Collaborative Post

Women vs. Men in Trading

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As traders, an increasing number of women have stepped into a primarily male-dominated domain. How different is trading in the hand of women traders?

Forex Trading, if done correctly, can be profitable and beneficial for everyone without the consideration of their gender. The domain of Forex trading has grown significantly since the 2000s, and duly notes the contribution of both women and men.

Though the strategies and principles followed in the market of Forex trading are not dependent on gender, class, or race, several misappropriations and misconceptions of the trading floor have resulted in harmful stereotypes.

Do these stereotypes have any scientific or documented proof? Or is it simply the biological or physiological gap that leads to such stereotyping of women and men in trading? Let us find out!

Forex Trade market and gender

The Forex trade market is a fascinating network of traders of Foreign Exchange, and buyers and sellers of currency pairs in global circulation. Over the past decade, the Forex trade market has seen exceptional growth and integration, thanks to extraordinary traders, irrespective of their gender.

However, following the trend of new traders entering the global Forex market, reports have shown that it comprises a significantly large percentage of men, whereas women traders are extremely underrepresented. This disparity among men and women traders of Forex was consolidated by the data recovered by CitiFX in early 2014 and came up with the result that over 80% of retail traders in the Forex trade are men. In Europe, the contemporary standards showed that 60% of Forex traders are men.

The reason behind this dominant male presence in the trading industry has been explained by experts. Not only is gender equality a comparatively newer norm in Europe, but the devastatingly low percentage of female contribution in Forex trading is also a result of the historically discriminatory process of hiring, and the oppressive patriarchal society. This, however, in no way indicates the lack of interest in trading in women, nor does it point to a lower success rate. The gender-based disparity we find in the present Forex market is therefore indicative of the attitude and discrimination based on gender, and other economic reasons.

Female vs. Male trading

The wide disparity in the percentage of male and female involvement in the trading market has resulted in a varied analysis of women and men traders in the Forex trading market. Studies conducted over the years have shown that men have a 45% higher tendency for dealing in trades than women. Women, however, have shown a greater profit margin, with an annual profitability which is 2.65% more than men. Most analysts have therefore concluded based on these results that, women are more likely to do better in trading than men.

Male traders were more likely to break “house rules” to deal in higher trade volumes, but they run the risks of overtrading and higher risk propensity. Overtrading can often be a potential risk for male rookie trainers and have suffered a loss of almost 35% than women traders.

Women traders have also outperformed male traders in several other niches in terms of investments and annual returns. Studies in the late 20th century have shown all-women investment clubs have delivered higher annual returns than all-men investment clubs. Between 1980 and 1995, all-women trading marginally outperformed all-men trading clubs in nine years.

Women traders have shown a higher rate of being able to make trading decisions than men, who are not just more competitive, but often tend to take trading decisions based on emotions or under an adrenaline rush. They have also shown high-risk aversion than men, dealing trades only when positive outcomes are almost certain. This is helpful to lower the chances of running into unnecessary risks, but it can lead to stagnation and lower returns. On the contrary, men have been observed to have engaged in trading under extreme market situations. While they have greater risk factors, if done right, such opportunities can add up be to massively profitable.

Conclusion

Therefore, women traders have shown an enormous potential in remaining in a field that has been an arena primarily dominated by men. With the progress of time, experts are hoping that the vast gap between male and female traders can be bridged. The last fifty years have shown a slow, but steady growth in women traders participating in various trading platforms. Market analysts are looking into the other fundamental differences between male and female traders in the hope that these will benefit in creating a more integrated, egalitarian Forex trading market in the future.