Testosterone is a potent driver of confidence and competitiveness. Biologically, it fuels aggression and reduces fear – traits that prime someone for bold decision-making . In competitive situations, testosterone spikes (the “winner effect”), further boosting confidence and appetite for risk . In short, higher T tends to make people more motivated, persistent, and eager to take on challenges. For example, Cambridge researchers note that traders’ confidence and risk-taking surge with their T levels . However, there is a flip side: too much testosterone can overdrive the system, impairing judgment. Studies warn that excessive (especially synthetic) T can trigger impulsivity or “mania,” undermining rational choices . In practice, this means a sweet spot of T can boost motivation and decisiveness – but overdosing that drive can backfire.
- Drive & Confidence: Testosterone surges raise self-assurance and willingness to bet big . High-T individuals often exhibit boldness and persistence in new challenges .
- Competitive Edge: During wins and competition, testosterone spikes reinforce dominance (the winner effect), leading to even bolder bets .
- Risk Tolerance: High T tends to reduce fear of loss and make risky options more attractive . Men with naturally higher T often tolerate bigger gambles than lower-T peers.
- Caution – Impulsivity: Excessive testosterone (especially from steroids or unjustified boosts) can lead to reckless risk-taking, euphoria or rash maneuvers . In a trading context, this “overconfidence” can wipe out gains if not checked.
Risk-Taking and Decision-Making
Testosterone’s psychological effects align with entrepreneurial grit. Higher levels are consistently associated with greater risk appetite in finance settings. For instance, a landmark study followed 17 London traders and found that on days when a trader’s morning testosterone was above his own median, he made significantly higher profits . In other words, high-T days = high gains. Researchers link this to T-driven confidence: testosterone stimulates an optimistic view of the market, encouraging bold trades .
Leverage Risk for Reward: Studies show traders earn more when their testosterone is high. For example, Coates & Herbert found 14 of 17 traders made larger profits on high-T days . This boost comes from greater confidence and risk-taking under higher testosterone . However, it’s not a guarantee: extreme T can lead to bubble-chasing. Cambridge scientists caution that chronically high testosterone eventually creates irrational risk-seeking, hurting performance .
In business negotiations and deal-making, testosterone similarly influences decision speed and assertiveness. Sauder School researchers examined 350 mergers and acquisitions and found younger CEOs (with naturally higher T) behaved more aggressively: they were ~20% more likely to cancel or withdraw a bid than older CEOs . These young, high-T CEOs also initiated ~4% more acquisitions . In practice this means they push harder in deals but also sometimes back out if uncertain – a double-edged sword. Summarizing, testosterone tends to increase initiative and confidence in business choices, but it can also push one to cut deals prematurely or gamble when wiser heads would sell .
Testosterone and Financial Performance
Multiple studies link testosterone to better outcomes – up to a point. For example, research on self-employment finds a positive connection: one analysis of ~1,200 Australian men showed that a one-standard-deviation rise in testosterone raised the likelihood of being self-employed by about 10–12% . High-T men were more driven to launch and run businesses, which can yield higher income if successful. Likewise, a survey of MBA students found that individuals with higher testosterone tended to choose riskier finance careers (like trading or investment banking) over safe options – careers that often pay more to those who succeed.
Real-World Wins: From Wall Street to startups, high-testosterone individuals often aim high. Studies of City traders (who earned up to £5M/year!) confirm that days starting with higher T brought larger profits . In the corporate world, a University of British Columbia study showed young CEOs (proxy for high T) withdrew M&A offers 20% more often – reflecting a willingness to walk away from bad deals, albeit sometimes to their detriment. And entrepreneurs with more T tend to succeed on their own: Greene et al. (2014) found that men with +1 SD in testosterone had a ~10–12% higher probability of self-employment . In each case, testosterone’s effect is linked to higher income or bold success – provided the risks are managed.
