Women have the advantage when it comes to trading

Interesting fact: female stock pickers outperformed single males by 2.3% during a seven year study by Terry Odean, a professor from University of California.

He also found that female investment groups outperformed male counterparts by 4.6% and women overall outperformed men by 1.4%.

And do you know why women get superior results? Put simply: men are overconfident. In the study men placed 45% more trades than women – the more you trade the more chance you have of losing – and were slower at exiting a losing trade therefore losing more than the women.

By their very nature, women tended to be more conservative in their stock choices and quicker to cut their losses before getting onto the next trade.

This is really good news for women wanting to get into trading shares – you have genetics on your side! But seriously this is a really good attitude to take when trading: think carefully about the positions you are taking and manage your trades effectively. Or as I like to say, cut your losses and let your profits run.

If you are interested in trading shares for the first time then the best place to start is to spend some time researching a trading strategy that suits your lifestyle and personality. There is no point trying to day trade (buying and selling shares during the day) if you work full time and don’t have access to a computer to place your trades. Instead you could choose an end-of-day strategy or something longer such as a weekly strategy.

An end-of-day strategy means you assess the trades you wish to place at the end of the day, then place your trades online prior to the market opening the following day. A weekly trading strategy sees you placing your buy and sell trades just once a week, usually on the weekend. Trades are entered into your broker’s online platform on the weekend and executed (or activated) during the open auction on Monday morning.

What is the ASX open auction?

Investors can place their trades with their online broker prior to the Australian Stock Exchange (ASX) opening at 10am Sydney time. Trades must be in the system before 9.45am to take part in the opening auction. The auction occurs during the first 10 minutes of trading. The ASX matches or balances the buy and sell orders for each company, called Volume Weighted Average Pricing (VWAP) to decide on the opening level.

Once your trade has been executed on the ASX your broker will send you a trade confirmation by email.

Nick Radge heads a team of technical analysts at The Chartist, reviewing individual stocks and markets. AFSL 288 2000.

For more information on share trading, visit http://www.wealth.anz.com/investments/online-share-trading.

This article was sponsored by E*TRADE Australia. The opinions in the article are the personal opinions of the author and not of E*TRADE Australia. To the extent permitted by law, E*TRADE Australia does not accept any liability or responsibility in connection with the use or reliance on the information in the above article. ETRADE Australia Securities Limited (trading as E*TRADE Australia) (ABN 93 078 174 973, AFSL No.238277) is the provider of the ANZ E*TRADE online investing service.


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