Over the past decades, the financial industry has been primarily controlled and managed by men. Things are starting to change, and as gender equality is adopted, a greater proportion of women are joining and taking major roles in the financial world. Women are discovering more success than men in this male-dominated industry, which is not the norm. The difference in approach, goals, trading duration, and timeline between men and women likely causes this difference in success rates. This article looks at why women are better traders when compared to men.
A lot more men trade when compared to women investors, and here are a few reasons why women are more successful than men at trading.
Risk Management
There is more to trading than just choosing the right asset to trade or buy. Risk management with the help of Tradingview is usually the difference between a profitable trader and a struggling trader. Women tend to take less risk than men, reflecting their performance in the financial market. Risk-taking is a big part of trading, but high risk can greatly impair one’s trading performance. Women are preservative by nature, which makes them more inclined to prioritize capital preservation. Women also do not overtrade; they apply a slow approach, making them more consistent and their profits more stable.
Discipline
Every trader needs discipline to succeed, as trading requires trade setups to come to traders rather than traders chasing after trades. This is a solid, strong point for women, as they are unlikely to relinquish the fear of missing out and instead wait for a more favorable opportunity. Women rarely have the problem of overtrading, which is a huge problem for men because there are lots of opportunities in the financial market. Overtrading increases transaction costs, which directly increases losses on unsuccessful trades.
Emotional Control
This is one of the significant factors that makes women more successful than men at trading. Emotional control describes one’s ability to understand and manage emotions. The ability to keep emotions in check greatly reflects on trading performance, as there will be fewer impulse trades and revenge trading.
Regarding handling losses, women are more mentally stable than men. A female trader is more likely to reflect on her mistakes after taking a loss than make excuses. Men are more emotionally triggered, so losses are more unbearable to them.
Women are more in tune with their emotions than men, so they have better control over these emotions when compared to the average man. In cases where women are unsure, they seek counsel from others to make better-informed decisions.
Overconfidence
Overconfidence has ruined many traders by making them prone to bad investment decisions. Many men fall victim to this investment behavior, leading them to throw risk management out the window. This often results in financial losses. Women are more risk-averse and self-aware, which helps keep their bravado in check.
Perspective
Men and women tend to have different perspectives regarding trading. More women take long-term trading positions (e.g., holding stocks for years), while men often trade short-term and mid-term. Women focus more on building a solid investment portfolio than men, who are more concerned with quicker profits.
The long-term perspective implemented by most female traders is better suited to dealing with market fluctuations in the stock market. Women are long-term thinkers, which is reflected in their trading approach and investment goals.
Adaptability
To succeed in the financial market, you must be flexible and adaptable because market conditions change every time. Women tend to be very flexible, making them able to change their strategies to fit varying market conditions. They are open to learning something new at every opportunity.
Women are also more likely to seek out diverse sources of information to improve their trading strategy. They are very curious, so they ask questions until they are satisfied. The ability to gather information and adopt new methods makes them successful in unstable market conditions.
The financial industry is currently still dominated by men. Still, more women are entering this industry and achieving success, thus closing the gender investing gap. Their ability to adapt, emotional intelligence (EQ), patience, perspective, and risk tolerance make them good traders.
These characteristics are not exclusive to just women, as many successful male traders possess these qualities as well. Although there are gender differences, the ability to overcome obstacles when trading is not determined by gender but by one’s mindset, ability, and knowledge. Trading presents opportunities for women and men without gender discrimination. Although a trader might succumb to their learned behaviors when emotional — which could negatively impact their trading opportunities and results — men and women can learn to overcome their initial responses, instead relearning new behaviors that can help them.