Here are some key findings on testosterone and financial outcomes:
| Finding | Source/Study |
| City traders: 14 of 17 made more profit on days their morning T was above average (higher T → higher daily returns). | Coates & Herbert (2008 PNAS) |
| Entrepreneurship: +1 SD in men’s testosterone ⇒ +10–12% chance of being self-employed . | Greene et al. (2014 Econ. & Hum. Biol.) |
| Deal-making CEOs: High-T younger CEOs withdrew M&A bids 20% more than peers; also 4% more likely to start deals . | Levi & Li (2010, Management Science) |
| Career choice: Women with higher T showed lower risk aversion and more often picked high-risk finance jobs . | Sapienza et al. (2009 PNAS) |
| Large genetics study: No causal effect of endogenous testosterone on income, education, or risk-taking . | Harrison et al. (2021 Sci. Adv.) |
| Men’s RCT (2025): Single intranasal T dose did not change risk-taking or fairness choices in 1,000 men . | Dreber et al. (2025 PNAS) |
| Stress & Loss: Higher testosterone-to-cortisol ratio made men ~3.4× more likely to sell losing stocks (cut losses) . | Nofsinger et al. (2018 JEHB) |
Gender Differences
Men and women show different hormone dynamics in finance. On average men have much higher testosterone, which partly explains why men are often less risk-averse in markets . Sapienza’s MBA study found that among women higher testosterone meant significantly less risk aversion – effectively narrowing the typical gender gap . In fact, at low testosterone levels, men and women behaved similarly. However, within men testosterone variation made little difference to risk tolerance (men may already be near a plateau) .
Clinical trials underscore these nuances: in a double-blind study, giving postmenopausal women testosterone for a month did not increase risky choices , and a large 2025 trial in men found no change from a testosterone dose . These null results suggest that short-term boosts in testosterone don’t magically alter risk behavior – pointing to developmental or contextual factors. Also, a major UK Biobank genetic analysis found no evidence that normal T levels cause higher income or less risk aversion for either gender . In summary: while men’s higher baseline T correlates with career and risk differences on average, simply raising testosterone artificially does not guarantee better financial choices . Other factors (training, experience, personality) play big roles.
- Women: Higher natural T → lower risk aversion, similar to men . But giving women extra T had no effect on risk in trials .
- Men: Naturally high T, so within-men variations show weak effects . A massive 2025 experiment found a single-dose T spray did not change any financial decisions in men .
- Big studies: Mendelian analyses indicate T does not causally boost wages or reduce risk tolerance . Any observed gender gaps likely come from complex social and developmental factors.
Stress, Volatility & Holding Power
Financial markets are stressful, and testosterone does not work alone – cortisol (the stress hormone) complicates the picture. Research shows that market uncertainty spikes trader cortisol: on days with the largest swings and volatility, traders’ cortisol levels climbed sharply . This stress response tends to raise caution: elevated cortisol makes people more risk-averse and anxious . In contrast, testosterone drives optimism: a lab asset-trading experiment found giving men testosterone made them pick riskier assets by boosting optimism about gains . Thus in turbulent markets, a tug-of-war plays out: cortisol encourages selling off and freezing up, while testosterone nudges toward staying in the game.
One intriguing finding is the testosterone-to-cortisol ratio’s effect on loss aversion. A study of naïve investors found that men with a higher T/C ratio were about 3.4 times more likely to sell losing stocks (versus hold them) . In practice, this means high-T individuals might cut losses quickly, preventing bigger drawdowns. Conversely, those under high stress (high cortisol) tend to cling to status quo. The bottom line: testosterone may help some traders hold their nerve and cut losses – but persistent market stress (and high cortisol) often forces even confident traders to become extremely risk-averse .
- Cortisol spikes: In high-volatility markets, cortisol goes up, pushing traders to be cautious . Chronic stress even causes “irrational pessimism” during crashes .
- Testosterone optimism: T fosters a bullish mindset. Studies show elevated T makes investors more optimistic about prices and more willing to take new risks even under pressure.
- T/C Ratio: A high testosterone-to-cortisol balance encourages decisive action – investors with higher T/C cut losing positions sooner (limiting losses) .
Key Takeaways (Summary Table)
The data paints a nuanced picture: higher testosterone can be linked to ambition, risk-taking and higher returns in finance, but it isn’t a magic bullet. In some cases (especially with proper moderation) it correlates with greater profits and entrepreneurial success . Yet large-scale experiments remind us correlation is not causation – boosting T artificially often fails to change outcomes . Ultimately, testosterone may give extra fuel for high-stakes decisions (higher risk tolerance and drive) , but winning in business also requires strategy, experience and stress-management.
Sources: Scientific studies and reviews cited above provide the evidence for each claim . Each bullet/table entry links to detailed findings, ensuring this breakdown is fully grounded in current research.