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Financial markets have traditionally been male-dominated, but in the last 50 years or so, the number of women in trading has risen. This change has inspired academic research into the fundamental differences between how men and women trade. After all, financial behaviours are influenced by the social and psychological issues of wider society, as well as by economic factors.
Learning how different societal, psychological and economic pressures influence traders can help market participants of all genders make considered and informed trading decisions. With that in mind, let’s look at some of the major studies on the role of gender in trading and explore some of the researchers’ key findings.
We start with a seminal paper in this field of research, titled ‘Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment’ by University of California, Davis, and University of California, Berkeley, academics Brad Barber and Terrance Odean. First published in 1998, the paper describes their study of 35,000 accounts at a large discount brokerage company.
The researchers determined that men traded with a 45% higher frequency than women but with 2.65% fewer net returns per annum. They attributed this higher-frequency trading pattern to overconfidence. A stronger belief in market assessments could, according to the report’s authors, cause increased trading activity1, and overconfidence in knowledge and ability could lead to impulsively taking greater risks without looking at the bigger picture.
Conversely, the women featured in the study invested less frequently and held positions for longer, typically creating greater financial returns. Generally, they didn’t take sub-optimal or high-risk setups as often as the men did, so typically had higher winning percentages1, the study found.
This statistical difference could stem from various social factors, including the gender pay gap leaving women with less income to risk in trading2, a lack of financial agency enforced by archaic gender roles, or a lack of access to resources or education about investment3 caused by community gatekeeping, according to the authors of various studies.
Barber and Odean’s report is now more than a quarter of a century old. For some modern readers, it may reflect the dynamics of a society that no longer exists. But for others, its insights into trading psychology may still resonate today.
A study from US investment advisor Vanguard in 2020 found that women trade less frequently than men during periods of high market volatility, while men are more likely to panic and sell positions when the market moves against them. According to this study, men are more likely to lock in losses, while women are more likely to hold and give markets a chance to recover4.
Trade frequency isn’t the only way male and female traders differ; their risk appetites may also diverge. In 2015, Catherine Eckel and Sascha Fullbrunn conducted an asset market experiment which found that male-dominated markets generated bigger speculative bubbles than female-dominated ones5. The researchers conclude that “increasing the proportion of women traders might have a dampening effect on the likelihood and magnitude of bubbles”5.
Men are considered by some researchers to be more competitive, which according to Eckel and Fullbrunn’s study could impact their propensity to form speculative bubbles5, whereas women might avoid getting caught up in the adrenaline rush of the moment and focus on their eventual spending goals.
Conserving capital is essential in trading, and the available data from the studies cited above suggest that women tend to be more risk-averse than men, trading less often and pursuing more cautious strategies. A 2008 study by the US-based academics Xin He, J. Jeffrey Inman and Vikas Mittal on the role of gender in financial risk-taking and ‘issue capability’ (the extent to which someone feels like they have the resources or skills to resolve an issue) supports the notion that women are more risk-averse than men. Using data from the US television show Jeopardy!, the researchers found that “men are sensitive to issue capability in decisions that are driven by the achievement of gain (eg, investment decisions), whereas women are sensitive to issue capability in decisions that are driven by the prevention of losses (eg, insurance decisions)”6.
Returning to Eckel and Fullbrunn’s 2015 paper, the authors noted that empirical studies of women in financial markets suggest “[professional] female traders reach their positions only at the end of a lengthy selection process”5. This can be a double-edged sword, however, as being too conservative can result in lower returns. An overly cautious approach could also contribute to a herding bias, creating a tendency to follow the consensus that could backfire if that consensus proves faulty.7
While the various studies explored in this article examined differences in the way that men and women tend to trade, there are messages to take from their findings that apply to traders of all genders. It’s important for traders to consider the ways that social and economic pressures might impact their trading strategies, because reflecting on our thought processes can help us look beyond gender stereotypes and encourage more informed trading decisions.
The studies we’ve looked at in this article suggest that, no matter your gender, it may be wise to place fewer and less risky trades, to avoid blindly following trends, to take time to consider your approach and to formulate a trading plan that you stick to. If you want to explore trading strategies in more depth or consolidate your understanding of the markets, our learn page has plenty of resources to help.
• Geraldine Weiss was one of the first women to come to prominence in finance through her “Investment Quality Trends” newsletter, which she co-founded in 1966. Nicknamed “The Dividend Detective” for her unconventional value investment style, Weiss’ newsletter recommendations consistently outperformed the market for over 30 years.
• Muriel Siebert was the first woman to become a member of the New York Stock Exchange (NYSE) in 1967, and the first woman to head one of the NYSE’s member firms with the eponymous Muriel Siebert & Company. An outspoken advocate for women and minorities in finance, Siebert sat on the boards of several philanthropies.
• Abby Joseph is a former Goldman Sachs strategist, who accurately predicted the 1990s bull market and was named Institutional Investor’s top strategist in 1998 and 1999. She now teaches at Columbia Business School and has appeared on Barron’s 100 Most Influential Women in Finance list every year since its inception.
• Abigail Johnson is the CEO and president of Fidelity Investments and one of the world’s wealthiest women, with a net worth of around $38.1bn as of February 2025. She has ranked in Forbes’ World’s 100 Most Powerful Women top 10 since 2017 and has been Massachusetts’ richest person since 2015.
• Cathie Wood is the founder, CEO and CIO of investment management firm Ark Invest, which manages several ETFs with a focus on disruptive technology. In 2021, she was selected for the inaugural Forbes “50 Over 50” list.
• Helene Meisler writes the Top Stocks article and a daily technical analysis column for Real Money. She previously worked as a market technician at banks including Goldman Sachs (where she was hired as the company’s first technical analyst in 1989) and Cowen & Co, and she has over 40 years of market experience.
• Mish Schneider was one of the first female floor traders on the New York Commodities Exchanges and is currently the chief strategist and the director of trading education and research at MarketGauge. Her award-winning book, Plant Your Money Tree: A Guide to Growing Your Wealth, was published in 2019.
• Mellody Hobson became the first African American woman to chair an S&P 500 company in 2021 when she became chair of Starbucks. She is currently the co-CEO and president of Ariel Investments, one of the largest African American-owned money management and mutual fund companies in the US.
• Kathy Lien began her Wall Street career at the age of 18 on the forex trading desk at JPMorgan Chase. She currently works as the managing director of forex strategy at BK Asset Management, an arm of BKForex Advisors – a company she co-founded in 2007.
References
1. papers.ssrn.com/sol3/papers.cfm?abstract_id=139415
2. www.researchgate.net/publication/277313389_Gender_Differences_in_Investment_Preferences
3. www.researchgate.net/publication/268341254
4. www.ft.com/content/564bc758-1f45-4937-9406-6ad2d4ee48f7
5. www.aeaweb.org/articles?id=10.1257/aer.20130683
6. www.jstor.org/stable/pdf/30162544.pdf
7. papers.ssrn.com/sol3/papers.cfm?abstract_id=3910478
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CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.
