Work Stress and Performance Among Financial Traders

Abstract

This study investigated factors associated with work stress and performance among professional decision-makers in financial markets. Three hundred and twenty-six financial traders completed questionnaires while supervisors provided performance ratings. Of these 32 per cent of traders reported ‘very high’ or ‘extremely high’ stress levels. Overall, traders ranked ‘profit goal’ as the highest stressor followed by ‘long working hours’. Traders' experience of occupational stress was based on four main factors: Profit Pressure, Social Pressure, Work Load, and Decision-Processing. These factors varied systematically across different trading roles. Proprietary traders with higher performance ratings experienced less stress. Similar stress ‘profiles’ of North American and European traders indicate universal responses to job demands. Trader work stress is possibly mitigated through self-selection and substantial latitude over trading style. Copyright © 2005 John Wiley & Sons, Ltd.

Full text

Copyright © 2005 John Wiley & Sons, Ltd.
Work stress and performance
among financial traders
Thomas Oberlechner,1,2 and Ashok Nimgade3,*
1Harvard University, Kennedy School of Government, Cambridge, MA, USA
2Webster University, Vienna, Austria
3Harvard School of Public Health, Occupational and Environmental Health, Boston,
MA, USA
* Correspondence to: Ashok Nimgade, Harvard School
of Public Health, Occupational and Environmental
Health, Boston, MA, USA
E-mail: animgade@hms.harvard.edu
Contract/grant sponsor: Schrödinger Scholarship
#J2219.
Contract/grant sponsor: Schrödinger Scholarship
#J1955-SOZ.
Stress and Health
Stress and Health (in press)
Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/smi.1063
Received 19 April 2005
Revised 18 July 2005
Accepted 26 July 2005
Summary
This study investigated factors associated with work stress and performance among professional
decision-makers in financial markets. Three hundred and twenty-six financial traders completed
questionnaires while supervisors provided performance ratings. Of these 32 per cent of traders
reported ‘very high’ or ‘extremely high’ stress levels. Overall, traders ranked ‘profit goal’ as
the highest stressor followed by ‘long working hours’. Traders’ experience of occupational stress
was based on four main factors: Profit Pressure, Social Pressure, Work Load, and Decision-
Processing. These factors varied systematically across different trading roles. Proprietary
traders with higher performance ratings experienced less stress. Similar stress ‘profiles’ of North
American and European traders indicate universal responses to job demands. Trader work stress
is possibly mitigated through self-selection and substantial latitude over trading style. Copyright
© 2005 John Wiley & Sons, Ltd.
Key Words
financial traders; traders; stress; work stress; performance
2001–2002 (Jones, Huxtable, Hodgson, & Price,
2003) found prevalence of stress conditions dou-
bling over the 1990s with ‘stress, depression, or
anxiety’ afflicting a half-million workers, leading
to as many working days lost as did muscu-
loskeletal disorders. In Finland, over 50% of
the workforce experiences ‘burnout’ symptoms
(Gabriel & Liimatainen, 2000). In the US,
Workers’ Compensation claims for mental stress
have gained publicity from several high profile
monetary awards (Anonymous, 2001; Blitzer,
1992) and from dramatic increases in certain
states (Cahan, 1993).
On the other hand, professional, and especially
financial, workers may be particularly prone to
mental stress. US Bureau of Labor Statistics indi-
cate that, in contrast to blue collar jobs, white
collar jobs have a higher relative risk for severe
Introduction
For professionals in today’s financial markets,
stress and its relationship to work performance
have become more crucial than ever. On the one
hand, evidence indicates that work stress is gen-
erally increasing. For example, a UK survey in

