Testosterone and the trader

[Merc..]

Check this out ( about natural hormone levels ) ..


WORLD AT SIX, APRIL 16
Testosterone and the trader



UK researchers have applied science to the trading pit and come with some interesting conclusions regarding trader hormone levels and market stability.


Bruce Whitfield:
You would have heard Adam Gilchrist on the UK report this week refer to research from the University of Cambridge which suggests that movements in financial markets are correlated to traders’ hormone levels. I beg your pardon? Traders’ hormone levels and markets? The bottom line; if more women were traders markets would be less volatile. Dr John Coates joins us now and he is a research fellow at Cambridge University and seriously John, hormone levels affecting market levels - are you picking at straws here or is this something that comes out of your own experience?

John Coates:
Well it comes out of my own experience in two ways, one I used to work on Wall Street and I was observing behaviour during the dot-com bubble which I thought was very strange and I came to suspect that it is possible that naturally produced steroids , not anabolic steroids, but naturally produced steroids were having some effect on shifting people's risk preferences across the market cycle. So that was my experience which led me to develop this hypothesis. The other part of the experience and more importantly is this experiment that we have just run in the city and that gave us scientific data, initial data, that sort of shows us that we are on the right track in thinking that these steroids respond to financial events like making and losing money and market volatility.

Bruce Whitfield:
Now let's go back just one step if we can to how you actually carried out the research because what you're trying to prove is whether or not testosterone and I think it is cortisol, play a role in market behaviour or participants in the markets’ behaviour.

John Coates:
That’s right what we did we went on to a trading floor in the city and we sampled steroids from 17 male traders twice a day over a two-week period and then correlated those steroid levels with how they were performing and the volatility in the market and what we found was that when these traders had an above average gain for the day their testosterone levels rose. More importantly we did a slightly different experiment with the testosterone in that we looked at the days when the traders had high morning levels of testosterone and when they had high morning levels of testosterone they made more money for the rest of the day than they did when they had low testosterone levels. So those were the two main results we found for testosterone which confirmed our suspicion that testosterone was in fact playing a role in traders’ judgment or behaviour.

Bruce Whitfield:
Cortisol is less well-known, what were you measuring there?

John Coates:
Cortisol is a stress hormone, probably the most important stress hormone in your body. What it does is in times of emergency it slows down long-term functions of the body such as digestion and reproduction and marshals glucose for you to use. Cortisol goes up very powerfully under conditions of uncertainty and what we found with these traders is that when the volatility of their trading results and the volatility of the market went up, their cortisol levels went up there strongly.

Bruce Whitfield:
Does that mean that men make better traders than women or men are better suited to trading than woman and I run the risk of getting myself shouted out of town but it's a question one has to ask?

John Coates:
No, I don't think so because what we were seeing, I mean some people have reported this result as saying that the higher your testosterone levels the better a trader you are and that's not what we found at all. We weren't comparing testosterone between two people we were comparing changes in testosterone within one person and that is something that can happen with someone with very low testosterone levels or someone with very high testosterone levels. Secondly we think these steroids can actually if they rise too much in your body they can start impairing your judgment and that can lead you to take on too much risk and the wrong kinds of risk and it is also possible that women may not be as subject to these swings in steroids or at least of these two steroids, cortisol and testosterone, as men so in some kinds of trading, probably not the kind we were looking at, but in other kinds of trading, it is entirely possible that they may have longer long-term performance.

Bruce Whitfield:
So potentially, women could be better long-term traders than men on a day-to-day basis.

John Coates:
Well, I think they would just be different traders and the point of this research is that the more diverse, the more types of traders we have in the market the more stable it is. So everyone is not going the same way at the same time.

Bruce Whitfield:
And that would be nice.

John Coates:
And I think it is entirely possible that we could dampen some of this fluctuation by having more women in markets.

Bruce Whitfield:
Now, you traded derivatives yourself at Goldman Sachs and Merrill Lynch, would this knowledge, if you had this scientific backing that you are developing at the moment, if you had had it then, would you have been a better trader or is it something that hormone levels are going to affect you regardless?

John Coates:
Well, I could certainly feel them. I think a good trader is someone who feels these things and knows how to take the appropriate action. Equally, a good trading manager is someone who should recognise the signs but having said that, sometimes they are extremely hard to control and more importantly it’s when the public, I think bubbles don't really become dangerous until the public becomes involved, and then I think if you haven't had a good training in trading it must be very difficult to control these things.

Bruce Whitfield:
Dr John Coates, thank you so much for talking to us this evening on the ‘World at Six’. He is a research fellow nowadays at Cambridge University, coming together with that research and essentially diversity in the workplace is a good thing. More woman traders in trading rooms would be a good thing as well because us men, our testosterone levels can be challenging.


http://business.iafrica.com/transcripts/699476.htm


Merc.

[Kratos]

so don't get juiced up and go to a casino?
already made that mystake, lost $120 bucks that night...not even close to my worst

[BigLittleTim]

If women controlled financial markets we'd have more stability in general, but a world-wide depression every thirty days or so.

-BigLittleTim

[Narkissos]

If women controlled financial markets we'd have more stability in general, but a world-wide depression every thirty days or so.

-BigLittleTim

[Merc..]

lol....

[shifty_git]

If women controlled financial markets we'd have more stability in general, but a world-wide depression every thirty days or so.

-BigLittleTim

ha ha ha

also the world trade markets would slow right down while they decide on what to actually buy!

[kirk3624]

that is pretty interesting...I absolutely don't believe in the whole "efficient market" hypothesis and this sort of back up that. Human emotion is just to powerful of a catalyst.

[Merc..]

^^^^^^^^

[Amorphic]

If women controlled financial markets we'd have more stability in general, but a world-wide depression every thirty days or so.

-BigLittleTim

you should be a market analyst, thats some brilliant insight.