31 May 2017

Masculine Lines & Feminine Curves

Men and women often find themselves caught in gender disputes — every subject has been through the ringer apart from one: Trading.



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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.
So it seems that women are better suited for trading but men are more likely to trade. The explanation for this lies in deep rooted societal factors that have developed over hundreds of years. For example, women have children so men tend to be the breadwinners. Women are on average more family orientated and more risk averse than men. Women are more focused on emotions, men are more focused on actions. It is arguably true that men feel more responsibility in earning an income for the family compared to women.

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.


However, ‘trading’ starts way before you make a trade and continues after you've just closed a trade. People that can handle and use their emotions to their advantage will be better traders than people that can’t.

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