, Giving the finger to Harriet Harman: part 4: leadingcounsel.co.uk
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Giving the finger to Harriet Harman: part 4

The next thing which the study sought to identify related to market volatility. The people studied were engaging in high-frequency trading. This involves looking at various screens and making quick decisions which almost certainly require speed of thought and speed of physical reaction. Previous studies (not a market context) had demonstrated that a low 2d:4d ratio was indicative both of visual response skills and quick reactions. If those traits linked to a low 2d:4d ratio existed and were relevant to market trading then the scientists reasoned that they would be even more useful in a volatile market. This was on the basis that in a volatile market many more opportunities present themselves as a result of constant and speedy shifts, but only those who could react quickly and decisively enough would be likely to take advantage of them. Euribor (the 3-month European interbank rates) was identified as a good indication of market volatility (and is one of the assets specifically traded). Using this therefore is a good indication of volatility, (i.e. when this was volatile it was taken as an indication of the market generally being volatile) the scientists checked profitability against market volatility and looked at this as regards both experience and a low 2d:4d ratio. In simple terms experience was not a particular indication that you would do even better in a volatile market, but a low 2d:4d ratio was. As the study put it "these results show that the lower a trader's 2d:4d, the more money he makes as volatility increases".

The study further analysed why the low 2d:4d ratio (as reflecting the impact of androgens in the womb) might give advantages. What was considered was whether this might make the person more responsive to the effect of testosterone in the system. The impact of testosterone was studied amongst the traders by considering saliva samples. The testosterone levels of traders on a particular day were compared with their usual levels. On days when they had a high level of testosterone in the morning compared to their usual level, traders made higher profits. A trader with a low 2d:4d ratio showed an even greater response to higher testosterone by making even greater profits. Thus higher testosterone was linked to higher profitability, but was more marked depending on how low the 2d:4d ratio was .

Market trading of this sort is not the whole of the City because there are investment bankers and analysts for whom customer relationships and developing them is important, and obviously areas where taking a long-term position is what is important rather than trying to follow the short term and dip in and out to take advantage of the twists and turns of the market. However such market traders are an important component of the stock market. It is a competitive and in some respects as we have seen a literally testosterone fuelled world, with those relative levels apparently directly linked to profitability, albeit that the impact of raised testosterone levels is more marked in low 2d:4d ratio individuals than in others. Whilst we will consider next week whether there are any valid objections to Cityclients being taken to lap dancing clubs, this is a world which one should not expect to behave as if it were the church choir, since probably a more appropriate analogy would be a highly competitive and driven sports team. Nor is this in any way an apparent attempt to exclude women or indeed anyone else. It is in part a reflection of the type of world it is and within that world, certain types of entertainment, if treated as part of the norm, will be embraced by it.

Michael J. Booth QC