![]() The more successful of these traders earn in excess of £4 million per year. This floor employed ≈200 traders, of which all but 3 were male. To test our prediction we recruited 49 male traders from a trading floor in the City of London ( 15). Specifically, we predicted that traders with a lower 2D:4D would make greater long-term profits and would remain in the business for a longer period of time. We therefore formulated the hypothesis that higher prenatal testosterone exposure would improve a trader's performance. Digit ratios have been found to predict performance in competitive sports, such as soccer ( 12), rugby, basketball ( 13), and skiing ( 14), so 2D:4D may also predict the risk preferences and physical speed required for high-frequency trading. A number of surrogate markers have been proposed for measuring the effects of fetal androgens ( 10), but perhaps the most convenient is the second-to-fourth digit length ratio (2D:4D), a relatively longer fourth finger (i.e., lower 2D:4D) indicating higher fetal androgens ( 11). According to both animal and human studies, these effects may include increased confidence ( 4), risk preferences ( 5 – 7), and search persistence ( 8), as well as heightened vigilance and quickened reaction times ( 9). Prenatal androgens have organizing effects on the developing brain, increasing its later sensitivity to the activational effects of circulating testosterone ( 1 – 3). These biological traits may derive in part from traders' prenatal exposure to androgenic steroids. The physiological demands made on traders raise the possibility that success in the markets depends as much on traders' biological traits as it does on the truth of their beliefs. Furthermore, traders engaged in “noise” or “high-frequency” trading require additional skills because their rapid style of trading is a demanding physical activity: they engage in extended periods of vigilance and visuomotor scanning, and they must react quickly to place a trade before other traders arbitrage it away. Traders must also possess confidence enough to place their bets, risk preferences high enough to place bets of meaningful size, and the ability to process information quickly enough to keep one step ahead of competitors. Successful trading in the financial markets requires more than correct beliefs about the value of securities. The success and longevity of traders exposed to high levels of prenatal androgens further suggests that financial markets may select for biological traits rather than rational expectations. Our results suggest that prenatal androgens increase risk preferences and promote more rapid visuomotor scanning and physical reflexes. ![]() 2D:4D also predicted the sensitivity of their profitability to increases both in circulating testosterone and in market volatility. We found that 2D:4D predicted the traders' long-term profitability as well as the number of years they remained in the business. Here, we report the findings of a study conducted in the City of London in which we sampled 2D:4D from a group of male traders engaged in what is variously called “noise” or “high-frequency” trading. ![]() Yet, little is known about the effects of prenatal androgens on an economically influential class of competitive risk taking-trading in the financial world. 2D:4D has been shown to predict success in highly competitive sports. The second-to-fourth digit length ratio (2D:4D) has been proposed as a marker of these prenatal androgen effects, a relatively longer fourth finger indicating higher prenatal androgen exposure. Prenatal androgens have important organizing effects on brain development and future behavior. ![]()
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