Wanna Be A Great Trader? Size Matters... Finger Size

Tyler Durden's picture

Take a moment and look at your hands. Specifically, compare the length of your ring finger to the one you use to point.  Is the ring finger longer or shorter than your pointer, and by how much?  It turns out that the answer to that question can tell a lot about your mental abilities and appetite for risk. As ConvergEx's Nick Colas details, a 2009 study of mostly male traders working in London found that the ones with longer ring fingers were generally more profitable than those with shorter ones. Traders with the largest fourth finger/second (pointer) finger ratios actually made 11 times more than those with the smallest. 

Via ConvergEx's Nick Colas,

A 2012 study of entrepreneurs in Italy showed that highly successful female entrepreneurs tended to have longer ring fingers as well.  Researchers believe that the causal link between digits on your hand and in your bank account goes all the way back to the womb.  No, finger length is not the only thing that makes you successful in this business.  But it clearly doesn’t seem to hurt.

Occasionally I happen upon a theme for one of these notes that seems to stretch well into the distant horizon of the unbelievable.  This is one of those days.  Still, at ConvergEx we follow the data wherever it leads and we also have an abiding respect for the scientific process.  So buckle up – here goes.

The length of your ring finger relative to your pointer digit is a useful proxy for a whole host of personality traits and aptitude for the world of high finance.  So take a look at your hand, and check to see which is longer.

If your ring finger is longer than your pointer, then:

You are likely a better athlete than your peers.

 

You tend to be more physically aggressive, regardless of gender.

 

You take more risks.  If you are an entrepreneur (male or female), you have a greater chance of succeeding.

 

If you are a woman, may well have knee problems.

 

If you are a man, have an increased chance of oral and prostate cancers.

 

If you are taking the SATs soon, expect to do better on the math section.  Conversely, if your pointer finger is longer, expect to rock the verbal parts of the exam.

The science behind these observations, some of which date back many years, is relatively recent.  It turns out that the way your fingers develop is closely tied to your exposure to specific hormones during pre-natal development.  In 2011, researchers at the Howard Hughes Medical Institute in Florida managed to isolate the exact process by which the exposure to estrogen and testosterone governs the growth of fingers.  Males have testosterone receptors in their digits, so the more they get the longer the fourth finger grows.  Block the receptors, and you get shorter fourth fingers.  Pump in more testosterone, and you get longer ones again.  The experiments that yielded these results were done with mice, by the way.

The upshot is that longer fourth fingers are the result of greater exposure to testosterone in utero, and this has other developmental implications beyond digit length.   Larger doses of this hormone tend to promote better spacial relations during the key learning years, but also correlate to more aggressive personality types.  When it comes time to take standardized tests like the SATs, young men with longer fourth fingers tended to excel in math.  Those with smaller fourth/second finger length ratios tended to be better at the verbal parts of the test.  Yes, I know all this feels like a lecture from Larry Summers, but (again) all the studies backing up these assertions appear at the end of this note.  It does, however, raise the question: is Larry’s fourth finger longer than his second?  Inquiring minds want to know.

Let’s move onto safer and more familiar ground: success as a day trader.  In 2008 researchers John Coates, Mark Gurnell and Aldo Rustichini parked themselves at a London based prop shop and measured the finger lengths of 49 traders.  Then they examined how successful these people were at fast-paced trading.  Here is what they found:

The larger the ring finger relative to the pointer, the more profitable the trader on average.  The R-squared was 48%, an amazing result for a one-variable analysis.

 

The traders with the largest 4th/2nd finger ratios did 11x better than those with the smallest ratios. 

 

The researchers offer two explanations, and their data supports both.  One is that those traders with longer ring fingers are able to productively process higher levels of testosterone.   The amount of the hormone varied day to day by subject, but long-fourth-fingered subjects could take advantage of it when it happened along and use it to boost their confidence. The other explanation is that individuals with longer fourth fingers have superior pattern recognition abilities under pressure, a byproduct of the presence of higher testosterone levels in utero.  Put both explanations together and you get a plausible explanation for the fourth-finger effect.

Taken across its full spectrum, this whole analysis is a bit uncomfortable – full of gender stereotypes and nature/nurture debates.  Well, I never wanted to be Harvard’s president anyway.  Still, it is hard to turn away from the numerous studies on the topic and ignore them.  The authors of the traders study do point out that there is far more to success than just finger measurements, and that is fair enough.  But that this one simple metric can explain half a trader’s success is pretty dramatic.

And consider this – my own fourth finger is meaningfully longer than my second.  I should be home by now – markets closed hours ago.  But here I am, writing this note rather than planning tomorrow’s trades.  The only thing my own fourth finger is good for is typing the letters on the outer fringes of the keyboard.  Guess it really doesn’t work all the time.

 

Sources:

http://www.livescience.com/7290-finger-length-predicts-sat-performance.html

http://www.huffingtonpost.com/po-bronson/women-men-judging-risk_b_2741781.html

http://discovermagazine.com/2013/may/04-finger-length-ratio-can-predict-aggressive-behavior-and-risk-of-disease

http://news.nationalgeographic.com/news/2011/09/110907-ring-finger-length-science-genes-sex-hormones-men-women/

http://www.tandfonline.com/doi/abs/10.1207/s15326942dn2801_3

http://www.pnas.org/content/106/2/623.full