Could the length of your ring finger -- or more precisely, the ratio of the length of your index finger to that of your ring finger -- predict your success as a financial trader? When I heard this theory, I was convinced this must be an example of the abusive use of statistics -- what possible connection could there be between the two?
But now that I'm better informed on the underpinnings of the relationship, I'm a believer. Here's how it works:
John Coates, a research fellow in neuroscience at Cambridge University, recruited 49 male traders from a London trading floor for his study (opens a PDF). These were futures traders who trade at a frenetic pace -- their holding period is typically measured in minutes (and sometimes even seconds!).
More profitable, longer-lasting
Coates found that traders with a lower ratio of index-finger to ring-finger length were both successful financially and more likely to last in the business, after controlling for a number of other factors, including experience and level of risk-taking.
The explanation? In men, a longer ring finger indicates a higher exposure to masculinizing hormones in the womb. That, in turn, produces a host of characteristics that are beneficial in this type of trading: increased confidence, higher risk preference, faster reaction times, etc.
Don't believe it? What cinched it for me are previous findings that the same finger-length ratio is also correlated with success in certain competitive sports. In my experience, local traders on futures exchanges such as the CME
Over time, athletic ability lost some of its cachet at investment banks, because many areas of trading have become increasingly mathematical, thus favoring overdeveloped brains over brawn. But as the Coates study indirectly suggests, the value of athletic prowess hasn't disappeared entirely.
Good news for those with short ring fingers
If you don't have a long ring finger, don't bother opening a day-trading account at your favorite broker. You're starting at a disadvantage.
There is some good news, though: Coates is careful to stress that his findings are valid only for high-frequency trading and that "the correlation could even reverse sign among traders who adopt a more analytical and long-term approach to the markets." In other words, the short-ring-fingered should leave the day trading to the jocks and become investors instead.
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Alex Dumortier, CFA has no beneficial interest in any of the other companies mentioned in this article. JPMorgan Chase is an Income Investor recommendation. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.