Last Updated on 10 February, 2024 by Trading System

Women only make up around 10-15% of all traders. However, that number is on the rise. On top of that, research into the various characteristics which separate the two genders claims that women might actually be better at trading than men. We take a look at some of the traits that make a successful trader. For each of those traits, we try to determine whether a specific gender has a natural aptitude for it, and thus would it be better at trading because of it?

In general, your gender does not have an long term impact on your success as a trader, and women are not better traders than men. However, both genders are different and thus have different areas where they excel. In order to be a great trader, you need to focus on your weaker areas and improve yourself both technically as well as psychologically, regardless of gender.

Let’s now look at some of the areas where men and women respectively tend to excel. Of course, these are just general tendencies, and there will be many who don’t fall under these gender-specific traits!

The Traits of a Successful Trader

Regardless of whether you are a man or a woman, the art of trading remains the same. A good trader not only needs to have all the necessary knowledge and technical skills but they also are able to keep their emotions in check and their nerves under control.

This is where we start to see major differences between men and women. While women make up only a small percentage of all the traders, studies conducted to analyze differences between the two genders do tend to point out how women might have an inherent advantage when trading the markets.

Where Women Excel Over Men in Trading

Let’s take a look at the advantages that women have before diving into areas where women might be weaker. Remember that the following data is based on research and wide sample sizes. All of the conclusions we reach here are meant to be ‘on average’.

In reality, each trader is unique in their own way and may have a varying mix of both good and bad habits which affect how successful they are as a trader. However, you can use this primer as a starting point for your self-analysis. Figure out if you truly are weak in any of the areas mentioned and start to fix it. The best thing about being a trader is that you can largely make up for most of your shortcomings through practice and hard work.

Women Follow the System

Let’s start out with perhaps one of the most important differences between men and women. As we have stated on The Robust Trader many times, it is very important for traders to adhere to a system. Only experienced traders who fully understand the intricacies of their system know when to break the rules. For most traders, it is best to simply stay within the limits of their system.

It is quite clear that, on average, women tend to follow the rules that have been set for them (by themselves, or anybody else)  more closely than men. In a study conducted by Alexander Mann Solutions, men were over twice as likely to break the rule-set than the women. In fact, most women stayed within the confines of the system.

Over the long run, this means that women are more likely to develop and fine-tune a trading strategy that works for them. Only by properly adhering to a system can you understand its strengths and its flaws. Once you understand the system, you can slowly weed out what doesn’t work until your system is consistently profitable.

Women Are More Risk-Averse

Being risk-averse is the best way to make money in the markets. While you might miss out on some short-term gains(or losses), a safe approach beats out recklessly risky trading methods in the long-term. It has been proven through multiple studies that women have a safer approach to trading than men.

A survey conducted by Blackrock showed that 72% of the women were strongly opposed to investing in riskier instruments. On the other side, only 59% of men showed the same resilience.

Women also tend to make fewer trades on average than men. In the aforementioned Alexander Mann survey, women averaged 69 trades while the men averaged 94. More trades can not only lead to more mistakes but also more brokerage fees. Often times, the best option is to wait out for better opportunities, and women seem to be better at it than men.

However, there are also disadvantages to being more risk-averse. For one, you often miss out on opportunities to make big money. For example, only an investor who has an appetite for risk would take on The Bank of England as George Soros did. Of course, a high-risk approach can also cause massive losses. As such, it is best to consider managing risk as a balancing act!

Women Make Better Students

There is a lot of research which suggests women are better at learning than men are. When it comes to trading, you are constantly looking to evolve and learn new things. In fact, we advise traders to never stop their education as there is always something that you can improve on.

From all the research that has been conducted, it seems as if women are more psychologically geared towards traditional teaching methods, while men do seem to respond much better to the practical application of information.

Over time, this advantage is probably going to even out as male traders catch up through the practical application of their knowledge. However, beginner female traders do seem to outperform male traders quite consistently (as shown in the Alexander Mann survey), and it could be due to them being better students.

Where Men Excel Over Women in Trading

As you would expect, there are also certain areas in trading where being a man might be more advantageous than being a woman. Let’s take a look at some of them.

Men Tend to Work More

Although this is one of those things that can be either an advantage or a disadvantage, data shows that men usually work longer hours at work (not including work at home) than women. This is regardless of industry and thus is bound to impact trading as well.

As we stated above, doing fewer trades is oftentimes better. However, those who properly utilize their time might not spend their entire day trading. They might divide their time between studying, analyzing the markets, and back-testing their systems.

As such, it is possible for men to eventually surpass their female colleagues over the long run as the extra time spent at work tends to add up. However, it is important for anyone who spends long hours on their craft to use their time productively and not waste it by constantly trading.

Men Hold Their Nerves

While women are usually better traders under pressure, oftentimes it is the irrationality of men that works out to their advantage. Their riskier nature, along with a higher confidence level, often leads them to believe that the trade that they have made cannot be wrong.

This, in turn, causes them to hold onto positions for longer than women would. While the safer approach is generally the better one, the rash approach can often lead to better results, if you know what you’re doing. For this reason, it is possible that men may outperform women when the market becomes extremely turbulent and numerous opportunities present themselves.

A perfect example of this is the famous Contrarian Investor Carl Icahn. His investment decisions are based on taking calculated risks and going against the flow of the crowd. Men are generally more open to risk and as long as they can learn to take calculated risks, they should see better returns.

Men Are More Motivated by Money

Financial rewards are more enticing to men. It is quite obvious that the two genders behave somewhat differently from one another. It shouldn’t be a surprise that both of the genders, in general, crave different rewards as well.

Since the primary purpose of trading is to make money, it is obviously going to attract more men than women.

Once you combine this with the tendency of men to work more, it is easy to see how male traders might be more motivated than their female contemporaries.

Bottom Line

As we stated at the beginning, your gender has no impact on how successful you are as a trader in the long term. The fact is that all the traits that your gender does not usually embody, you can learn. The mindset of a trader should be focused on the future, and thus you need to prepare yourself psychologically as well if you want to be successful.

If you are a man, try to focus on understanding your limits and keeping yourself in check. If you are a woman, try to study how you can take risks in a safe and calculated manner. In the end, your effort and dedication will outweigh any natural disadvantages that you may have.

FAQ

Are women better traders than men?

The question of whether women excel over men in trading is complex and depends on various factors. Research indicates that, on average, women tend to follow trading systems more closely and are more risk-averse. However, individual trading skills vary, and success is not solely determined by gender.

What is the significance of risk aversion in trading?

Risk aversion is crucial in trading as it helps avoid reckless methods, leading to long-term success. Studies suggest that women, being more risk-averse, tend to make safer trading decisions, reducing the likelihood of substantial losses.

How do women perform as trading students?

Research indicates that women are often better at learning and evolving in trading. Their psychological inclination towards traditional teaching methods contributes to consistent outperformance, especially among beginner female traders.

If you enjoyed this article you might also like our other articles answering common questions traders have!