The 8th of March is International Women’s Day. The perfect opportunity to talk about why women are a great asset to the finance and investment industry. Even though the industry is still dominated by men, there has been an improvement in gender balance in recent years. But why are women still hesitant to enter the industry? What makes them good traders? Research and four female experts shed their light on the topic.
The increase of female vs male traders
Research from The Modern Trader shows that almost one in five (19% to be exact) of all the world’s online traders were female in 2018. In 2015, City Index revealed that 46%(!) more women opened trading accounts compared to the previous year. Furthermore, the number of female traders has gone up by 1,434% each year since 2001. Good progress!
Even though the number of women in the industry has gone up quite a bit, the industry is still mainly populated by men.
“I began to invest a number of years ago during a journey to pay off our debt, and whilst learning about paying off debt and money management I realised investing was one skill I‘d benefit from for our future long term financial success.” – Jennifer Kempson – YouTuber/Podcaster/Financial Educator
Struggles of entering the finance industry as a woman
Regardless of being perfectly capable, entering an industry that is dominated by men comes with struggles and prejudices. Even the most successful female traders have a harder time to be taken seriously and having a voice in the finance industry.
Aleksandra Mihajlovska has provided some useful tips on how to successfully enter a male-dominated industry in this Forbes article. Some of her tips include to find other women to support you, keep an eye on female rolemodels, to seek out male allies and to focus on the positives.
“I was afraid of how people around me will react to my decision to involve in investing. Especially because I am a young woman and investing is not something that the general public thinks of as a woman’s interest. That is why I decided not to tell anyone at first.” – Neža Molk – Master’s Student of Biotechnology
Why female psychology is a benefit to the finance industry
While women and men are capable of developing the same skills, women’s natural psychological differences have proven a great asset in the industry.
Research shows that women are more risk-averse than men are. Risk management, however, is a huge part of minimizing losses. It is also a misconception that women don’t take risks. Many female traders go for social trading, spread betting and binary options, which are considered risky strategies.
Women are also viewed to be more emotional than men. That being said, women make very calculated trades and keep a tight hold on profits.
Furthermore, it is believed that women take losses harder than men. However, women are likely to lick their wounds better than men because their egos aren’t as big. Statistically, women are less likely to steer away from their chosen plan while men are more likely to trade impulsively when things go sideways. Research even showed that women’s portfolio’s fared better than men’s by 4 to 6% during the 2007/2008 crisis.
“Female traders are often more conservative and don’t take excessive risks. Of course, I’m not making assumptions since everyone is different. Male traders tend to take more risks – there are pros and cons of both sides.” – Karen Foo – Trader/Investor/International speaker/Author
Female trading strategies
Women are most active in forex, followed by day trading and CFD trading. When it comes to trading, they prefer other strategies than men.
Research shows that women were more likely to invest when markets were declining. This is a good strategy on the longer term, resulting in a return of 43% on individual stock. Men tend to buy and sell more quickly. Furthermore, females trade less frequently than men. Studies have shown that this leads to a 2,65% reduction in net returns for men, and 1.76% for women.
“Invest in the companies that will be profitable in the next 5-7 years that I know and understand. Stick with your strategy. Do not be swayed by Fear and Greed.” – Sharon Connolly – Financial Services Change Manager
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