Men and women often find themselves caught in gender disputes — every subject has been through the ringer apart from one: Trading.
Men and women are often in dispute as to which gender is better.
Pretty much every subject has been analysed and argued
over including driving, cooking, multi-tasking, communication, business and DIY
to name just a few. Asking whether men or women are better at something always
produces explosive reactions from people – all keen to stand up for their
gender. Usually, it’s all just a bit of good fun, with both genders walking
away from the conversation having agreed to disagree.
On a more serious note however, one topic that is rarely
looked at is Trading.
The trading community across the globe is predominantly
dominated by men, whether it is individual retail traders trading on their own
account or institutional traders working for large banks. Estimates vary, but
approximately 80% of all traders are men. Trading amongst individuals is
growing rapidly with increasing amounts of people opening a trading account
each year and speculating on the movements of financial markets worldwide. The
recent financial crisis highlighted the fact that experienced traders who work
for banks, can be just as careless with their money as the average person – if
not more so.
The extent of physiological differences between men and women is extensive; and research is constantly ongoing.
In terms of empirical research and scientific studies,
some differences about men and women have been proven by science. According to
Simon Baron-Cohen from Cambridge University, the male brain is characterised by
'systemising' tendencies and ‘mechanistic’ thinking. Systemising is the drive
to analyse, explore, and construct a system. The "systemiser"
intuitively figures out how things work, or extracts the underlying rules that
govern the behaviour of a system. In contrast, the female brain is
characterised by 'empathising'or "mentalistic" thinking.
Empathising is the drive to identify another person’s
emotions and thoughts, and to respond to them with an appropriate emotion.
Research from both Cambridge University and Simon Fraser University concludes
that men’s greater systemising and mechanistic skills are the primary reasons
why they are better than women at mathematics, physics, and engineering,
because all of these fields deal with various rational ‘systems’ governed by
rules. Women’s greater empathising and mentalistic skills are the primary
reasons why they are better at languages and tend to be better judges of
character.
When applied to trading it seems that men are better at
analysing and rationalising how financial markets work, but women are better
equipped at understanding the psychological side of what other traders are
likely to do as well as managing their own actions in the process. Although
women are said to be more emotional than men, they are also better able to
handle those emotions compared to men.
In trading this is key. How you handle your emotions and
how you well you understand the mindset of other market participants are
probably the two most important aspects of Trading.
Stereotypes of men and women are well known and of course exceptions exist, but exceptions don’t always disprove the rule.
For example, there are many women who are taller than the
average man, and there are many men who are shorter than the average woman. But
the generalisation, “Men are on average taller than women”, remains valid.
According to Dr. John Gray, author of the best-selling
book Men are from Mars, Women are from Venus, men's brains
tend to perform tasks predominantly with the left-side, which is the
logical/rational side of the brain. Women, on the other hand, use both sides of
their brains because a woman's brain has a larger 'corpus callosum', meaning
women can transfer data between the right and left hemispheres, faster than
men.
A BBC documentary in 2009 called Million Dollar
Traders, filmed in the UK, followed a group of 8 novice
traders without any prior trading experience to see how they would perform in a
live trading environment. At the end of the experiment, it was a woman who was
the most profitable despite the group being male dominated. The reason why, was
largely because she was able to manage her emotions and balance the required
logical aspect of trading with the equally important psychological side.
Although the programme wasn't conducted in a scientific
environment, we are still able to see the broad pattern that although men are
more likely to be attracted to being a ‘trader’, it is often women who make the
best traders.
 |
| Eight ordinary people are given a million dollars and a fortnight of intensive training, in BBC’s ‘Million Dollar Traders’, filmed in 2009. |
Men are like straight lines, women are like curves.
Men are predisposed to being good at logic, theory and actual performance while women are predisposed towards emotional intelligence, greater self-awareness and psychology. In trading, you need both sides of this divide to truly excel and become an excellent, profitable trader, over the long-term.
To succeed in trading you must use both the emotional and logical parts of your brain in unison. Best performance will be achieved when the logical left side works in harmony with the emotional right side. Being balanced in your own mind allows the trader to see the rational and emotional sides of any trade as well as remembering to take into account what other people consider to be ‘rational’ and what type of emotions are likely to be driving them. Financial markets are incredibly dynamic so the approach to trading should try to follow suit.
Trading is ultimately a game of winning and losing.
According to the scientific community, trading should be an occupation women flock to because of their natural predisposition to mitigating risk and managing the inner self. Unfortunately, as a result of how society is structured and the broad perception that trading is an excessively risky occupation, women tend to discount trading as a suitable occupation. Trading is an activity where egoistical and macho characteristics are least suited, but paradoxically, most trading floors around the world are full of macho men with large egos.
A strange world indeed.
Sources:
Baron-Cohen, S. (2003). The essential difference: Men, women and the extreme male brain. London: Penguin.
Badcock C, Crespi B.J. (2006) Imbalanced genomic imprinting in brain development: an evolutionary basis for the aetiology of autism. Journal of Evolutionary Biology 19:1007-1032
Satoshi Kanazawa, 2008, The Scientific Fundamentalist
Dr. John Gray;, Men Are From Mars, Women Are From Venus (HarperCollins, 2004)
Schubert, R., Brown M., Gysler M. and H. W. Brachinger, 2000. Gender Specific Attitudes Towards Risk and Ambiguity: An Experimental Investigation
Written by George Tchetvertakov
Written by George Tchetvertakov
