Why a stressed-out trader is a wimpy one Long-ter
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Why a stressed-out trader is a wimpy one
Long-term stress makes traders afraid of risk, says a Goldman trader-turned-neuroscientist
NEW YORK (MarketWatch) — Of all the things that can bamboozle the markets – fat fingers or malicious manipulation , technical glitches or squirrel malfunctions – here’s one more: trader hormones.
Throw a bunch of traders into the crucible of long-term stress and their swashbuckling nature, far from rising to the occasion, instead shrinks away, leaving them clammy at the prospect of making bold financial bets, according to a new study co-authored by Cambridge neuroscientist John Coates. And while at first blush such a result sounds nice — we want banks to take less risk, don’t we? — it’s actually doing the market no favors, Coates hypothesizes.
Coates has already studied how market volatility causes stress. For this study, scientists raised the level of cortisol — that’s the stress hormone — in volunteers for eight days, then asked them to play risk-taking games. The result? Their appetite for risky business collapsed. http://www.marketwatch.com/story/why-a-stress...beforebell Long-term stress makes traders afraid of risk, says a Goldman trader-turned-neuroscientist
NEW YORK (MarketWatch) — Of all the things that can bamboozle the markets – fat fingers or malicious manipulation , technical glitches or squirrel malfunctions – here’s one more: trader hormones.
Throw a bunch of traders into the crucible of long-term stress and their swashbuckling nature, far from rising to the occasion, instead shrinks away, leaving them clammy at the prospect of making bold financial bets, according to a new study co-authored by Cambridge neuroscientist John Coates. And while at first blush such a result sounds nice — we want banks to take less risk, don’t we? — it’s actually doing the market no favors, Coates hypothesizes.
Coates has already studied how market volatility causes stress. For this study, scientists raised the level of cortisol — that’s the stress hormone — in volunteers for eight days, then asked them to play risk-taking games. The result? Their appetite for risky business collapsed. http://www.marketwatch.com/story/why-a-stress...beforebell
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