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Why Women Make Better Traders

by

I'm throwing down the gauntlet and entering the trading ring. Ladies and gentlemen I would like to introduce the ultimate trader champion of the world...it is SHE.

Yes you read it correctly, move over guys because I'm going to explain why women make better traders than men.

1. The Biggest Fish
Men like to show off and often measure their worth against how others are doing. The prized fish caught on a men's fishing trip is a perfect analogy. He wants a picture with the biggest fish he caught to display proudly on his desk to recant to his buddies about his big catch. Whether he is talking about who caught the biggest fish, who made the most money, or how many computer screens they use to trade, a man's ego gets in the way of his potential. Almost daily I hear or read about male traders biggest or best trades on twitter, websites or blogs. Men seem to validate themselves as traders by posting his one big trade in the same way that men talk about the biggest fish they caught.

Sure a little competition can help motivate anyone male or female, but men are less likely to be able to keep this competitive nature in check. When he becomes more focused on trading better than the next guy, he isn't focusing his energy on taking profits from the market.

2. Feeding His Ego
A man's ego can also seriously hurt his trading account. While men may have one big trade, they may have many other big losing trades that they don't publicise, these losses can deplete his account. Big winning trades are great, but big losing days hurt and can deplete your account quickly. Trading with consistent profits will create a sustainable life in trading.

Women in my opinion are less likely to focus on winning big with one trade. She is able to keep her ego in check and make profitable trades consistently according to her trading plan. She isn't worried about making more money than the next guy; she remains focused on her own profits, plan and trading accounts. She knows she can make money and she keeps her energy focused where it counts.

3. She Listens
As traders, we all need to realise that the market doesn't listen to individual traders. Successful traders understand how to be patient instead of trying to bully the market to move in their favour. Anyone can learn set ups and market analysis, but waiting for them to set up requires the ability to patiently listen to the markets. Luckily for me, women are more patient and far better listeners than men. She is much more likely to wait and watch for the markets to set up according to the rules of her trading plan.

Listening to the market will keep her from getting in a trade too early. Sorry guys, but no matter how loud you yell at the computer screen when the markets move against you, the markets won't hear you telling it to move in your favour. Come on guys, admit it, you know you've yelled at the screen when you got in a bad trade.

4. Getting Help When You Get Lost
To support this theory I need only remind you of what happens when a man and a woman get lost while driving to a new destination. Typically, a woman will stop and ask for directions while a man will continue driving in circles hoping to figure out where to go on his own. She realises that asking for help is not a sign of weakness.

These behavioural differences also translate in to how a woman and man react when they get lost trading (metaphorically speaking). If she gets in to a losing streak, she is more likely to ask for help from a trusted trader to refine her trading plan. A man will try and figure it out on his own which can lead to even bigger loses or worse "hope and pray" trades.
Managing losing trades is what keeps traders trading long term. Successful traders realise that not every trade is going to work but they know how to manage a loss responsibly. In my opinion, women are more likely to ask questions and get help when they need it. As she refines her trading strategy she sets herself up to be a successful trader for the long term.

5. I'm Not Alone
You need only Google using these keywords "why women make better traders" to find many other experts and large financial publishers writing about the same thing. I am not alone.

So I would like to propose a toast, please join me in raising a glass to women in the markets.
Congratulations ladies, you can indeed trade, and in fact, you are the better trader.

[Editor's Note: What do you think? What traits might men have that make them better traders? Or, do you agree with our author? Let us know here!]

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27 Comments

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edjaworska1: RT @markrose: Women Make Better Traders @shecantrade http://t.co/LagdHfk5kc via @TraderPlanet
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edjaworska1: Women Make Better Traders http://t.co/uOJ4W0iELp via @TraderPlanet
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Visitor - Vince Stanzione: Great article and confirms what I have also found and I have been around trading for many years, see: http://www.bullbearings.co.uk/traders.views.php?gid=2&id=110 also Daily Telegraph http://www.telegraph.co.uk/women/womens-business/9690599/Boys-will-be-boys-Why-women-make-better-traders-than-men.html
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Visitor - Henry:

I agree with the article. Women tend to have more patience and less ego. They also take less risk. So overall, more women would succeed in trading than men, if they were interested. Most women I know are far too smart to get involved in such a stressful pursuit as trading. They instead have made their fortune in property, which is less risky and requires less effort.

