Article

What Traders Can Learn From Women

One fascinating realization I have come across during my years as a private trading coach and instructor is how different female and male traders can approach, analyze and trade the markets. Without offering outrageous generalizations, it has been my experience that women possess a particularly logical mindset that can give them a substantial advantage in market speculating. Simply, the trading method I developed and use quantifies the supply/demand and human behavior relationship that ultimately determines price in any market. It is based on a very objective and mechanical set of criteria. In other words, the goal is to learn the method and then simply follow the rules. The female mind has a much easier time doing this than the male mind. Here is an example of how this works.

I recommended a trading idea to buy AMD at a certain price based on anticipatory analysis. One of my female students took the trade and did well with it, while a male client saw the trade but did not enter it. I had discussions with the two of them, and the conversations were truly fascinating ? how could two human set of eyes look at the exact same chart, be told exactly what to do, and yet, treat the trading opportunity so very differently? For privacy purposes, we’ll call them Lucy Logic and Eddy Emotion. So, here’s the scenario: AMD had been declining to an area of support (demand) from where it had recently rallied. Eddy quickly asked me what I thought of the opportunity, and Lucy did not. Eddy then asked if I thought the support (demand) level would hold and produce a reversal, or would prices decline through it? Lucy would never consider asking that question with any trading opportunity because she knows it’s a waste of time trying to predict the future. Eddy doesn’t feel the same way. But let’s face it ? No one on earth knows for sure if the support will hold. All we can do is properly assess the odds and risk. If the odds are stacked in our favor and the risk is acceptable, we take the trade. When the trade was nearing our entry level, Eddy abandoned objective thought and gave into emotions that still control his decision-making process today. Lucy remained logical and objective. Instead of worrying about what may or may not happen at support (over which no one has control), she explained to me why a high-odds/low-risk trading opportunity was at hand. She said that sellers were now selling after a multi-day decline and into an area of support (demand), exactly where the consistently profitable trader would be buying, not selling. When her entry price was reached, she took the trade with a low-risk stop in place and an objective target identified. She ended up profiting nicely on the trade. Eddy never entered.

How can we all benefit from this information? It is clear to me that females in general don’t worry all that much about things that are not in their control, and this allows them to naturally focus on the objective information, which is key in successful trading. In trading, it is the objective and logical mindset that gets paid from the subjective emotional mindset. I have found that the difference between mindsets is most evident at a specific time. When a trading opportunity arises and it is time to take action, the female mindset tends naturally to execute the trade that has been planned out. At the same precise time, the male mindset tends to drift to subjective and emotional thought, which can lead to trouble. It appears that, again generally, the female mind has the naturally logical mindset needed to understand the material quickly, whereas the male mindset has difficulty keeping things simple, naturally trying to complicate the process. An example would be to constantly add subjective indicators and oscillators that can lead to trouble for any trader. What validated my thoughts on this topic are what my female clients and other successful male traders out there have in common. Each of them share two common traits. First, they realize the power of human emotion and that a trading plan absolutely must be followed. Second, the successful male clients I have worked with have the ability to not let subjective information enter into their brains. It is almost as if they have a special filtering process going on when they read trading books, take seminars and courses. In other words, successful male traders succeed with tools a female brain naturally possesses.

From my experience, men tend to be focused on trying to predict the future whereas a woman uses simple logic to consistently make the correct choice. They have the natural ability to keep things objective, simple and logical. The man tends to have trouble in these areas, which can make trading for him more difficult than it has to be. This is no different than how men and women make choices in other parts of life outside of trading. Though trading is still a career dominated by men, I would expect this to change in the near future for a few reasons. First, the barrier to entry is not what it was years ago. Second, from my experience, the female mindset is likely to last longer in a trading career than a male mindset, as a woman’s mindset is much more suited for the challenging task of consistently profitable trading.

Sam brings over 15 years experience of equities and futures trading which began when he was on the floor of the Chicago Mercantile Exchange. He has traded equities, futures, interest rate markets, forex, options, and commodities for his personal interests for years and has educated hundreds of traders and investors through seminars and daily advisory services both domestically and internationally. Sam has been involved in the markets since 1991 both on and off the floor of the Chicago Mercantile Exchange. He has served as the Director of Technical Research for two trading firms and regularly contributes articles to industry publications. Sam is known for his trading, technical research, and educational guidance.Points of interest:• Chicago Mercantile Exchange Floor• Author of Market Advisory Letters• Fund Manager/CTA• Speaker to Investment Groups, Universities, and Private Seminars• Contributing Author for Stocks, Futures, and Options Magazine, Active Trader Magazine, and Futures Magazine• Trading and Investment Conference Speaker

0007

Well-known member
Jun 19, 2005
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#4
I can't take any article that claims women have a logical mindset seriously.
Have to disagree. You may be right in the case of Essex-girl (and I don't know what proportion of women come into that category), but the ladies can be very logical (doctors, scientists, lawyers, academics, aviators) and one big advantage they have over us blokes is that they find it easier to admit when they are wrong.
 
