Over the past decade, the participation of women in trading has continued to grow, reflecting broader trends in financial inclusion and technological accessibility. Although men still constitute a larger proportion of traders, many platforms report a steady rise in female clients. For instance, some trading providers have noted significant year-on-year growth in female registrations, driven by factors such as improved access to educational resources, targeted marketing, and the increasing availability of user-friendly trading apps.
The rise in female participation in spread betting and CFDs is a notable shift in a field traditionally dominated by men. Studies and industry insights reveal several reasons and trends behind this growth:
- Increase in Female Account Holders: Women now account for about 15% of spread betting and CFD trading accounts, with certain firms reporting even higher percentages. The growth is attributed to increased media coverage about personal finance and the accessibility of online trading platforms.
- Differences in Trading Behavior: Women tend to approach trading with more caution, thorough research, and long-term strategies. They are less likely to take excessive risks and more inclined to follow structured plans, resulting in generally better trading outcomes compared to their male counterparts.
- Studies Supporting Women’s Investment Skills: Research, such as studies by Merrill Lynch and Vanguard, shows that women are less likely to engage in impulsive or overconfident trading behaviors. For example, women were found to hold onto investments during crises rather than selling at low points, as many male investors did.
- Industry Trends and Adaptation: The spread betting industry is keen on tapping into the growing market of female traders. Some providers have noted a sharp increase in female clientele over recent years, reflecting a shift in marketing strategies and product offerings.
- Biological and Psychological Insights: Studies like those by John Coates explore hormonal and psychological differences, suggesting that women’s cautious approach and ability to avoid overconfidence may contribute to their trading success.
- Market Dynamics: Women traders are increasingly recognized for their resilience and discipline, with firms like IG Group and City Index acknowledging their growing impact in the trading landscape. Women are reported to outperform men in terms of risk management and overall profitability.
While there remains a gender disparity in trading, the trajectory shows that women are becoming a significant force in the trading world, challenging traditional norms and stereotypes. This trend is reshaping how financial trading platforms approach and engage with their clientele. Let me know if you’d like to dive deeper into any specific aspect of this trend!
Interestingly, market fluctuations, like those during the global financial crisis of 2008-2009, have highlighted gender-based differences in trading behavior. While male traders often adopt risk-heavy strategies, many women traders exhibit a more cautious approach, potentially making them less prone to the volatile risks associated with market downturns. This cautiousness, initially perceived as hesitancy, is now being re-evaluated as a strength in navigating uncertain markets.
Platforms have also observed shifts in how women approach trading, including an emphasis on research, long-term strategies, and disciplined risk management. These traits align with broader industry data suggesting women traders often achieve steadier outcomes compared to their male counterparts. As the trading landscape evolves, experts anticipate that gender disparities in participation will narrow, with women continuing to expand their presence and influence in the market.
As one market analyst at a leading broker remarked: Just over 20 years ago, the attendees at our seminars were 100 per cent male. But today there are no gender barriers. Online trading platforms have removed many of the barriers to entry into spread betting and this has meant that one of the fastest expanding areas in this industry is that of the female client. With online dealing there is no ‘old boy’s network’ to be concerned about and female clients do not need to worry about prejudice. In fact, women traders may be actually better spread betters than men; according to IG, on average, female traders win twice as much or lose half as much as their male counterparts.
Women Vs Men…Who Would you Put your Money On?
A risk is most likely to be taken by men, according to a study conducted by Barclays Capital and Ledbury Research. However, this doesn’t mean that women are incapable of taking the plunge into speculative trading, it just reflects that they are more careful and cautious in avoiding catastrophes.
The study indicates that women would make better investors, as opposed to men, who have already partially led us into the credit crunch. ‘Women are more likely than men to have a greater desire for self-control’, the study said. ‘Women also tend to have…a great desire for financial self-control’.
The study found that men are over-confident. Although this can pay off, at times, it can also backfire too. Researcher Chun Xia, a former professor in Hong Kong, claimed that women are prone to stress quickly, more than men. As a result they tend to be more conservative in financial deals in the hope of avoiding anxiety provoking situations. Men, on the other hand, are the ones who need more discipline when it comes to money since they tend to be overly confident in their financial decisions, the study found.
The current study follows a 2005 study by Merrill Lynch, a financial management and advisory firm. It found that 35% of women held an investment too long, compared with 47% of men. More recently, in 2009, a study by the mutual fund company Vanguard involving 2.7 million personal investors revealed that during the recent financial crisis, men were more likely than women to sell shares of stocks at all-time lows, leading to bigger losses among male traders.
Biology could also be playing its part in how men and women make their decisions. Men’s overconfidence could all boil down to hormonal impulses which trigger off these quick decision making moments. According to Time magazine, there is a growing sector of study called ‘neuroeconomics’ in which scientists are examining the links between hormonal and neurological impulses.
One such recent study by John Coates, a research fellow in neuroscience and finance at Cambridge University tested male trader’s hormone responses to workplace decisions. He found that testosterone drives winning streaks and then risk taking. Men are more inclined to be confident about their decisions, albeit this doesn’t mean they are more accurate, in their financial decisions while women tend to value wealth as a basis for security, as opposed to opportunity.
The so-called ‘winner effect,’ which has been seen in athletes during competition, also seems to apply to male traders. As the UK’s Guardian explained:
This happens when two males enter a competition and their testosterone levels rise, increasing their muscle mass and the ability of the blood to carry oxygen. It also enhances their appetite for risk. Much of this testosterone stays in the system of the winner of a competition, while the loser’s testosterone melts away fast; in evolutionary terms, the loser retires to the woods to lick his wounds. In the next round of competition, though, the winner already has high levels of testosterone, so he starts with an advantage, and this continues to reinforce itself.
