Men and Women Trade Differently

Stav Dimitropoulos

Charmel Delos Santos
Charmel Delos Santos is winding up her midday meal, broccolini and lemon risotto today. She eats a healthy meal with rice every midday, a “ritual” squeezed into her busy schedule somewhere between keeping a vigilant eye on the breaking market news and checking on her positions. Delos Santos, 42, trader, will actively monitor stocks for the rest of the day, but has structured her lifestyle in a way that also allows for family life.

“In the afternoon, I take a short nap, or meditate for stress protection. Then, I will have dinner, do activities with the kids and prepare for the market 30 minutes before they open,” says the posh Australian-Filipino, who trades in the US market. By her own account, she grosses a five per cent profit per month. Only the global financial crisis trimmed her monthly profit to four per cent, and she also traded oil stocks when oil stock prices were marching to all-time highs.Delos Santos is part of a roughly 15 per cent of female traders around the world, a proportion seemingly in decline. By all appearances, trading remains an opportunistic, “old boys’ club”, or better, a “rich, white, old boys’ club”. A couple of years ago, the “iron lady” of the IMF, Christine Lagarde, suggested that, if collapsed bank Lehman Brothers had been Lehman Sisters, the current economic crisis would look quite different. It is intriguing that a fresh-out-of-print study* by the Department of Economics at the University of Leicester now confirms that having more female traders in the markets will indeed save the world from many and extreme stock market crashes—and this time physiological evidence is used to back claims up .

Testosterone – key trigger for market bubbles.

A computer model created to study the hormonal effects in both male and female traders across the whole market pointed fingers at excessive … testosterone as the key trigger for market bubbles. “Testosterone leads to greater, and even irrational risk taking,” says Dr. Xin Li, member of the Leicester scientific team and Graduate Teaching Assistant in the Economics department. The research found that female traders on average earned more than their male counterparts, but the top performers were a selective bunch, mostly male. “The best performing traders were male, a small group that got lucky, winning through larger bets driven by their hormones, while male hormone levels were more affected by trading outcomes than female ones,” says Li. Women came on less strong, placing premeditated bets, clearly favoring consistency and duration over time. The study concluded that a higher proportion of female traders will make the markets more volatile, but, at the same time, will reduce the occurrence of the most extreme crashes.

© University of Leicester, Research(March 2016)

For Women the Trading Floor Is Still Shaky

On the real-life trading floor, Delos Santos’s self-reported betting style falls in with the findings of the research. “It is more important for me to have a dependable income and manage risks so that I don’t incur big losses. For example, on corporate reporting periods for AAPL (the Apple Computer, Inc. stock symbol), the stock can move five per cent outside of market hours. Calculating my risks, I tend to step aside and not take the trade because, if I am wrong, I will incur a big loss,” she admits. “I’d rather confirm the market movement and trade the confirmed move,” is her motto in the game of trades.

Catherine Stott

Catherine Stott, a British psychologist and certified psychotherapist and clinical hypnotherapist, has spotted the differences between male and female trading patterns since 2010, when she first entered the world of trading “from the sidelines”. A mindset coach for traders and investors, she views trading as a male-dominated environment, “…fertile for men of the alpha male type and threatening to women”. “The training courses are written mainly for men. I have had direct feedback from female traders that they feel awkward and unable to ask questions when on these courses,” continues Stott, who runs special workshops on overcoming gender-related trading challenges just for female traders.
On the other hand, she recognizes how women have the ability to make more stable profits. “Women tend to be more risk averse, they tend to let trades play on their minds more, and are more careful in their approach,” the coach from Wokingham, Berkshire confirms.

Leveling the Playing Field Will Halt Market Frenzies. But How?

It is this well-balanced approach that was acknowledged by the study of March, 7, which went on to propose rebalancing the gender composition in the trading world to better match that of the population as a whole and, thus, reduce market frenzies. Echoing the whole team, Li says that for more women to be encouraged to come and stay in trading, enterprises must change their tactics and offer a bonus scheme better rewarding consistent profits.

But how big of a change can that be, when financial firms are far more invested in giving golden parachutes to the “hungriest”, winner-takes-it-all-players—who are by default boys? From her own standpoint, Stott answers this question saying companies should start doing special recruitment drives, similar to STEM companies inviting more women in science. “They can work on the softer skill side that attracts women too,” she says, pointing to the many ways via which the gates of trading can open to women. “There is also the generation of women who are having career breaks to have families, and don’t want to go back to their traditional careers. They may have not considered trading, but it may be a viable option for them.”  Ut enim ad minim veniam, quis nostrud

Dr. Xin Li

“Gone Shopping, Gone Bargain-Hunting? Congrats, You’ve Traded”

One of the perks that persuaded Delos Santos, a mother of three young kids herself, to quit her previous “highly taxed and highly stressful” job of business analyst in Australia and the Philippines to become a trader—evidently ahead of her time—is flexibility. “Trade as a woman,” she writes on her website, in the bio section of which she credits her roots for the “girl power” early instilled in her (Delos Santos grew up in the Philippines, surrounded by her mother and six aunts who were all teachers, while in her teens she got to work in the family business exporting handicrafts made by women in her village).

Charmel Delos Santos

And, though the—now—Sydney local feels challenged by juggling the multiple identities of a “mother, wife, daughter, sister and friend”, she has no qualms about saying she will never return to the confines of a 9-5 job. Hers is a simple formula to attracting more women in the stock trading territories: “When my friends see me trading, checking my phone for stock prices, and see that I do it when attending playgroup, or out shopping, or grocery shopping, they are encouraged to follow in my footsteps,” she says. “Trading is actually a simple act of buying and selling . . . There’s a lot of flexibility, and there’s income to be made there … When you go shopping, sooner or later you’ll go bargain-hunting. It’s the same in the stock market.”

* The paper is entitled ‘The role of hormones in financial markets’ and can be downloaded in full from here. The authors are Subir Bose, Daniel Ladley and Xin Li.

Stav Dimitropoulos is a journalist and writer whose work has appeared on CBC and CBS Radio, In The Fray, Global Government Forum and more. Facebook | Twitter: @TheyCallMeStav

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