Your Inner Super-Trader

Interested in improving your trading acumen?

I came across a recent study by British researchers that indicated that higher amounts of testosterone in the morning was correlated with bigger returns at the end of the trading day. This study by John Coates, which appears in the Proceedings of the National Academy of Sciences, theorized that this super hormone can be related to extensive risk-taking in traders, which can lead to bad financial outcomes, if left unchecked. However, the research also seems to indicate that higher levels of testosterone may make a trader feel very confident, inspired and consequently, take more risks, which can be associated with greater returns at the closing bell. The study also examined cortisol levels of the participants, as it has a tendency to increase during periods of prolonged stress or market volatility .

The Study

To briefly describe the researchers' methodology, they used a private screen-based trading floor in London and took saliva samples from 17 male options traders before their trading day began to assess pre-trading levels and then again at the conclusion of their session. The assessment was conducted over the course of eight days when market-moving reports were released. As outcome measures, the researchers looked at the books of each trader and compared their performance and market volatility with their hormone levels.

Testosterone is our bodies' own natural anabolic steroid. For traders, testosterone may serve as the competitive drive and fire that allows them to take larger monetary risks and make quick decisions. This investigation showed that testosterone levels for top-performing traders were highly elevated, but only in anticipation of profit, not in reaction to a big day.