money from public stockholders are definitely the worst. I would say it is wrong livelihood.

For informed traders, as an individual, who make their living purely based on investment such as stock, options, properties,......etc, that in fact is a hard line to draw. They are unproductive and should be categorized as gambling.

The teaching about wrong livelihood for laypeople is found in AN 5.177, as follows:

A lay follower should not engage in five types of business. Which five? Business in weapons, business in human beings, business in meat, business in intoxicants, and business in poison.

In addition, a warning about "gambling" is found in DN 31:

There are, young householder, these six evil consequences in indulging in gambling: (i) the winner begets hate, (ii) the loser grieves for lost wealth, (iii) loss of wealth, (iv) his word is not relied upon in a court of law, (v) he is despised by his friends and associates, (vi) he is not sought after for matrimony; for people would say he is a gambler and is not fit to look after a wife.

Also, positive advice about "investing" is also found in DN 31:

With wealth acquired this way, a layman fit for household life, in portions four divides his wealth: thus will he friendship win. One portion for his wants he uses, two portions on his business spends, the fourth for times of need he keeps.

Where as the following teaching in MN 117 appears to be for monks:

And what, bhikkhus, is wrong livelihood? Scheming, talking, h inting, belittling, pursuing gain with gain: this is wrong livelihood.

Stock trading does not count as pursuing gain with gain mentioned as wrong view in MN117 because this teaching is for monks and is about when a monk acquires gains by donations and then gives some of those gains for the purpose of gaining a social reputation so he can acquire more gains. Its similar to public philanthropy by billionaires to develop a positive public image and avoid lynch mobs (as J.D. Rockerfeller did, when he was the most hated man in the USA).

As for active stock trading; there is nothing "very destructive" about it; apart from the destruction of wealth referred to in DN 31 for those who stock trade similar to "gambling". Those who get destroyed are the sheep that follow the herd. This said, it is not inherently immoral because such activity is done with others who consent to participate in this speculative activity.

As for passive stock investing in a company one believes will grow into a real and profitable business; this is not wrong livehood because most investors will benefit; such as if you invested in Apple Inc 30 years ago, 10 years ago or even 5 years ago.

I have a background in finance and am an active participant in the financial markets. In my opinion, investing/trading/speculating (however you want to call it) any financial instrument can have a wrong livelihood to it.

For example, the options, futures, forex markets are zero-sum based so someone has to lose for your gain. Many people may argue that this is wrong livelihood just based on that but in the complex world we live in, these financial instruments can be used to hedge against risk in which less if not all financial loss can be achieved. For example, a multi-national company can buy a futures contract to hedge against fluctuating currencies. If done currently, the company minimizes losses which in turn the money can be used to make payroll or pursue further R&D which results in a net benefit to their employees and stakeholders. So in a way, positive things can happen.

In equities or debt markets which are not zero-sum, speculative positive things can benefit the world too. For example, a biotech company raises capital through debt or equity, in which they intend to use that money to research cures for deadly diseases. As a retail investor, you can contribute to this by purchasing the stock which helps it stay liquid and increases demand so in the future if the company does an equity raise, it is more likely to find interested investment banks.

Overall, I do believe there is some sort of potential net benefit to society through investing. However, the wrong livelihood of it is also present because of negative emotions, thoughts and potential financial destruction which is common amongst retail investors. I guess if you think about it, the complexity of the financial markets today is brought upon ourselves because we created it, so that in itself is wrong livelihood in my opinion. But spin it however you want, it is quite hard to avoid or avoid contributing to any financial instrument in our time for the lay Buddhist.