Nov 10, 2006
97
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#5
"It is clear to me that females in general don't worry all that much about things that are not in their control"...

Most women I know worry about everything that's out of their control !
 

BSD

Well-known member
Feb 8, 2006
3,820
984
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#6
I'd say quite often women are wiser than men, as women are more often right-brainers than not.

Right-brainers are more results oriented than more process oriented left-brainers.

Applied to trading women are in this to make money, while many men prefer proving themselves and their clever analysis right.

Most market participants are losers, and most participants are men.

Read through many boards and it's not hard to see that most men are chasing after a holy grail, after a system that is 99% right.

Correlation, anyone.

;)
 
Likes: gamma

Adamus

Well-known member
Mar 25, 2008
1,898
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#7
Most market participants are losers, and most participants are men.
so the sample is probably too small (of women and of winners)

I don't know any women speculators.

Was there more than one in Market Wizards?
 

arabianights

Well-known member
Jan 9, 2007
6,725
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#9
I'm also skeptical about the claim most market participants are losers. That is certainly very unlikely to be the case if one takes the winners' clip size into account and remove hedgers from the equation.
 
Likes: Joey25

BSD

Well-known member
Feb 8, 2006
3,820
984
123
#10
Well there are some studies.

But just look around boards, hehe.

"An analysis of the profiles and motivations of habitual commodity speculators


W. Bruce Canoles 1, Sarahelen Thompson 2, Scott Irwin 2, Virginia Grace France 3 *
1Merrill Lynch, Meridian, Mississippi
2Department of Agricultural and Consumer Economics, University of Illinois, Urbana-Champaign, IL 61820
3Department of Finance, College of Commerce and Business Administration, University of Illinois at Urbana-Champaign, 340 Commerce West Building, MC-706, 1206 South Sixth Street, Champaign, IL 61820-6271
*Correspondence to Virginia Grace France, Department of Finance, College of Commerce and Business Administration, University of Illinois at Urbana-Champaign, 340 Commerce West Building, MC-706, 1206 South Sixth Street, Champaign, IL 61820-6271


ABSTRACT

The focus of this study is the habitual speculator in commodity futures markets.

The speculator's activity broadens a market, creates essential liquidity, and performs an irreplaceable pricing function. Working knowledge of the profiles and motivations of habitual speculators is essential to both market theorists and policy makers.

Responses to a 73-question survey were collected directly from retail commodity brokers with offices in Alabama.

Each questionnaire recorded information on an individual commodity client who had traded for an extended period of time.

The typical trader studied is a married, white male, age 52. He is affluent and well educated.

He is a self-employed business owner who can recover from financial setbacks. He is a politically right-wing conservative involved in the political process.

He assumes a good deal of risk in most phases of his life. He is both an aggressive investor and an active gambler.

This trader does not consider preservation of his commodity capital to be a very high trading priority.

As a result, he rarely uses stop loss orders.

He wins more frequently than he loses (over 51% of the time) but is an overall net loser in dollar terms.

In spite of recurring trading losses, he has never made any substantial change in his basic trading style.

To this trader, whether he won or lost on a particular trade is more important than the size of the win or loss.

Thus he consistently cuts his profits short while letting his losses run.

He also worries more about missing a move in the market by being on the sidelines than about losing by being on the wrong side of a market move; that is, being in the action is more important than the financial consequences.

Participating brokers confirmed that for the majority of the speculators studied, the primary motivation for continuous trading is the recreational utility derived largely from having a market position.

© 1998 John Wiley & Sons, Inc. Jrl Fut Mark 18:765-801, 1998"


LINK:
Wiley InterScience :: Session Cookies

This the part that is SOOO typical of board losers posing as successful wannabes waffling on about hit rates:

"He wins more frequently than he loses (over 51% of the time) but is an overall net loser in dollar terms.

To this trader, whether he won or lost on a particular trade is more important than the size of the win or loss.

Thus he consistently cuts his profits short while letting his losses run."



:LOL::LOL::LOL: