Contrary to traditional stereotypes, active traders are not all men. The average female active trader made over 1,200 trades last year - accounting for roughly $18,000 in annual commissionable revenues, according to recent Gomez research.
What's more, women are well-versed active traders with dollars to trade. Of the active female traders we surveyed for our latest report, How to Attract and Target Active Traders, nearly 88% made between 500 and 1,999 trades a year last year, compared with just over three-quarters (76%) of active male traders. And although a smaller overall percentage of women made over 2,000 trades last year, the percentage of women making over 5,000 trades a year trailed that of men by just 4% (7% vs. 12%). Moreover, while the current bear market has taken its toll on all active traders, a higher percentage of active women traders (63.6%) told us they trade more during a bull market than did men (52.1%).
These findings are most noteworthy for browser-based firms. Gomez research shows that a higher percentage of women (64%) use a browser platform compared with just 45% of men. Furthermore, lower activity levels tend to correlate better with Web-based trading and lower commissions (and related fees) - giving browser-based firms the edge with women. And once women choose their platform, they tend to stick with it. Only 18% of women using a browser-based platform have switched to a software-based platform in the past two years. Active women traders tend to be more loyal than their male counterparts, sticking with their primary broker and not switching as frequently across platforms compared with men that fall into the same trading lifestyle.
Beyond browser-based firms, active-female traders should be on the radar list for any active-trader firm contemplating a segmented marketing strategy to weather this prolonged bear market. Disciplined active traders are most likely to trade through volatile market conditions, and women are more experienced and show trading discipline similar to that of men. Over 42% of the women we surveyed have actively traded for four to seven years, compared with 37% of the men. Men and women also tend to be similarly disciplined by using focused-trading strategies. Approximately 61% of women and 63% of men surveyed stick to one trading strategy, such as fundamental or technical-based analysis.
It's also important to note that women active traders have deeper pockets than their male counterparts. The average value of women's primary online-trading account is over $669,000, whereas men have an average of less than $569,000 to trade. At the same time, women have higher investable assets than men ($609,000 vs. $459,000) -- making women a lucrative target to cross sell related products and services.
How should firms target these affluent active-trading women?
*Offer streaming content. Streaming content delivers a more timely and context-sensitive picture of the financial markets.
*Pitch lower cost Web-based platforms that reward women with commission discounts (the more they trade, the more they save). As these women exceed certain transactional thresholds, provide them with higher levels of service to encourage further transactional increases.
Active women traders will probably never reach the same numbers as their male counterparts. But as their societal roles evolve into financial heads of family and primary breadwinners, they will play an increasingly significant part in the active- trading community. Targeting active women traders during the ongoing bear market could well set the stage for a lasting and profitable relationship for your firm.
Shalin Patel is an analyst who follows online brokerage and insurance services at Gomez, Inc., a Waltham, Mass.-based Internet quality market research and consulting firm. He can be reached at [email protected].