mental stress than for all other injuries and ill-
nesses (Webster & Bergman, 1999). In the UK,
the annual ‘severe mental stress’ incidence rate of
about 2 per cent among financial workers was
twice as high as the incidence among ‘average’
workers (Jones et al., 2003). Likewise, in one
Australian state, finance/investment ranked
among the top seven industries for ‘mental disor-
der’ workers compensation claims filed, with such
claims climbing 37 per cent in the first half of
the 1990s (Dias, 1997). Elevated stress among
finance workers is also suggested by high alcohol
consumption among London financial traders
(Kahn & Cooper, 1990).
These findings clearly point to the possible neg-
ative effects of work stress among traders. In fact,
the very act of trading impinges upon the auto-
nomic nervous system, with even experienced
traders showing real-time spikes in heart rate,
blood pressure, and skin conductance with tran-
sient market events (Lo & Repin, 2002). Too
much stress may contribute significantly to
medical costs (Manning, Jackson, & Fusilier,
1996), with associated health problems rang-
ing from cardiac to mental disorders (Cooper,
1996) and work accidents (e.g. Arsenault &
Dolan, 1983; Bowles, Ursin, & Picano, 2000;
Cartwright, Cooper, & Barron 1996; Fiedler,
Della Rocco, Schroeder, & Nguyen, 2000).
A number of specific aspects of their work may
predispose finance professionals to increased
levels of stress. For example, evidence exists that
piece-rate compensation was associated with
more stress and injuries than traditional fixed-
rate compensation (Levi, 1972). It is thus quite
possible that bonus incentive schemes prevalent
in financial jobs heighten mental stress. Although
human data is lacking, behavioristic animal
models suggest that increased stress stems
from variable-ratio reinforcement (Naruo, Hara,
Nozoe, Tanaka, & Ogawa, 1993).
Despite the significance of stress in the work
life of financial traders, only a few studies
on traders’ work stress exist, possibly because
of their profession’s intense time pressures
and arcane work functions (Kahn & Cooper,
1993; Oberlechner & Hocking, 1997; Rodahl,
1989). Studying financial traders, however, may
yield insights regarding stress in technology- and
information-rich settings. Moreover, such a study
may help to understand the link between stress
and performance in these settings. While tradi-
tional occupational stress research often neglects
to consider job performance in favor of more
easily measurable ‘proxy’ outcomes such as
mental and physical health, which are assumed
to impact individual performance (Jex, 1998),
trading performance can clearly be gauged (by
traders themselves and by their supervisors)
through yearly trading profits, i.e. the basis for a
trader’s pay and bonuses.
Thus, the present study aims at contributing to
a better understanding of work stress and per-
formance among professional traders in financial
markets. It explores (1) the degree of ‘overall
stress’, the impact of various stressors, and the
main dimensions on which traders experience
stress; (2) differences in stress across various
trading roles; and (3) the relationship between
stress and performance. The analysis of these
points rests on traders’ own ratings of their work
stress and supervisor ratings of traders’ work and
trading performance.
Method
Participants
Results of this study are based on a survey of 326
financial traders working for leading foreign
exchange banks in North America. Table I sum-
marizes demographic and professional character-
istics of participating traders. The study sample
consists of predominantly male traders in senior
positions averaging more than 10 years trading
experience. About half the traders worked in
New York City. Most traders belonged to three
major trading roles: Proprietary, Interbank, and
Sales1.
Instrument
Because of the time constraints of traders and
their unique job demands, instead of prior vali-
dated scales a brief stress questionnaire was
developed de novo based on interviews and prior
T. Oberlechner and A. Nimgade
Copyright © 2005 John Wiley & Sons, Ltd. Stress and Health (in press)
1Proprietary traders engage in speculative trading on
behalf of their banks. Most foreign exchange volume,
however, is traded between banks by Interbank traders,
who enter short-term trading positions in order to
benefit from temporary currency fluctuations and to
execute trades initiated by their peers. Sales traders
facilitate trades on behalf of bank customers.

