Written by Katie Gomez

Stock traders and jazz musicians might have more in common than you’d initially think. Much like jazz music, the stock market is often misunderstood and approached with a skewed mindset. Stock trading, to some, can be as enticing as jazz music, while for others, it can be something they’d rather avoid. This article dives deeper into the surprising parallels between jazz music and stock trading.

Improvisation 

At first glance, the stock market and jazz music might seem worlds apart, but they share a foundational similarity: the essence of improvisation. In jazz and the stock market, the ability to adapt spontaneously to unpredictable elements is vital. Jazz musicians weave melodies on the fly, whereas traders tweak their strategies in real-time, responding to market shifts.

Herbie Hancock is a famous jazz musician who played with the late great Miles Davis and learned invaluable lessons from him during his career. In a recent masterclass interview with Hancock, he recalled one of his performances when he played a wrong note during Miles’ solo during a live performance and was terrified he had ruined it. Yet, Miles continued and recovered the melody, picking it back up effortlessly. Looking back, he realized playing the wrong note did not upset or even phase Miles as much as he assumed it did. 

Hancock claimed he was so focused on the fear and judgment from playing that wrong note while Miles had already brushed it off. This story exemplifies the magic jazz exudes because it was not Miles’ talent that made a wrong chord sound right, but it was his ability to move forward unphased that created such a seamless transition. Hancock recalled that, according to Miles, there is no such thing as a wrong note. Hancock recalls Miles’ acceptance matched his judgment. He claimed Miles’ reaction demonstrated the ebb and flow any great musician must possess, teaching him the invaluable lesson to try to make anything that happens into something of value.” 

This interview reminded me of a similar theme found in stock trading. Just as the best jazz musicians can adapt and move forward making music, the best stock traders can adjust and make trades, no matter what surprises get thrown at them along the way. Thinking in the mindset of a jazz musician, where there is no such thing as playing a wrong note, inspires a stock trader because it redefines what failure looks like and how to move forward from your mistakes or bad trades. 

Embracing Imperfection

The focus on imperfection and improvisation is also a recurring theme in the film Whiplash, which follows jazz musicians and the intensity of their practice and mindset when it comes to playing. Watching Whiplash reminded me of both musicians’ and traders’ obsession with perfectionism; the dopamine rush of seeing a trade work out or hearing a melody work out are undoubtedly similar sensations. 

The film dives into what separates the good from the great jazz musicians or stock traders. What keeps traders and musicians from being remarkable is how they try to avoid mistakes and strive for perfection instead of learning to embrace the beauty imperfection offers. Expecting to achieve perfection in anything in life is a fool’s errand because wisdom and growth stem from accepting imperfection. That said, learning to befriend imperfection and finding value in it is crucial, whether playing the wrong note or making the mistake of selling too early.

Complexity 

Another similarity between jazz music and the stock market is the complexity behind both projects. Jazz compositions can be incredibly complex compared to other genres of music, which is why there are fewer jazz musicians than, say, rock bands. Jazz requires more intricate chord progressions, time signatures, and practice than other music forms. However, it also provides opportunities for more improvisation. Similarly, stock trading is more complex than basic investing (i.e., savings bonds) as it requires more effort, time, patience, and adaptability, which explains why it is less common than simple investing. 

The stock market is complex because it is constantly influenced by outside factors such as economic data, corporate earnings, seasonal changes, geopolitical events, and investor sentiment. Like jazz can change tempo in the blink of an eye, the stock market moves at a much more rapid pace to offer opportunities to improvise, especially for day and swing traders, who are making split-second decisions constantly. 

Risk and reward

Risk might not be the first thing that comes to mind with jazz, at least comparable to stock trading and investing. However, it remains a critical part of both. When people think of jazz, they usually think of repetitive, smooth jazz elevator music, but those who know jazz know this is a gross misrepresentation. There is a balance of risk and reward jazz musicians find through improvisation, as they tend to color outside the lines with melodies, hoping it will resolve itself in the end for a satisfying climax; sometimes, the risk pays off, and other times, it can take a wrong turn. However, like the stock market, everything has a way of evening itself out either way. 

Although the risk traders take may seem more intense, as they risk hard-earned money, jazz musicians feel the same satisfaction from a performance as a trader profits from a trade. Both musicians and traders are well aware of the potential losses associated with the risks they take but find the reward worth it enough to make it. Of course, this all ties back to the overall theme of imperfection/adaptation as well because it takes a certain amount of resilience to push forward when the calculated risk made does not pan out. The best musicians and traders learn from these experiences and readjust the risk/reward ratio accordingly in the future. 

Pattern recognition 

Skilled jazz musicians have an ear for recognizing patterns in music, which allows them to anticipate everything from chord changes and rhythm progression to the end of the melody. They do this through keen observation of their surroundings, from something as loud as a crashing cymbal to the slight tap of a bandmate’s foot. Musicians are constantly aware of what is happening at all times and how those factors influence their performance, which takes a high level of mindfulness to stay in the present moment. 

Likewise, successful stock traders rely heavily on pattern recognition, technical analysis, and market trends to make informed decisions. Traders and jazz musicians must practice mindfulness (staying present) to make these decisions from moment to moment. The ability to remain present also affects the long-term perspective skillful musicians and traders must possess. In addition, unpredictability is a huge factor in both aspects. Jazz performances and trading are both happening in real-time, with musicians interacting and responding to each other, just as a trader reacts to changes in market dynamics. 

Collaboration 

Jazz thrives on collaboration. Musicians interact in real-time, creating a collective masterpiece. Contrarily, while trading might seem like a solitary endeavor, successful traders often share insights and strategies, refining their decision-making processes collectively.

Emotion

Finally, another comparable factor in stock trading and jazz is the role of emotion and how it influences performance. Not only can both jazz performances and the stock market evoke strong emotions, but they revolve around the emotion we put into them as performers and investors. However, emotions can act as a point of contrast between the two. 

Music is a creative form of expression and, therefore, thrives off the emotion we back it with. However, when it comes to trading, our emotions can be one of the biggest obstacles to success. Emotions can hold us back from becoming the best traders we can be because they can cloud our judgment and logical decision-making process. On the other hand, the best music is created from our emotions and even requires musicians to turn off the rational brain to use them. 

Musicians express themselves through instruments, which can inspire beautiful melodies. However, traders’ experience with emotions usually leads to regrettable actions, from the euphoria we feel in bull markets leading to overconfidence to the anxiety we feel during market downturns, leading us into a downward spiral. Emotions are powerful and must be appropriately regulated and channeled in music and trading for different purposes. 

While jazz predominantly emerges from our creative instincts, it demands a precision reminiscent of stock trading. Both the stock market and jazz, despite potential misconceptions, are about navigating between structure and spontaneity, strategy and serendipity.