When financial-market traders start the day with high testosterone levels, they typically end the day with higher-than-average profits. That’s the conclusion of researchers at the University of Cambridge who measured morning and afternoon levels of the hormone in 17 male City of London traders over eight consecutive business days. The findings were made public today in the Proceedings of the National Academy of Science.
The researchers suspect that testosterone may increase a trader’s confidence and willingness to take risks. However, too much testosterone could be dangerous. Previous studies have shown that testosterone injections can cause men to make irrational decisions.
The researchers also measured levels of cortisol, a hormone that is released in response to stress. The traders experienced spikes of cortisol during times of high volatility in the markets.
Measuring steroid hormones such as testosterone and cortisol may offer a way to predict how well a trader will perform on the job, says Professor Joe Herbert of the Cambridge Centre for Brain Repair. He and his colleagues are now exploring this in more detail.