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MadMarketScientist

What Traders’ Testosterone Tells Us About Markets

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Interesting article about traders egos ...

 

An unusual study of traders’ spit may offer a taste of the future in how we understand what drives markets -- and why they aren’t as stable and efficient as we might hope.

Several years ago, two neuroscientists undertook an experiment on the trading floor of a major investment bank in London. Over eight consecutive business days, at both 11 a.m. and 4 p.m., John Coates and Joe Herbert took samples of saliva from the mouths of 17 traders. With these samples, taken before and after the bulk of the day’s trading activity, they measured the rising and falling levels of a number of steroid hormones, including testosterone, adrenaline and cortisol.

 

The data revealed physiological changes not evident to the eye. To begin with, Coates and Herbert found that when traders did well and made money, they didn’t do it solely through cleverness and cerebral dexterity. Guts also played a role, although “testicles” would actually be more accurate. Traders performed better on days in which they registered higher morning levels of the hormone testosterone, which is mostly produced in the testes

.

 

http://www.bloomberg.com/news/2012-06-10/what-traders-testosterone-tells-us-about-markets.html

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Interesting article about traders egos ...

 

.

 

What Traders

 

Ok, well, we could certainly have a lot of fun with this and it would all be on topic, but i will leave the fun for others.

 

The interesting thing is that I think this flies in the face of the common belief that you need to be relaxed or in that zen, meditative state to succeed. Having high testosterone levels on a given day isn't what I would call being meditative.

 

Nice find.

 

MM

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its a god point MM.

lots of those floors are more market making and dealing rather than trading as we know it.

There is also the associated bravado of sitting in among 100 other sweaty, beer swilling males all trying to pretend to be top dog......I am competing against no one....so the environment is different for a start.

 

Plus while different people react differently on the outside, I wonder if we are all salivating hormones once in a trade, even when in a state of nirvana and outward calm, ready to explode when the missus gets home....yum, yum.

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Ok, well, we could certainly have a lot of fun with this and it would all be on topic, but i will leave the fun for others.

 

The interesting thing is that I think this flies in the face of the common belief that you need to be relaxed or in that zen, meditative state to succeed. Having high testosterone levels on a given day isn't what I would call being meditative.

Nice find.

MM

 

gm MM

 

Good question.

 

I would say that high testosterone levels and qi (chi) are one and the same.

If you improve your qi then testo will follow ...I don't necessarily believe that the reverse applies

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"Traders performed better on days in which they registered higher morning levels of the hormone testosterone, which is mostly produced in the testes "

 

Reminds me of Christopher Lee in 'The Man with the Golden Gun', and his little routine with Maud Adams . . .

 

On a side note, it's pretty sad that there are no longer any genuine open-outcry floors in London. The LME is the only thing remaining, and it's pretty genteel and sedate for the most part, with lots of twenty year olds in suits worth as much as my car.

 

I would be more interested in a study of how caffeine intake affects trader performance, of course.

 

BlueHorseshoe

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its a god point MM.

lots of those floors are more market making and dealing rather than trading as we know it.

There is also the associated bravado of sitting in among 100 other sweaty, beer swilling males all trying to pretend to be top dog......I am competing against no one....so the environment is different for a start.

 

Plus while different people react differently on the outside, I wonder if we are all salivating hormones once in a trade, even when in a state of nirvana and outward calm, ready to explode when the missus gets home....yum, yum.

 

Siuya,

 

you make not being married seem good. A different type of explosion occurs when you are married for almost 20 years and your wife comes home.

 

MM

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I think you need to deepen your research and particularly your interpretation. Testosternone levels coorelate to euphoric emotional states that generate a belief in the certainty that the good times are going to roll and where risk is minimized. While cortisol leads to mind sets springing forth from fear where perception becomes biased into believing with certainty that bad things are going to happen.

