There's a common concept that trading is a man's world.
This may have been the reality for a long time but not anymore. So now the concept has become a misconception.
But because women like to play it low-key, it's not widely known how many of them are trading and investing. A bit of research will reveal that there are top female traders who have not only made a name for themselves on the trading floor but also on the global stage.
What about Forex trading, in particular?
You'd be surprised to know that there's been a steady rise of women who trade currencies because a majority of them prefer to trade in the Forex market than other investment vehicles.
A 2018 report on The Modern Trader showed that the number of female Forex traders around the world reached 19%, most of whom are trading online in Asia. The same report showed that:
As you can see, the long-standing stereotype where trading is concerned is no more. And, given the profitability of Forex trading, there's likely to be an uptrend in data.
But why the popular assumption that traders are mostly men?
It all comes down to certain myths surrounding women and trading. Many believe or used to believe that:
Not when you look at the population of women in finance-related sectors, however.
Based on the gender occupational breakdown in the UK, there are more women than men working as finance officers, credit controllers, retail cashiers and check-out operators, bookkeepers, payroll managers and wages clerks, and pensions and insurance clerks and assistants. These figures show the opposite of this myth.
Most importantly, a good number of women (31%) in a relationship say they are the primary financial manager and decision-maker in the household. No one would assign this huge responsibility to someone perceived as bad with numbers, right?
This is why most of them are risk-averse and trade with caution, resulting in better risk management and higher profitability rates. The idea doesn't necessarily stop them from trading but to trade with care and take only reasonable risks. While there might be a few trading daredevils and gamblers, a majority of them trade smart.
Again, gender-based occupations say women are definitely interested in finance and related roles. As for trading, it's only due to the lack of representation that this misconception flourished. Given the increase of the female population in the Forex market, however, this myth is the opposite of today’s reality.
Besides, the internet has made it easier to learn about trading and to access support from other traders and trading communities. If there's one thing women are good at, it's acquiring and absorbing knowledge like a sponge. This brings us to another popular myth.
This may be the case before online connectivity became prevalent but not anymore. Anyone can access economic news online and other tools that can aid in fundamental analysis in Forex.
Moreover, there are plenty of free educational materials on currencies, including blogs and webinars. You can also follow Forex brokers on Facebook and other social networks to get regular updates on Forex trading.
It is a popular belief that women tend to panic and make irrational decisions during a crisis, resulting in disastrous outcomes.
A study conducted by German Comdirect Bank and the DAB, however, showed otherwise. This is because, during the 2007 and 2008 crises, women's portfolios fared better than men at 4% to 6% on average. This is based on over 500,000 samples.
The world may have changed significantly since then and several recessions have occurred but people often improve rather than regress.
Women often take a calculated approach when trading, so this myth is more than busted. Again, this might have something to do with the idea that most women tend to be emotional than logical in certain situations. Not in the market, however.
Their tendency to prepare for any project also means they do their research, seek information, and think twice before they enter the market.
If these myths are untrue, then women have the mindset that makes them great traders.
Not necessarily. But women have the behaviour and psychology that make them more successful at trading.
While both men and women struggle with self-discipline, most studies have shown that the female population has a better handle on it than men. Studies on how gender affects self-control and eating habits also revealed how women fare better in these aspects than men.
This means that women are more likely to follow trading rules and their strategies than their male counterparts. This provides a major advantage when trading in the foreign exchange market. If they have established money and risk management rules, they'll stick to them as well.
Most women don't have a problem recognising their lack of knowledge on certain topics. With this awareness, they then proceed to fill in the gap by doing research and taking steps to learn and practise. When they enter the market, they'll be more than prepared.
As previously mentioned, women take reasonable risks and tread on the market with care. Given their self-discipline to stick to their trading plan, most of their trades are calculated. So when they do earn a profit, they keep a tighter hold on it, saving money in the process.
Moreover, they're less likely to be driven by ego. This means they won't overtrade and blow their account when euphoria hits.
The ability to wait patiently has made women profit consistently. Rather than be swayed by false signals, they can enter trades with perfect timing. Coupled with their discipline to stick to their trading plan, they're likely to earn positive results.
Relying on gut instinct or instinctive feeling may go against the idea of studying the markets when trading, but women's intuition has always been legendary. This enables them to get a better feel of market signals.
Led by their instincts, they then refer to their logic and knowledge before entering a trade.
Because women have less of an ego, they have better control over their reaction to losses. They don't revenge trade or overtrade following a loss. They also look at their failures with an investigative rather than a defensive approach. This allows them to understand what went wrong and determine what they need to do to avoid doing the same mistake.
In similar situations, a man might consider their loss as a reflection of their capabilities as a trader and will fail to look at things objectively. This results in them taking an emotional response instead of an analytical one.
Women don't take unreasonable risks when trading. The probability of their loss is also minimised because they stick to their trading strategies. Moreover, they tend to prepare before they trade and learn tips on how to trade efficiently.
Moreover, women are better at doing more work almost simultaneously. It's not multitasking since the brain only focuses on one task at a time, but the female population has no problem analysing various charts while keeping an eye on indicator signals.
Learn more about How to Master the Right Mindset for Successful Trading
So, given all the information above, are you convinced that women make better traders than men?
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