‘Steroids,’ Coates explains, ‘like most chemicals in your body, display what is called an inverted U-shaped response curve.’ That is to say, when you have low levels of them you lack vitality, and do very poorly at mental and physical tasks. But as the levels rise you get sharper and more focuses until you reach an optimum. The key thing is this, however: ‘If you keep winning, your testosterone level goes past that peak and sliding down the other side. You start doing stupid things. When that happens to animals, they go out in the open too much. They pick too many fights. They neglect parenting duties. And they patrol areas that are too large.’ In short, they behave like traders on a roll; they get cocky.
LouAnn Lofton, in her book ‘Warren Buffett Invests Like A Girl: And Why You Should, Too’ makes arguments of why women make better investors than most men. According to LouAnn, women investors tend to trade with less frequency than men, are less prone to be overconfident; are more realistic in their goals and expectations; put in more effort in researching their investments; seek to analyse all angles and detail as well as alternative perspectives; are more likely to disregard peer pressure and tend to make decisions the same way irrespective of who’s watching; learn from past mistakes and are less open to take extreme risks.
As one market analyst put it: Women tend to be in smaller stakes, testing the waters first as opposed to putting all their funds on a single trade. He notes ‘Their longer-term trades often mean they are more successful, holding on to positions for longer, as opposed to jumping in and out of trades.’ Men also tend to learn by ‘doing’ which could disadvantage them compared to women – women are more open to research, learning about common mistakes and attending courses. Women have a number of natural characteristics that form part of a good investor; they can multi-task, they give attention to detail in their research and are often ready to take a longer term perspective of the markets. Men tend to be more aggressive and try to bully the markets, sometimes opening spread betting and CFD trading positions on instruments that they do not understand – and most men tend to hate to be wrong. Women tend to not risk as much on each trade which gives them more room for being wrong.
Having said that, the profile of male and female spread traders is quite similar – generally speaking, they are of about 42 years of age, with a similar first deposit size and typical trade sizes. They also tend to place the same kind of first trade stake, which is usually £3 per point on the FTSE. In this respect most traders seems to share a particular type of personality and trading style, irrespective of their gender.
What Lessons Can Male Traders Learn from Women’s Approach?
Women have been increasingly recognized as effective traders in spread betting and CFD trading, with a unique set of qualities that contribute to their success. Studies and industry observations highlight that women often adopt a more cautious and disciplined approach, excelling in areas such as research and strategy adherence. This thoroughness not only enhances their trading performance but also contributes to their longevity as clients, aligning well with the goals of financial service providers.
Some say that women are more likely to admit when they’re wrong and ask questions and this gives women an advantage over men. Another reason cited is that women simply possess a more considered spread betting and CFD trading mindset than men. Female spread bettors tend to be more thorough with their research and approach their spread betting and CFD trading platform with far greater caution than the male trading population. In particular, women in general are more likely to follow a trading strategy and are more disciplined to execute it than men.
A key strength of women in trading is their willingness to acknowledge mistakes and seek guidance, fostering continuous learning and growth. They are also more likely to enter trades with smaller stakes initially, testing strategies before committing larger amounts. This careful approach helps mitigate risk and often leads to more stable, long-term returns. In contrast, men may exhibit more aggressive tendencies, sometimes prioritizing bold moves over strategic planning.
Discipline and Research-Oriented Approach
Women often demonstrate a highly disciplined trading style, marked by thorough research and a methodical strategy. They are more likely to admit mistakes, ask questions, and adopt a considered approach to trading, avoiding impulsive decisions. This contrasts with the tendency of some men to act more aggressively or impulsively in markets, sometimes taking uncalculated risks with instruments they may not fully understand.
Risk Aversion and Strategic Thinking
A hallmark of women’s trading style is their cautious approach to risk. They are more inclined to use smaller stakes when entering the market, allowing them to test strategies and learn without exposing themselves to significant losses. This caution is particularly advantageous in leveraged products like spread betting, where risks can escalate quickly without proper controls. Women are also more likely to employ risk management tools like stop losses, which help mitigate losses during volatile market movements.
Emotional Detachment and Long-Term Focus
Emotional detachment is another advantage women bring to trading. They tend to keep emotions in check, making decisions based on logic and strategy rather than impulsive reactions to market fluctuations. This contrasts with men, who may struggle to cut losses due to a reluctance to admit defeat, leading to prolonged and potentially costly positions. Women’s focus on longer-term trades also contributes to more stable returns, as they resist the urge to frequently jump in and out of positions.
Growing Participation and Market Trends
The number of women participating in trading has grown significantly over the past decade, although there have been fluctuations. For example, during the financial crisis of 2007–2009, the number of new female traders declined sharply, likely due to heightened risk aversion. However, participation rebounded as markets stabilized, reflecting women’s strategic and cautious approach to re-entering the market.
Marketing Challenges and Opportunities
Despite these strengths, the trading industry faces challenges in attracting more female participants. Traditional marketing strategies often cater to male traders, emphasizing competitiveness and risk-taking. However, targeting women with messages that highlight their natural advantages in trading—such as their disciplined approach, ability to manage risk, and success rates—could be more effective. For instance, online gaming platforms, which have successfully appealed to women by creating safe and anonymous environments, offer a model that trading platforms could emulate.
The Future of Women in Trading
As women continue to take on greater financial responsibility and control over investments, their presence in trading is expected to grow. Some firms already report a significant increase in female clients, with women now making up a substantial portion of their customer base. As the industry evolves, emphasizing education, support, and tailored marketing strategies could further enhance the participation and success of women in trading.
Women’s unique characteristics—discipline, composure, strategic thinking, and a focus on research—make them valuable participants in the trading world. By recognizing and building upon these strengths, the financial industry can better cater to this growing segment of traders while encouraging a more diverse and balanced market landscape.