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Many men trade semi-professionally, but few women do. This is despite the fact that many women possess many skills that help trading tremendously.
There’s one very basic reason why this might be the case and it’s probably not what you’re thinking.
It’s all about height.
I worked for a woman trader for many years. She made millions and millions of dollars a year while men around her were struggling. She was a pit trader and all of 5’2″ tall – when many of the men around her were 6’5″+. Let me assure you – Being tall is an enormous advantage on the trading floor. It was such an advantage many trading groups only hired tall college grads for their training program. Some traders used to wear platform shoes to be taller.
Tall people can see over others better and they are easier for others to see on the trading floor. They block people behind them from seeing trades. It’s a “huge” advantage.
It wasn’t uncommon to see someone 6’9″ in the pit – you’d think you were on a professional basketball court rather than a trading floor. But my woman boss was the best trader in the pit and made more money than anyone despite her size – because she had other skills and strengths.
And she personally attributed some of these extraordinary trading skills to the fact she was a woman. I can easily see this might have some truth in it for these reasons:
Ego: Women tend to be less egotistical about being “right”. To be a successful trader, you need to take wins and losses in stride – and move on to the next trade. One big winning trade doesn’t mean you’ve made it – you’ll need dozens to make it all work. One losing trade isn’t the end of the world, move on to the next trade.
A big winning year doesn’t mean you’re on easy street and you’ve “figured it out”. Nor does a string of bad trades make you a loser. All of this is about ego and taking both your successes and setbacks as part of the path. Women are generally less committed to being right and more committed to a successful outcome.
Risk Adverse: Women tend to be more risk adverse than men. This is supported by many studies. Taking smaller amounts of risk usually makes better long term trading results, and women have the leg up here. Once women get over the riskiness of trading, they tend to do great.
My boss had been working for a large trading firm and was very successful before she struck out on her own. She was making great money on her own but she wasn’t sleeping well and her stress level had gone up with her bank account (it really does work that way sometimes).
Her success wasn’t quite as good as she thought it would be trading on her own, so she did something remarkable – she went back to her old boss and asked him to give her money to trade.
She went on to make bundles more money after she did this. Going back to get money to trade from someone else cut her personal risk and showed her ability to overcome ego in pursuit of a larger goal of making money as a trader. Margie’s story was a total life-lesson for me. She made more money by taking less risk and by asking for very specific help instead of trying to do it all on her own.
Routine: Ask any successful woman and you’ll find that she’s got a routine for nearly every part of her life. Women tend to create and stick to a daily routine. Trading requires a good routine, such as a trading checklist and the ability to stick to your trading program. Make it quick, easy, and logical, and women are glad to follow a routine. Especially if it works to grow her money.
Women monitor trends better. I don’t mean to sound cliched, but ask most women what shoes they want and they will tell you 3-4 brands, styles and colors that are current and “trending.” I did an experiment as I wrote this article and asked my wife what shoes she wants. She very gladly gave me the exact brand, size, style, and even where I should go to get them at the best price. How about hair styles? No brainer. They know what’s going on with current trends (whether they have the hair style or not).
It’s not so much that things that are less “trend-y” are bad – it is just those old styles are no longer relevant or “hot.” It doesn’t take a rocket scientist to see how this might apply to trend trading. The markets that aren’t in trends aren’t bad markets, they just aren’t trending. And keep in mind that while what’s trending in the markets right now – both up and down – might be great for the next few month,t their time will pass and they will stop trending. If women can take the confidence that they might have in shopping and apply that confidence to embrace market trends, women can rock Wall Street. Women in Japan,, in particular housewives, are the single, largest group of currency traders in the country for this reason. Your kid wants to play on an expensive hockey team? No problem, mommy’s going to pay for that with a few clicks on her computer.
Now I hope I haven’t offended any people with this list, but really, I don’t care that much. This blog is intended to help people become better traders. If helping people become better traders involves saying women are better than men at some things, so be it.
My wife certainly thinks so.
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Michael Sankowski lives in Oak Park, IL and has been a professional trader for 20 years. He’s traded billions of dollars on four continents in many markets including Futures, Currencies, Stocks. He is a well-known financial writer and is a CFA, CAIA, and has created patented products used in Futures Exchanges. His blog is at http://www.trendfollowing101.com/blog He believes many people are trading the wrong market in the wrong way.
