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The famous Greek myth about King Midas is that he was offered a wish by the god Dionysus, and the king asked that whatever he touched would turn to gold. This, of course, backfired when old goldfinger found himself unable to eat, drink, or touch a loved one without giving them a million-drachma makeover.

But while King Midas was taken too literally by the Greek gods, his legacy seems to live on among stock market traders. New research published today in the Proceedings of the National Academy of Sciences gives evidence that finger length can predict financial success.

Previous research had indicated that the length ratio of the index finger to the ring finger (the 2D:4D) can predict relative levels of prenatal androgen exposure. The longer the fourth finger, the higher the level of those steroids, and also—studies have shown—a greater chance of success in competitive activities such as sports.

So researchers at the University of Cambridge took this theory and applied it to the financial world, and found that the 2D:4D ratio was a good predictor of profitability in stock market traders, as well.

Forty-four “noise” traders—those that rapidly trade securities sometime every few seconds—were chosen from the trading floor in London and measured for 2D:4D. After ruling out age as an influencing factor, it was found that a low 2D:4D was a good indicator of successful Profit & Loss Statements—an accepted measure of performance in the trading industry.

Noise, or “high-frequency,” trading is a physically and mentally demanding process that requires sharp focus, quick reaction time, and the ability to visually scan and process information. Androgenic steroids can provide the type of biological boost that makes one individual more susceptible to these traits. The prenatal exposure to this steroid has an organizing effect on the developing brain that often later results in increased confidence, risk preferences, and heightened vigilance.

The researchers also think that a low 2D:4D, along with the number of years’ experience, can predict a high-frequency trader’s success over the long term.

Of course, with the global financial markets in a quagmire, this news about traders could be irrelevant to investors, who might have a different finger in mind: 3D.

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1. Midas Touch: Finger Length Associated With Financial Success | ScienCentral | Science Videos | Science News « My Stoop says:
   

   January 16th, 2009 at 5:46 pm (#)

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