In nearly all aspects of life, men and women differ vastly in approaching certain situations. The same lies with investing and trading, how they financially plan for the future, and how they invest. Let’s take a look at the difference between trading and investing and how the two sexes differ in their approach.
What is trading?
Have you ever wondered what the difference was between an investor and a trader? You may be shocked to hear that they are worlds apart. Simply put, investing is gradually gaining wealth through either buying or holding stocks, whereas trading involves buying and selling stocks. In almost every field, women and men perform differently; let’s find out if it is true for trading as well.
Women tend to be less aggressive
In most areas, women are usually less aggressive than men are, and this applies to investing as well. Many factors contribute to this. For instance, women tend to take a more conservative approach to their trades. They prefer the long term rather than the short term, thus not making hasty decisions in the heat of the moment! They analyze each aspect of the trade and determine whether it is worth it, whereas men take more risks and prefer the short-term advantages. Both methods have pros and cons, which are among the major differences between the two when it comes to trading.
Women are overall less confident
When it is time to buy certain stocks, a study has shown that men are usually more confident in their decisions than women. One study concluded that around 70% of men are confident compared to around 50% of women. However, a similarity between both sexes is that as their assets increase, both men and women are more confident in their decisions. However, just with any field, confidence in both sexes increases with experience. There is a direct relation between confidence and time spent in the trading business. Â
Women usually earn more
Even though women may have less confidence than men, studies have shown that overall, women have better success with investing. A study from fidelity investments concluded that women outperformed men by around 0.4%. Over time this small percentage can lead to huge differences. Women’s investments were also more consistent as compared to men. More women also preferred using a professional advisor compared to men, only around 30% of men compared to around 50% of women.
Men like to take risks
Although risk-taking is a very individual trait and cannot be generalized between the sexes, it is quite apparent that overall, men tend to take more risks as compared to their female counterparts. Money Crashers found that ‘men tend to be more adventurous.’ Women preferred focusing on the long term did not favor volatile assets. Women also tend to pay more attention to the social aspects of investing as compared to their male counterpart.
Women are more patient
Women overall are more patient when it comes to buying or selling stocks. They are approximately 30% less likely to complete a trade as compared to men. Trading too much or too less both have their pros and cons. Men tend to trade more frequently; thus, they may earn overall less as each stock sold does not have much value, but they also avoid overnight risk. On the other hand, women trade stocks less frequently, with each stock having great value. However, as they wait, sudden market crashes may occur, which can be devastating. Women tend to wait and allow the market to change before deciding to buy or sell stocks, whereas men tend not to.
Women are more open to help
Women are more likely to seek and consider taking help from other individuals. A study concluded that women were 50% more likely to seek help. According to a study done by Money Crashers, only 27% of men would prefer a professional advisor than 47% for women. When surveyed about who they preferred to manage their finances, 59% of men responded with me compared to only 34% of women. Taking advice from other people can vastly benefit the individual as they learn about another point of view.
Staying cool and admitting mistakes
Typically, males are less likely to admit their mistakes than females; thus, men lose more money as they hold on to bad trades. On the other hand, women quickly realize their mistake and ask for help, thus minimizing losses. Women are also more likely to give markets a chance to recover and not sell stocks hastily, whereas, after a large market drop, men tend to sell stocks quickly. Overall, in times of panic or stress, women seem to outperform men.
Conclusion
Do women trade differently than men? It ultimately depends on the individual, and one generalized statement cannot categorize any man or woman. However, on a more general scale, we see some key differences. There is no one set method to trade; it depends completely on the trader and the methods they find effective. Women can learn from men; similarly, men can also learn from women, leading to maximum return on stocks. Just like in any field, balance is vital for maximum efficiency.Â
