High Levels of Testosterone and Cortisol in Traders Linked to Risk-Taking

According to a new study published in Scientific Reports, working in competitive or stressful environments was proved to influence traders by making them more prone to take financial risks.

Volunteers who participated in the experiments were found to be more likely to invest in higher-risk assets after being administered doses of either testosterone or cortisol. Researchers had them buying and selling various assets among themselves under the effect of these steroid hormones.

Senior author of the study, Dr. Carlos Cueva PhD of the Department of Economics at the University of Alicante, Spain, explains that the experiments were designed to offer a better understanding of how hormonal changes can influence the traders’ behavior, especially when they work in times of financial instability.

Results showed that testosterone and cortisol both had a direct influence in the way traders were ready to take financial risks. Both men and women participated in the study, summing up to 142 participants, all of whom had their saliva samples collected for measurement and identification of hormone levels.

In the first phase of the experiments, the participants’ natural hormone levels were tested and measured, offering researchers a baseline to work with. During the second phase, the volunteers had their hormone levels artificially increased.

In natural conditions, cortisol – or hydrocortisone – is usually secreted when the individual deals with fight-or-flight situations, and is correlated to increased blood sugar. Psychological stress or intense physical activity are two of the most common triggers for elevated cortisol levels in the organism.

Upon comparing and analyzing the behavior of the two groups, researchers found that increased levels of hormones had a significant influence on taking bigger risks in financial investments.

Volunteers who had their cortisol level artificially boosted showed a clear tendency in acquiring high-risk assets, while those on testosterone presented increased optimism for potential future price change in assets.

Lead co-author of the study, Dr. Ed Roberts of the Department of Medicine at Imperial College London, said that understanding the influence of hormones in this line of work is important when it comes to establishing whether or not the traders’ environment is too competitive or stressful.

Dr. Roberts noted that the focus of the study was to observe only the behaviors of the groups with artificial hormonal boosts; this lab response might not reflect real-life situations of traders performing their jobs – something Dr. Roberts is keen on measuring and analyzing in a different study.
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Melissa Gansler

Melissa calls herself Poet, essayist, and naturalist. Graduated from the University of Michigan, Melissa holds a degree in Literature. Besides English, she can also speak Chinese, German, French.