Whenever you pick up and article in the financial press referring to a trader, it usually refers to a man. In a world where the rights and more importantly the abilities of women are increasingly being recognised, we felt it would be useful to highlight some of the recent findings regarding female traders.
Male traders are more likely to take bigger risks than female traders. While some may see this bravado and risk profile as beneficial in a competitive environment, in the long run, taking such risks is extremely likely to result in losses. Men’s bravado means they really dislike being wrong and end up staying in a losing/bad trade longer than they should. Dr Alexander Elder alludes to this trait in ‘Come Into My Trading Room: A Complete Guide To Trading’:
‘I find that the percentage of successful traders is higher among women. They tend to be less arrogant, and arrogance is a deadly sin in trading.’
Female traders have a clearer trading objective. This focus on being more selective, spending more time evaluating a trade leads to them have a calmer head approaching and during a financial storm. They also have no fear of saying no – sometimes the best trades are the ones you do not make. Men according to various studies are more inclined to break the rules by booking late trades or exceeding limits than female traders, both of which are a sure way of amplifying a problem and being a complacent trader. By avoiding reckless tactics, female traders operate in an efficient manner which results in better decisions.
It seems men cannot tear themselves away from the market, while female traders are able to separate themselves. As a result, overtrading by men (perhaps because of their constant attachment to market movements), means they were more likely to burn up some of their profits in commissions. With a more considered approach, female traders are able to make better decisions and ensure fewer losses. This means they can be more calculating, which is certainly advantageous when trading.
This mindful trading approach leads to female traders using less capital and spending less time trading. Their focus on better quality trades instead of higher numbers arguably proves that the stereotype of trading as a bullish, busy environment is not perhaps the most effective way of working. Indeed, in a nod to what we at the Lazy Trader regular highlight as important – having a trading strategy and sticking to it – women read the manual, stick to a strategy and when they are unsure ask a question. Much better than blokes who don’t dare ask for fear of looking stupid in front of their mates or a total stranger.
The same discriminatory problems that women face in the workforce are similarly acted out in the financial world. Fortunately for women, as with Geraldine Weiss, the internet allows them to be judged on their ability and not their gender. One of the biggest drivers of bringing more women into investing and trading, especially in the retail area, is online trading. If women can trade online it masks their identity, as much as we like to think there is no discrimination in today’s workplace, it is there, even if it is unconscious. Online trading can eliminate this bias because no one knows who is on the other end.
Geraldine Weiss was the first woman to break into the financial advice arena. In the 1940s, Weiss studied finance and business, and eventually, she became a financial advice writer. However, due to gender discrimination, she signed her columns “G Weiss” and only revealed her full name after she had established a name for herself.
Ingeborg Mootz only started trading at 83! After her husband passed away, Ingeborg found herself in difficult financial circumstances but decided to start trading with the small amount of funds she had. She managed to increase her capital to at least two million euros without any financial education, knowledge about financial markets and armed only with a local newspaper in hand and unique intuition of long-sighted, real Frau!
Kathy Lien graduated from New York University’s Stern School of Business at the age of 18 and started her career at JPMorgan Chase where she worked on the interbank FX markets. She is one of the authors of Investopedia’s Forex Education section, is frequently quoted by Bloomberg, Reuters, the Wall street Journal and has appeared on CNN and CNBC. An impressive record for someone is under 40!
Muriel Siebert never graduated from college but still managed to obtain an entry-level research position in the financial world which eventually led to her being made partner and founding her own firm. Getting her own firm registered was a challenge as no men would sponsor her application. She persevered and became the first woman-owned member of the NYSE. It is still the only national, woman-owned brokerage on the exchange.
A more recent name and currently much sought after is Carolyn Boroden, a commodity trader, advisor and technical analyst. Known in the trading world as the Queen of Fibonacci, though her expert knowledge of Fibonacci trading strategies or the Golden Ratio. Carolyn began her trading journey on the floor of the Chicago Mercantile Exchange in 1978. She discusses women and trading in the following interview, which is worth a listen if you want to know more about Fibonacci strategies.
In Japan during the 1990s, there was a substantial number of women retail forex traders. Given the relatively patriarchal history of Japan, most women were married and stayed at home, so they tended to make extra money by trading. Currently, up to 25% of the retail forex traders in Japan are women, though now they are younger, more aggressive, and more interested in maintaining independence from a male counterpart. Compare that to the 5% of retail forex traders that are women in the UK and 10% in Australia.
Previously, women would find it difficult to secure jobs in the traditional financial world. They faced discrimination and often had to defend against gender bias. Now, with an anonymous internet and trading platform, the bias disappears. If the P&L statement is favourable, then the trader is favourable – man or woman.
Some of the main reasons women may make better traders are also stereotypical. Of course, that doesn’t mean all women are better than all men, but there is some truth to the notion that women may make more stable traders – which means they will probably make more consistent profits.