 

The article I read in The Economic magazine went on to say the researchers discovered that thinking was impaired both ways by the level of cortisol or testosterone. And that the traders did not even recognize that they were impaired. This, by the way, led to substantial losses.

 

In my experience euphoria leads to over trading and impulse trading where good risk management is thrown out the window in the hijacking of the mind. And it is particularly prevalent when the trader has actually become successful but does not stay vigilent in maintaining state of mind while trading. They get a high off winning and come to believe that it is them winning, rather than maintaining a particular state of mind in the performance of a series of trades. That euphoria leads to sabotage.

 

There needs to be a balanced chemistry, including testosterone, to build and maintain the mind that trades effectively.

 

Rande Howell

www.tradersstateofmind.com

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Ok, well, we could certainly have a lot of fun with this and it would all be on topic, but i will leave the fun for others.

 

The interesting thing is that I think this flies in the face of the common belief that you need to be relaxed or in that zen, meditative state to succeed. Having high testosterone levels on a given day isn't what I would call being meditative.

 

Nice find.

 

MM

 

 

NICE FIND......and like most things we find here and everywhere else....some weeks they hold up, others they dont. I can tell you as a guy who has used anabolic steroids and given lots of thought to the behavior of criminals and how it relates to test. I will say this, if people with higher levels of testosterone have a better week than others, its simply because aggressive trading is what is called for....for THAT week! I will also say that no one is asking how a traders testosterone gets higher on monday than on friday for example. Well, I believe, if you have 2 or 3 losing days in a row, your confidence thus your testosterone goes down, and if you had even one big day on friday, youll have all weekend to anticipate crushing the markets on monday and your testosterone should be a bit higher...but do we really win any more money? Sometimes yes....sometimes no. Dont go out and start injecting steroids yet. I did, and it isnt helping or hurting me either way over 4 months. But I injected for bodybuilding reasons. Id never put foreign hormones into my system on the hope I will trade better.

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On the note of testosterone and trading: a 2009 study says if your ring finger is LONGER than your index finger, you need to be a trader! If your ring finger’s length is LONGER than your index finger, trading is for you.

 

The findings are in the January 2009 issue of the Proceedings of the National Academy of Sciences.

 

In a study by John M. Coates:

 

“I used to run a trading desk on Wall Street. During that time I had noticed — during the dot-com bubble — that the traders were displaying almost clinical symptoms of mania. They were delusional, euphoric, had a diminished need for sleep, and displayed feelings of overconfidence. You couldn’t get them to shut up or put a normal sentence together. And I began to think that something physiological was going on.”

 

“So I left Wall Street, in large part to look into the hypothesis that testosterone was driving trader behavior during the bull market…

 

“We’re the first study to look at this, but the results are just unbelievably strong. Economics generally has overlooked the body. But this shows that hormones actually play a huge role in the market, that the body and mind work together and that the body influences economic life.”

 

The results reportedly found a high prenatal testosterone exposure when your fourth finger (ring finger) has a greater length than your second finger (index finger).

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NICE FIND......and like most things we find here and everywhere else....some weeks they hold up, others they dont. I can tell you as a guy who has used anabolic steroids and given lots of thought to the behavior of criminals and how it relates to test. I will say this, if people with higher levels of testosterone have a better week than others, its simply because aggressive trading is what is called for....for THAT week! I will also say that no one is asking how a traders testosterone gets higher on monday than on friday for example. Well, I believe, if you have 2 or 3 losing days in a row, your confidence thus your testosterone goes down, and if you had even one big day on friday, youll have all weekend to anticipate crushing the markets on monday and your testosterone should be a bit higher...but do we really win any more money? Sometimes yes....sometimes no. Dont go out and start injecting steroids yet. I did, and it isnt helping or hurting me either way over 4 months. But I injected for bodybuilding reasons. Id never put foreign hormones into my system on the hope I will trade better.

 

Careful, you'll grow nipples like a woman. Bitch nips I think they are called or were called.

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