Written by Katie Gomez

It is no secret that the trading market has been male-dominated for centuries. From the 1800s to the present day, men still make up the majority of traders and investors, but that has nothing to do with higher skill levels, capability, or intelligence than women. Men have traditionally played the role of breadwinner, carrying the responsibility of providing for their families by handling the finances. On the other hand, women have learned to trust their husbands and fathers and not concern themselves about money. 

However, these ideals do not match the new and independent society we live in today. Women no longer need to rely on a man for financial support. Women are no less capable than men, but the fear of change and abnormality that continues to separate genders in careers. Even in 2022, there is still a stigma in professions like finance. Women are told to stick to what they know, afraid to branch out and try a career they may succeed in. 

The most popular belief explaining why men excel more in investing/trading than women is emotion. Women are stereotyped as the more emotional gender, which clouds their judgment, rendering them unable to make decisions, while men use logic and follow impulses in their trades. However, ex-Rothschild banker Emma Sinclair—with decades of experience in finance—claims women traders are less emotional and better in crisis because they know how to practice emotional regulation (Sinclair, 2012). 

Moreover, women possess additional traits that can help them meet and even exceed the expectations of a successful trader. Compared to men, women are more cautious making decisions. Therefore, the idea that women can’t trade because they are emotional tidal waves incapable of making a single choice is a foolish argument to back. Their tendency to move cautiously allows women to make better traders in that they are more consistent, measured, and methodical in their trades, unlike men, who cannot help but follow their gut impulses. According to the Forbes study on gender differences in stock trading, women are far more likely to do more extensive research on their future trades than men (Curry & Birken, 2021).

Additionally, women are seen as more patient and disciplined than men, making them even better students. Women are proven to be more consistent, willing to make mistakes, and learn from their mistakes. These traits exemplify the foundations of a successful trader. On the other hand, men have a more difficult time admitting when they are wrong and demonstrate a lower tolerance of patience in the learning process. Men are less likely to learn from their errors as quickly as women, slowing progress and growth. 

Another newfound factor that potentially contributes to womens’ success higher financial literacy and education. Capital.com conducted a study focusing on women (particularly in Asia) and found only 37% of male traders have a bachelor’s or master’s degree, compared to 50% of women. 

Unlike most male traders, women have more control over impulses. They have no problem saying no to stocks that may pique their interest. Now, many traders would argue impulsive risk-taking is essential as a trader, but others would attest that the best trades are often the ones you never make. Since women take fewer risks in trading, they tend to have smaller portfolios than men, meaning women are usually more suited to swing or retail trading (at least to start). 

Over the last decade—even though women make up only 13% of the trading community—female retail traders have consistently performed better at stock picking than their male counterparts. The Fidelity Investments 2021 Women and Investing Study found that out of the small pool of female traders, “women still outperform their male counterparts by 40 basis points or 0.04% on average” (Dore, 2021). While this percentage may seem low, factoring in how small the women trading population is compared to men, this is quite an accomplishment. 

Unfortunately, despite this success, most women still lack confidence. Only a small percentage of women told capital.com that they thought they were better investors compared to men. This lack of confidence is one of the biggest hurdles women continue to face on the road to success. 

While it’s clear women can make just as good or better traders than men, they have their drawbacks. Women traders use their strengths to gain an edge over men in long-term returns, yet still struggle with short-term investments. Unlike male traders, women find it challenging to make impulsive decisions, so instead, they make smaller low-risk investments and fight the urge when they feel that impulse. Women can be masters of emotional regulation when they want, but this low-risk strategy makes them less profitable in the long run. 

Men also have their strengths and weaknesses. While not all women are equipped with the time and money to become professional full-time day traders, the number of women traders is slowly increasing. Over the past year, there has been a 47% increase in women opening Fidelity accounts to enter the world of investing. Women have keen instincts and the skill to succeed in investing or trading, but only if they can gain the confidence needed to take action (Ruzika, 2022).

We’re breaking through old gender stereotype barriers as women continue to follow their passion for investing and trading. Everyone craves that sense of autonomy, pride, and adrenaline rush that the stock market evokes, so why should those feelings be limited to only men? While women surpassing men in the world of trading is extremely unlikely, at least in this generation, I think the progress seen over the last few decades speaks for itself. 

So, if you are a woman unsure about entering the world of trading and investing because it feels wrong, uncomfortable, or scary: stop thinking and do it. It’s your money, and you can take control of it anytime you want to. Who knows? You might even surprise yourself with how successful you can become once you decide to leap into the unknown and believe you’ll land on your feet. 

REFERENCES

https://www.ft.com/content/564bc758-1f45-4937-9406-6ad2d4ee48f7

https://www.businessinsider.com/why-women-makes-better-traders-than-men-2012-11

https://www.forbes.com/advisor/investing/woman-better-investors/

https://www.cnbc.com/2021/10/11/women-investors-are-still-outperforming-men-study-finds.html

https://capital.com/are-women-better-traders-than-men