Taking Risks and Reaping Rewards

Natural Born Trader

Researchers at the University of Cambridge in England report that men with longer ring fingers, compared to their index finger, tended to be more successful in the frantic high-frequency trading in the London financial district.

The same ring-to-index finger ratio has previously been associated with success in competitive sports such as soccer and basketball, the researchers noted.

The length ratio between those two fingers is determined during the development of the fetus and the relatively longer ring finger indicates greater exposure to the male hormone androgen, the researchers noted.

Previous studies have found that such exposure can lead to increased confidence, risk preferences, search persistence, heightened vigilance and quickened reaction times.

In a separate study last year, it was reported that the hormone that drives male aggression also seemed able to boost short term success at finance.

(The researchers should check the finger ratio at Lehman, Bear Sterns, AIG, et. al. If their theory is right, it's got to be huge.)

What can we learn from this?

Most people realize that they are better at some things than others and if they are lucky, they are really good at something. So while the relationship to a finger length seems a strange indicator of anything, it's not surprising at all that hormones, a part of us that impacts behavior, that cause aggression lead to being good at competitive things like trading. They are natural born traders.

The aggression and attitude of the top traders isn't common in the overall population. At least that's my observation from my experience. They tend to be overwhelmingly confident and willing to take risks that make many people shudder to even think about it. The bravado that is off-putting to many allows them to overcome the fear that would envelop others.

Others think they have what it takes, but when they get in the game, they don't last. Some say it's the pressure, others say stress, but no matter the reason for quitting, could it be that nature just takes over? The successful ones overcome the situation through their naturally aggressive attitude of take no prisoners, kill or be killed.

So is success on the trading floor just a natural difference between people? This study would lead us to that conclusion.

Even if its wrong, it's probably wise before you apply for a position in the trading pits at the CBOT, to check your fingers.