Why Trading is a good fit for women

One of the biggest mistakes – or perhaps flaws – I have seen with men over the years is the first question they often ask interns, regardless of gender.  “Do you like risk?”.  The amount of times I’ve heard this on a trading desk…

In my opinion, a better question to ask is “do you like making decisions?”  and to take it a step further, “do you like making educated decisions?”

Women by nature – and I’m sure there are plenty of studies out there – generally seem less risk averse than men.  That’s not necessarily a bad thing.  As we have been hearing for years, a thriving institution is one comprised of diverse employees – different backgrounds, educations, opinions, and approaches.  A good manager of a trading desk - or any revenue producing business, for that matter -  should seek to balance their earnings potential.  If every single trader swings for the fences every single day, sure each one may collectively hit the ball out of the park and produce a record year.  Yet, away from a few rare examples such as the massive opportunity set in 2009, there are usually hot sectors and those ebb and flow with overall market cycles.  Consider the trading environment in 2015 in the energy and commodities markets; that did not exist in financials.  Better strategy could be a team comprised of different styles which can complement each other in any or most market cycles.

Away from women’s basic approach to investing, I’d like to draw a parallel to one of my favorite pastimes – shopping.  Perhaps I got this from my mother, but I like to think it is just something most women possess.  Women are constantly doing market research and have an acute awareness of value.  Rarely do they make any purchase, regardless of how small or large, without having a very good sense of what that item costs at at least one other vendor in order to justify said purchase.  Now, perhaps I don’t always check the exact cost of Charmin Ultra Soft toilet paper when I’m about to click order on Amazon Prime.  But that’s partly due to previous research that has proven to me the price is fair.

Why is this relevant to trading?  Forget all the flashing computer screens with random code language (you will soon learn to “speak” Bloomberg!) and the salesperson who is shouting at you from four rows over.  At the end of the day, each time a trader chooses to buy or sell, he or she is making a decision.  But I argue that is not – or should not – be a raw, spontaneous decision.  It should be make quickly perhaps, but in a calculated manner ONLY after you have processed a series of checkmarks in your head.  “Do I already own this?  Am I actually short this?  What is our view on the credit?  Do I have a buyer of this?  Do I have a seller of this?  What are stocks doing?  What is my overall risk position, do I want to get longer?  Do I like the market, or perhaps do I want to shrink my risk? Does my peer at Goldman own these from a trade last week?  Did I see a buyer of these the other day and I don’t think they found the bonds?”

That may seem like quite the laundry list, but believe me, in time you fly through it.  It is a very similar process as to whether you buy that flight on United or Delta and whether you pay a little bit more for the flight out of LGA but it is worth it by the time you tack on the additional cab/Uber from JFK.

On the flip side, how many of you have been shopping with a boyfriend, brother, dad.  They are the worst shoppers!  They hate it and inevitably they wind up spending far more money than they should purely because they just want to go in one store and be done.  Nor they have failed to do any homework and check prices online (don’t even ask if they have coupons or wait until Friends & Family sales!).  This is especially true for Christmas shopping and birthdays/anniversaries/Valentines Day.  They wait until the last minute and then have to overpay or wind up purchasing something that will not go over well but at least they didn’t forget.  Side note – a female on a trading desk because an invaluable asset to the countless men who need gift suggestions.  One colleague counted I think six engagement rings she consulted on over the years; I should have been charging money on the side.

Think about these flaws and how they translate to market behavior.  Men often let their egos get in the way, or they rush and make impulse decisions.  Do these always result in a poor choice?  Not necessarily, but I would argue that it leads to a challenge for a manager and over time will catch up with you.  How many of you have sat next to a guy in a classroom or at work who shakes his leg?  Traders tend to be an impatient species; they want immediate gratification – a profit.  A slow day in the market can be a death trap for some traders.  They don’t know how to just sit on a position.  One of the most common phrases heard on a trading desk is “the best trade is often no trade”.  I would suggest women have an easier time doing this than men.

There are of course going to be exceptions to these generalizations.  These are merely my observations over the years, but given the push from leadership across financial services to hire and importantly, retain, women, I don’t think I’m pointing out any sociological breakthroughs.

But the key takeaway here is that we need to acknowledge that men and women have different approaches to not only trading, but business in general.  And to really make a change in terms of statistics and leadership, we can’t be afraid to tailor the marketing and story we tell to those we are trying to hire.  Its ok to not make everything equal just because girls can do anything boys can do.  They’re not going to do it if they aren’t appropriately enlightened.


Megan Philbin