Testosterone, the male sex hormone, is necessary for performing several routine and strenuous tasks.

According to researchers at the University of Cambridge, high morning testosterone levels can help city traders to make more than just average profits.

It was hypothesized by the scientists that testosterone has the ability to influence confidence and risk appetite, which can augment performance of traders.

From News-Medical.Net:

The influence of steroids naturally produced in the body (specifically testosterone and cortisol) may also provide insight into why people caught up in bubbles and crashes often find it difficult to make rational choices, unintentionally exacerbating financial crises.

Testosterone is a steroid hormone which controls competitive encounters as well as sexual behaviour. Testosterone in male athletes, for example, will rise prior to a competition and rise even further in a winning athlete (but decrease in a losing one). This increase of testosterone in the winner can increase confidence and risk taking and improve chances of winning yet again, leading to a positive-feedback loop termed the ‘winner effect’. However, too much testosterone can have a detrimental affect on the ability to assess risk rationally.

In order to determine how hormone levels affect those working in the financial sector, the researchers followed 17 City of London male traders for eight consecutive business days. To measure the traders’ hormones, they took saliva samples twice per day at 11:00 a.m. and 4:00 p.m., times that fell before and after the bulk of the day’s trading. At each sampling time, traders recorded their profit and loss (P&L).

It was remarked by Dr. John Coates, lead author, that increased testosterone and cortisol levels prepare city traders for risk-taking.