Think Like a Woman and Make More Money
I am a trading psychology coach, who has doctoral level training in Sport Psychology. That means the only thing I focus on in my consulting work is how to improve performance. Wall street says it cares about gender equity, which I think is kind of silly because what pays the bills and earns the salaries is one thing: Performance. And last time I checked, the markets do not pay you more just because you are a man or woman; however, thinking like a woman may give you an edge in trading.
I believe women, in many ways, are able to be very successful in occupations that involve the combination of money, risk taking and risk management. And a lot of it has to do with the simple fact that they are hardwired that way. What this potentially means is that maybe there should be more women then men on the front lines or in senior risk taking positions on trading desks.
Here are three reasons why I think women can be great traders.
(I have many more reasons but I am just going to hit on a few in this blog post.)
1) Men let their pride get in the way of their decision making process and women don’t.
- Ask any guy the following, “Before GPS’ were around and you got lost, would you stop and ask for directions?” Pretty much every guy out there would quickly, say, “No way.” Yet, almost every woman out there would respond, “Of course, I would.” For men, being lost or confused triggers our caveman ego and makes us want to solve the problem on our own rather than show what we think is ‘weakness’ and ask for help from a stranger. It’s not our fault. We are just hardwired that way. This means in order to short-circuit this and avoid driving around aimlessly for hours, we have to recognize when it happens, intentionally stop ourselves and then put in a corrective measure. That is a lot of work and mental energy we would have to expend just to be able to get to the same place where a women got to from the beginning, quite naturally and effortlessly. From a trading perspective what this could mean is that women are more likely to not turn one bad trade into two, three or four bad trades. Whereas a man, may do this, just as he would choose to drive around for hours, aimlessly because of his pride. Can you say, “Rogue Trading?”
2) Self-Awareness is the single most important characteristic among elite traders.
- Many women keep diaries. I don’t know why. I am a guy. Guys, for whatever reason, just don’t do stuff like that. At least not by their own measure. Have any of you guys out there ever written in a diary about your emotions, friendships, relationships and feelings just because you felt like doing it? The single most important part of my trading psychology coaching practice is that I require my clients to keep a daily trading journal. I give them a list of 20 or so questions to answer each day about their trades, their game plans, their trade sizes, their emotions, and so on and then hold them accountable to emailing it to me each and every day. I am constantly told by them how valuable they find the daily journaling to be. It keeps them on top of their trades. It improves their risk management and helps them get bigger in their highest conviction trades. They all (the male traders at least) tell me they don’t like doing it and that it is weird at first but extremely helpful to solidify their thinking. My female trader clients actually like doing the daily journals for the same reasons and it also comes more naturally to them to do it. The bottom line is the more writing my traders do, the greater and deeper level of self-awareness they obtain.
3) When men get into arguments, they get physical or start wars. Women pause, reflect, plan and then unleash a well-calculated mental warfare.
- My 9 year-old daughter told me the other day that when her younger brother gets her mad instead of hitting him (which she quickly discovered results in him hitting her back harder), she has found that she can hurt him more by just saying mean things to him. Look at that, 9 years old and she is already on her way to becoming an expert in mental warfare! She didn’t go through any CIA boot camp to learn this skill – it came naturally and intuitively to her. In the trading world, the market is constantly telling the trader he is wrong. It is constantly (about 45% – 55% of the time) taking money from the trader. The automatic male response is to get angry and want to fight or what I commonly refer to as “Trade for Revenge.” This is not the case for the women traders, however. When the market proves them wrong, they will get upset, just the same, but instead of trading for revenge or over-trading, they will quickly cut their risk back. They then take the time to reflect on what happened, why it happened and what they will do different next time. And they do all this before they get back into the market for the next trade.
Via Forbes.com , Written By: Doug Hirschhorn