It's a bit like cooking. Overall, women are better cooks then men. But the truly great chefs tend to be men. That's because men tend to take bigger risks and aim high. To do that and come out on top, you have to be exceptionally gifted, determined and intelligent, which the average person (man or woman) by definition is not.
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Visitor - Lou: What are you, 12?
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Visitor - Boris: Sorry, I couldn't finish reading the article till the end. I stopped at point 3. She listens - does he not listen? What's yelling got to do with anything?! How with that argument you prove anything? Does a woman never get in early? I believe women are more short-tempered, judgemental and jumping to conclusions without evaluating all points first much faster than guys. It is a matter of training your patience. A spy or a commando is easily trained to hide in a box or sit in a bush, whatever. I once saw a fox in a forrest not being able to wait for the right moment to try to escape from a cover. (Probably, it was a male fox.) Can a male trader not be trained to "sit on his hands"? That's nonsense. To be fair, I do admit that it is sometimes beyond me to finish waiting for a proper setup, so I get in early, but who says that women never do such mistakes? And I also confess that having trained myself too much, I often miss setups. But I also saw female traders enter prematurely - maybe, they were on steroids. Your point - guys are useless at listening and waiting. I don't know, but I am a good listner. You also prove nothing with the fish example - point 1. Where is the logic? I began trading with huge wins, now I am trying to catch smaller profits, and my success has deteriorated, so I am trying to re-learn my "bad" trait of catching "a big fish". And above all, what's the point of comparing? We are here for success, right? There is an absolute truth about trading, and not comparative. If, suppose, guys are better fence climbers, then they should be the ones who climb the fences. If women are better traders, then, I guess your reasoning must go, women should trade and guys should kick-and-box each other. If there is anything we, guys, can learn from women, then it is a question of learning from good female traders, not successfull bargain hunters or chit-chatters. It's a totally absurd article, sexually disciminative and indiscriminate between good traders and bad, and a waste of time. I see no purpose of it nor truth.
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Visitor - Laurie Itkin, The Options Lady: I'm responding to Kate. Kate, I just made a presentation yesterday at the Traders Expo/Money Show on covered calls. Sure enough, out of the 70 attendees perhaps 8 were women. I have launched The Options Lady to inspire, educate and empower women to become successful self-directed investors. I will be happy if I can play in role in getting the next generation of women to become interested in options trading.
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Visitor - Coridon: I am not so sexist in what makes a successful trader. I am a Captain of a very successful offshore fishing boat and do catch some nice fish. I release more than I keep. The pleasure and reward of being on the ocean is all I need. Have I ever caught a big one, you bet well over 800 pounds. This would be the first time bringing that up in public and never did take a picture (why it was just a day on the ocean to enjoy). Trading and fishing offshore have many of the same rules. You better have good equipment, a good plan, a load of patients, have a safety plan, enough funds, the proper experience and the number one trait trust in yourself with one rule "I AM RESPONSIBLE". None of the captains or boats I fish with have that male image that you portray and none of the male traders I personally know have that image either. What I do agree with is that women are better traders. My observations - woman are better shoppers looking for sales and the best deals, so from childhood to womanhood a woman is being trained to be a good trader. A little different social upbringing for most guys. My response is not to be critical but just a different point of view from my observations. To say women are more patient than men or less competitive is completely incorrect. Enjoyed your article but doesn't reflect the results of successful traders but may reflect the results of a novice trader with a big checkbook.
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Visitor - Lou: undefined
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Visitor - TraderMommy: I wrote this blog post in August http://www.rantfinance.com/2012/08/13/hey-ladies-thoughts-on-female-traders/ about female traders you may find interesting, as well.
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RachelHunter: I'm reviewing my recent trading today & I'm very happy. :-) Women do make great traders.

I'm on the fence as to whether women are better than men. We've both got the potential to be great traders. The proof is in your profit & loss statement rather than gender stereotypes.

Happy trading everyone.
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Visitor - Ernie (Ernmor Trap): I aggree with the above. I must be part Female, I wait days if I have to, to find the Trading Pattern, I'm Looking for. I hand Drew ' Intra day Charts' for 10 years, 1974 to 1984. When the Computer came a long, it was like having an Army working for me. I would draw 3,6 and 9 minute charts, of any Symbol, to be properly 'mathed' to the ' Market Energy' at any time of the day. I learned a lot from that work. Rules were set up, so that I didn't have to rub out ' Trend Lines ' and reDraw them. This led to my discovery of ' Traps or Reversals ' ! The other thing I learned, was that the Industry, is still in the 'Auto Scale Mode' after all these years ! While I was yanked out of School in my grade 9 year,
I learned that, if you don't have a consistant meaningful scale, you fail to see clearly, ' Money Management Grids' and Trading Patterns, that ' Hide ', in the ever changing Chart Distortions. Having Chart bars, too tight, is a great way to Hide good trading pattern ' Tells '... As when I was a Broker and drawing charts, , the Clients in the office, would often say " Why don't you enlarge the scale, on a quiet day ? I said, " I need to know when the market is sleeping, as opposed to an active day." Monthly, Weekly, Daily and Intraday Charts are all scaled relative to each other. This lets me see a Particular Pattern, in any Time Frame easily. (Hint Moving Averages, are SET THE SAME, in EVERY TIME FRAME ...)
-We don't need to disgise our Chart Patterns, by not practicing 'Consistant Chart Construction'.


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KateStalter: Great points, Sarah -- and a great collection of comments here. I was a trading instructor and market writer with Investor's Business Daily for a decade. The women whom we coached frequently were better able to follow the basic trading rules without trying to "improve" the system by overlaying additional indicators and oscillators. Often those extra layers would mess up the system by adding conflicting data.

