Traders on a London trading floor had higher testosterone levels when they make more money than on an average day. The winner effect. Their results also suggests that high morning testosterone predicts greater profitability for the rest of that day.
The role of cortisol in these men wasn't that clear. After some fancy brainstorming and analysis they discovered that cortisol was likely responding to uncertainty rather than the other way a round.
We found a significant relationship between testosterone and
financial return and between cortisol and financial uncertainty.
The ups and downs on Wall Street are simply a matter of hormones. maybe we are better off with female traders instead of all these hormonal males.
Cortisol is likely, therefore, to rise in a market crash and, by increasing risk aversion, to exaggerate the market’s downward movement. Testosterone, on the other hand, is likely to rise in a bubble and, by increasing risk taking to exaggerate the market’s upward movement.
What did they do?
They decided to conduct the study on a real trading floor rather than under laboratory conditions. They sampled steroids while traders did their normal jobs.