Female traders are changing financial markets
Our modern societies have come a long way in terms of gender equality and opportunity over the last decades. Where once male domination was all over the business and investing world, its thankfully no longer unusual for women to assume the very top corporate roles and take responsibility for billion dollars decisions on a daily basis. In fact, according to data from Catalyst, in 2019, 29% of senior management roles were held by women. Moreover, at least 87% of global companies have at least one woman in a senior management role.
Yet, despite the progress, men still continue to dominate the trading, and investment in general, arena even as women have climbed to the top of many other industries and sectors.
Historically, trading has been considered something that appeals mostly to men and isn’t really a woman’s cup of tea. But it seems like this isn’t necessarily true anymore. Although there’s still a frustrating lack of female presence in trading and investing, we’re seeing a rise in the numbers of female traders.
Now, this discussion as to how and why leads to a number of other complex issues, including why women are missing from the trading world and whether or not we can expect this to change anytime soon. But, there’s also one more interesting theory to analyze: do women trade differently than men?
Why are women missing from the trading world?
It seems that a report from Fidelity International found out that young women are not as likely as young men to seek help from a professional financial adviser. The report highlighted that while 21% of young men aged between 18 and 34 years old have asked for help from a financial adviser, only 12% you women in the same age group did the same.
Now, this is a shocking finding because according to the same report, 24% young women worry about their finances on a daily basis and 59% of them report worrying about money at least once a week.
Now, due to the COVID-19 pandemic, it seems that women’s finances have also been significantly and disproportionately affected, with nearly 78% of job losses affected women.
Yet, women struggling with finances isn’t recent news. Even before the pandemic, women faced various financial challenges such as the gender pay gap, plus a higher likelihood of taking a career break or going part-time to look after children.
So, it seems that this historical disadvantage, because women were paid less and focused on raising kids for a very long time in the past, can be a major reason that women are still underrepresented in the trading area in the present day.
Yet, although forex trading, and investing in general, the gender gap remains an undisputable reality at the moment, many studies are optimistic and are suggesting that we’re witnessing a rise in the number of women becoming involved in trading. According to 2012 data from PRNewswire, for example, there was a 1000% rise in female traders between 2002 and 2012. Moreover, data shows a 46% increase in new female traders in the UK, with 10% of women choosing trading currencies over other investment options.
So, despite the frustrating difference between the number of male and female traders in the trading sphere, it’s not a secret anymore that women are starting to make their way into this world as well.
Male trader vs Female trader
Studies show that there are real differences between the sexes when it comes to trading and investing.
It’s a pretty well-established fact by know that many things on earth would run better if women were in charge, including financial markets. And, as women are starting to dip their toes in the trading world more often and more consistently, studies find that their psychological differences to males are actually making them better traders.
For example, a paper called “Thar SHE Blows? Gender, Competition, and Bubbles in Experimental Asset Markets,” talks about the fact that women tend to be more cautious and risk-averse in their trading patterns. The paper also found out that financial risk tolerance is lower for women than for men, and that they tend to shy away from the competition.
The paper also highlighted a few patterns of male traders, including the fact that they will compete even if there’s a great risk to lose due to their tendency toward overconfidence.
2018 research from an investing app has also conducted a study analyzing the same topic, which concluded that at an individual-investor level, women tend to be more wiser investors compared to men. The study, which implied responses from 640.000 users of the app, also highlighted the idea that women are more reliable investors.
The overall finding when analyzing the behavior and patterns of male and women traders, there was observed a trend in women of “quality over quantity”. In contrast, in men, it was found that they tend to buy and sell stocks or trade at a quicker rate. As a result, the trading patterns of male traders often facilitates greater losses overall.
Fintech, trading technologies, and Social media
Trading in the traditional office settings, as we’ve all seen in The Wolf of the Wall Street movie, remains a barrier for some women. Yet, the rise of technology helped women traders overcome some of the challenges that kept them away from dipping their toes into the trading arena more often.
Fintech has opened a gate for those women who can’t get into trading and investing in the traditional settings due to either discrimination from their male counterparts or their decisions to be stay-at-home moms. The recent rise of mobile forex apps and trading platforms, and many other trading tools such as ECN technology, allow women to trade from anywhere at any time. For example, ECN allows you to trade outside traditional exchanges, helping women trade from the comfort at their own home.
As for social media platforms, thankfully, gender equality in every area, including doing business and investing is actively promoted here. So, we could say that social media is changing mentalities, both among women, who find their motivation to start trading, and men, who learn that their female counterparts are just as qualified as them to be part of this world.