But this made me wonder something else: There are a few high-profile women in the trading world, but why is it still such an overwhelmingly male pursuit? Ater leaving IBD, I worked with MoneyShow for a while, and the attendees who were interested in learning trading methods were mostly male. What's up with that?
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AnnMinnium: Wow...look at all these comments! They are the sign of a great article. As a personal financial planner I have noticed similar personality characteristics between man and women when I do risk tolerance analyses. The men are usually the cowboys...bigger risk takers. However, they are also less likely to be too conservative. Sometimes the risk you don't take is bigger than the one you do take. This is especially true in the current market environment. By being afraid of taking market risk many women can't even keep up with inflation. I think couples often have the best of both worlds.
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RyanM: What has been described here are personality traits, that's why psychology is 95% of this game. Without a well thought out trading plan along with discipline, patience and focus you are destined to fail as a consistently profitable trader, regardless of gender.

Responding to point #4, I didn't improve and become a consistent trader until I stopped seeking help from others and learned on my own, from my own mistakes. You have to do the work yourself, there are no shortcuts in this business.
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Visitor - Ben: Certain attributes can be a double edged sword. The conservatism you speak of that most women practice comes with great opportunity cost. Most women traders will nevertake big enough risks (even when the odds are in their favour) to reach the real goal of being wealthy and not having to slave away in the markets every day for the rest of our lives.
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Visitor - Andrew Menaker PhD: As a trader and coach, I've been around a lot of traders over the years, and of the female traders that ask for me for help, the biggest issue they want help with is holding winners longer. Men have that issue too, but just about every female trader I've talked to or worked with has cited this as a big issue.
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Darla: If you put the gender differences of this discussion aside, it results in this conclusion -- trading will always be a solitary occupation -- it doesn't lend itself to being "social". Traders, regardless of gender, typically don't want to share methods that make them profitable, nor does admitting failure come easily.

I personally believe that not sharing discoveries with others hinders personal and professional growth. This is one of the primary reasons that we developed TraderPlanet -- to inspire people to share ideas about trading with one another. So, our contributors, regardless of gender, are are all here and participating to help others.
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MariaRinehart: There are definitely differences between men and women. Many of us don't have a problem asking for directions. More importantly we are less likely to have a problem admitting when we fail (it is actually part of our social bonding), which then I think allows us to figure out what to do about it. Are we devoid of ego? No. Do we make the same common trading mistakes, I think so. I have, I have made all the one's listed on the various trading books. Perhaps, because it is socially acceptable for females to seek help does allow us to recognize and admit when we make the mistakes, and change our view in a more timely manner. Personally, I am a female INTJ, so while I will ask for help when I learning a new tool or where's the free-way. I do not ask for help making a decision. My decisions, my mistakes, my lesson learned.
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Visitor - Justin: There are so many other variables that go into this. As a general rule I don't think one is better than the other it really depends on the people involved. Ego vs. Emotion is pretty static but I think each person brings their own set of characteristics to the table.
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Visitor - Charles: Robots make the best traders
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Visitor - Julie: Overall, I think its a toss up. Whatever nature-based female advantages (put ego-aside, ask questions, follow directions) may be negated by our tendencies for self-doubt, emotional decision making and indecisiveness.
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AndrewThrasher: Nothing like a little gender stereotyping to start the afternoon!

You make some points, I'm not sure I can call them valid or good points just yet though. What many of the characteristics you describe are actually more prone to be done by novice traders, just a specific gender. Take out the gender-bias and re-titling your piece about the differences in professional and amateur traders and you'd be spot on! But to make broad generalizations about which gender stereotyping that's been form-fitted to describe a male trader is just not true nor is it realistic.

There's a reason some of the best traders in the world have names no one knows. They don't speak at events and they rarely do interviews. They don't boast on twitter and they just might ask for direction! They are traders first and foremost and working on their craft is what's important.

I don't think women are better traders than men but I don't think men are better traders than women either...it's about who puts in more work and has better focus. Mr (or Mrs) market doesn't care about our chromosomes.
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MariaRinehart: That is a very valid point. If we are on Twitter it is because we are still on our journey for one reason or another. For me, the goal is not to be recognized as a trader, but as an analyst for someone who could use my skills.
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BrianLund: I would never be foolish enough to comment on who are better traders, women or men, however I have written on the subject a bit. http://bclund.com/2012/03/05/calling-all-lady-traders/
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Catie: There was an article published in Forbes on this topic stating that women tend to be more patient and trade less frequently than men. Great article, Sarah!
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GregFirman: Great point's Andrew. I have many male amd female client's and one sex is not better than the other it is clearly the difference between professional and amateur traders and if given the proper direction either will be succesful
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About the Author

Sarah's new book How You Can Trade Like A Pro: Breaking into Options, Futures, Stock and ETF's is now available in stores and online.

Sarah typically trades weekly options and futures. She believes that anyone can learn to trade and wants to empower others at www.shecantrade.com. She applies her knowledge in education and adult learning theory to explain the trading world in a clear and concise manner. In her spare time she enjoys running, skiing and triathlons.

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