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New data shows women are more comfortable trading the short side of markets

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Who are the world’s female traders? It’s a good question and many brokers would like to know. Participation by women in active trading is still relatively low. Here at The Armchair Trader we know that 20% of our readers are women. Attendance at the recent London Trader Show demonstrated that there were a large proportion of women interested in derivatives trading.

According CFD broker Capital.com, 50% of its female traders across every market have a bachelor or master’s degree. This is compared to just 37% of male traders who declare they have either a bachelor or master’s degree.

The findings were revealed in Capital.com’s group quarterly report which tracks the trading patterns of retail investors across all markets it operates in. Over 4 million people have now opened an account on Capital.com.

According to Laura Lin, Chief Executive Officer, Asia Pacific, Capital.com, Capital.com’s investor data confirms that education success is key to driving greater female participation in financial markets.

“A big part of trading and investing is about building confidence through research, education and learning. Based on our findings, female traders are more likely to trade and invest for themselves if they are informed and educated. Building confidence via education is important to create a more inclusive and level playing field when it comes to trading and investing.”

Despite higher levels of education, female traders account for just 13% of Capital.com’s retail client base. This varies somewhat between regions.

Where are the female traders?

Australia has the highest number of female traders, accounting for 16% of its overall trader numbers in that country. The Middle East has the lowest number of female traders at 6%. Latin America (11%) and European Union countries (12%) are generally on par with each other sitting in the mid-range. The UK accounts for slightly higher levels of female participation at 14%.

“As more women generate their own wealth, they will increasingly control the deployment of their assets and become key financial decision-makers in their households. This trend, which is a characteristic of many emerging economies, contributes to greater financial and investing confidence among women,” said Lin.

Female investors are more comfortable going short

The data also shows that women are perhaps more disciplined and considered when it comes to investing and trading. This is certainly the case in the hedge funds industry, where I have heard from CTOs that women are generally better at managing risk and getting out of a losing position ahead of male colleagues.

According to the report, in the first quarter of 2022, deposits made by Capital.com’s female traders were 34% smaller than those of men. Over the same period, male traders on the platform were predominantly active in a single market, namely currency trading. Meanwhile, female traders were more diversified, preferring equities and multi-asset trading.

The report also found female traders were more prone to short-selling vs male traders.

“We found that 36% of our female clients classify as short traders, whereas for male traders it was only 29%. That does not mean our female clients are short sellers, but it could mean they understand both sides of a trade and evaluate entry from a short seller’s perspective more than men. This mindset can also help traders to identify opportunities under bearish market conditions,” noted Lin.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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