Thursday, April 17, 2008


Stereotype of the Day: The big swinging dick

Given the stereotype of the “big swinging dick” on the trading floor, it should be no surprise that a study linking trading and testosterone has attracted attention. —unattributed story in the Financial Times, "Calibrating cojones"

The wonder of it is that with a reputation like that, the traders aren't getting more attention. But truth be told, the stereotype of a trader is better summed up by "big prick."

Now we learn that everything we feared about placing women in positions of power is actually the problem we face in placing men in positions of power—

On volatile days the traders are flooded with cortisol, a stress hormone, while too much testosterone turns calculated risk-taking into recklessness.

One of the researchers, John Coates, himself once a Wall Street trader, comments that, contrary to macho stereotypes, these hormonal surges are masked by demeanours of icy calm. Alas, rational judgment is suspended nonetheless.

What we've so long admired as sang-froid turns out to be irrational behavior from a hormonal imbalance.

This is certainly not the first research to suggest that traders are sometimes irrational. It is not even the first study to investigate the physiology of traders: earlier researchers discovered that traders experienced “arousal” during moments of volatile trading. (It is with some relief that we discover that “arousal” refers to skin conductivity.)

I don't know why the author is relieved. Puritanism should have no place on the trading floor. We need a way to relieve these hormonal surges.

What may catch many people’s attention, then, is the speculation by Mr Coates that markets might be more stable if more traders were women....

The trading room that played host to this study had only four female traders out of 260, but if Mr Coates’s hunch is correct that will need to change. Managers could hire traders after holding blind trials of trading ability: it is possible that women, at lower risk of testosterone poisoning, might excel at such trials. Another bastion of masculinity, the world of professional US orchestras, unexpectedly found itself hiring women when blind auditions were introduced, so such a recruitment scheme is surely worth a try.

I would say that it is not only possible but probable that women would make the better traders.

But what if few women win such trials, or few have a taste for life on the trading floor? In that case, testosterone and cortisol must be drained from the system whenever they build to dangerous levels. Elevator music, fish tanks on desks, tai chi: all must be considered as vital tools for reducing stress.

Can we guess that the writer is male?

Castrating traders is another possibility, but it might discourage new recruits.1 In any case, these days that is a fate that most people are reserving for investment bankers.

This is why I read the Financial Times. They don't beat around the bush.

And one more point...

Concerning the study, I suspect the findings for day traders would equally apply to the majority of male politicians, not to mention Maggie Thatcher and Hillary Clinton. Of course to prove that contention we would need to draw some blood.

Related posts
Word of the Day: Greed (3/25/08)



1The possibility that castration would discourage recruits into the trading profession seems remote. After all, the castrati went under the knife merely to sing.'s encyclopedia informs us that—

In the 1720s and 1730s, at the height of the craze for these artificially-preserved voices, it has been estimated that upwards of 4000 boys were castrated annually in the service of art.

Of course aside from the service of art they did it for the money. They could be quite well paid as a chorister or opera singer, especially if they landed a position in, say, the Sistine Chapel. And surely a day trader can make a great deal more.

Listen to the voice of Alessandro Moreschi, the only castrato of whom we have recordings, singing Gounod's Ave Maria. With proper preparation, here's what today's traders might sound like—

I find it quite soothing. [back]

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