Is Your Money Safe In His Hands?

In men, the second (index) finger tends to be shorter (updated – thanks to Petr for pointing out the error) than the fourth (ring) finger whereas, in women, the second finger is most often the same size or slightly longer than the fourth. Studies have suggested that the 2D:4D digit ratio (ratio of length of index finger to ring finger) is influenced by prenatal exposure to androgen although ethnic origins also appear to have an effect, with higher digit ratios in more northerly populations. Many authors have suggested correlations between digit ratio and health or personality traits as well as sporting prowess, and a study published in the January 13^th issue of the journal PNAS now links 2D:4D ratio with some types of trading skills.

The researchers measured 2D:4D ratios in a group of male traders from the City of London engaged in “noise” or “high-frequency” trading. They found that 2D:4D not only predicted the traders’ long-term profitability, but also the number of years they remained in the business. Looking only at experienced traders, the study found that the traders with lowest 2D:4D ratios made up to six times more money over a 20 month period than those with higher ratios. The researchers suggest that prenatal exposure to testosterone, which increases a person’s sensitivity to the effects of the hormone later in life, may be linked to attributes such as confidence, risk-taking ability, and quick reactions which are important for this type of competitive, quick-fire trading.

In 2007, the researchers published a report, also in PNAS, showing that a trader’s morning testosterone level predicts his day’s profitability. The newer study suggests that the lower those traders’ 2D:4D ratios, the bigger their swing in profits between the high- and low-testosterone days. Although a testosterone rush may give an edge in situations where traders have to make snap decisions, it may not be what is needed for long-term trading.