research involving trading experts. Traders rated
their overall work stress (‘How do you rate the
level of stress that you experience at work?’) on
a seven-point Likert scale (from 1 =‘extremely
low stress’ to 7 =‘extremely high stress’). No
formal definition of stress was included. Traders
also evaluated the impact of 14 potential stressors
on their overall work stress (‘to what extent do
the following criteria cause the stress you experi-
ence at work?’). Responses to potential stressors
such as ‘long working hours’ or ‘time pressure’
were marked on five-point Likert scales ranging
from 1 =‘very little’ to 5 =‘very much’). The
questionnaire also assessed demographic/profes-
sional variables including rank, trading role,
trading limit (i.e. trading account sizes based on
performance and experience), and daily trading
frequency.
The work performance of traders was evalu-
ated by their supervisors, who provided three
separate ratings of trading performance (i.e.
‘personal trading potential’, ‘trading profits’, and
‘overall contributions to the trading depart-
ment’). Twenty-one per cent of surveys, however,
could not be matched to supervisor ratings
because of missing identifiers2. A total of 40
supervisors rated traders’ performance on scales
from 1 =‘strongly below average’ to 7 =‘strongly
above average’. Supervisors assigned a mean
rating of M=4.88 (SD =1.32) for personal
trading potential, M=4.97 (SD =1.45) for
trading profits, and M=4.63 (SD =1.40) for
overall contributions to the trading department.
On average, each supervisor rated 6.6 (SD =4.6)
Stress and trading performance
Copyright © 2005 John Wiley & Sons, Ltd. Stress and Health (in press)
Table I. Characteristics of the foreign exchange trader sample (N=326).
Gender Female 12.1%
Male 87.9%
Age 25 and under 4.0%
26–30 14.3%
31–35 29.2%
36–40 25.2%
41 and above 27.3%
Work location US, NYC 52.3%
US, other than NYC 30.5%
Canada 17.2%
Trading position Trainee 1.6%
Junior trader 13.1%
Senior trader 76.6%
Treasurer/manager 8.7%
Trading limit (US$) <10 million 17.6%
11–25 million 19.9%
26–50 million 16.5%
51–100 million 19.9%
>100 million 25.4%
Trading role Sales trading 30.7%
Interbank trading 52.7%
Proprietary trading 16.6%
Trading frequency Average number of daily trades M=74.76, SD =108.54
Time interval between trades, busy day M=17 min 59 sec, SD =1 h 32 min
Time interval between trades, quiet day M=1 h 33 min, SD =9 h 50 min
Trading experience Years M=10.75, SD =6.23
NYC, New York City; M, mean; SD, standard deviation.
2Traders with and without external performance
ratings did not differ significantly in terms of gender
(c2(1, N=322) =0.002, p=0.97), age (c2(4, N=322) =1.48,
p=0.83), trading role (c2(2, N=313) =1.94, p=0.40), and
location (New York City, other US, Canada; c2(2, N=325)
=4.65, p=0.10). A tendency for traders without per-
formance ratings to have higher hierarchical positions
(c2(3, N=312) =7.73, p=0.05) can be explained by man-
agers avoiding performance self-ratings.

traders. Up to eight different supervisors rated the
traders of one bank; however, 88 per cent of
traders worked in banks where only one or two
supervisors provided ratings. Supervisor ratings
were averaged for 10 traders (3 per cent) who
received performance ratings from multiple
supervisors.
Procedure
A confidential questionnaire was administered at
foreign exchange departments3of leading North
American institutions in June–September 2002.
Of 26 eligible institutions, 21 agreed to partici-
pate in the study.4Contact persons in the trading
departments helped determine participant eligi-
bility and facilitated questionnaire distribution.
Of a total of 551 questionnaires, 326 were
returned in sealed envelopes, resulting in a return
rate of 59 per cent. Analysis was performed using
Statistical Package for the Social Sciences.
Results
Traders reported an average perceived overall
work stress of 4.86 (SD =1.31) on a scale from
1 =‘extremely low stress’ to 7 =‘extremely high
stress’. The stress distribution was skewed with
32 per cent of traders reporting ‘very high stress’
and ‘extremely high stress’ levels (6 or 7). Less
than 1 per cent of traders reported ‘extremely low
stress’ as opposed to 10 times as many who
reported ‘extremely high stress’.
No differences in the degree of overall work
stress were revealed by one-way analyses of vari-
ance in terms of age (F(4,313) =1.42, p=0.23), hier-
archical position (F(3,305) =0.28, p=0.84), and
trading limit (F(4,313) =1.34, p=0.54). Overall
work stress also did not correlate significantly
with trading frequency as expressed by the
number of daily trades (r=0.05, p=0.18) or
average time interval between consecutive trades
both on busy days (r=-0.05, p=0.28) and quiet
days (r=-0.03, p=0.28). There was a statisti-
cally not significant trend for males to experience
more overall work stress (M=4.90, SD =1.28)
than females (M=4.51; t(316) =1.68, p=0.09).
Of 14 potential stressors, traders rated ‘pres-
sure to achieve profit goal’ as contributing by far
the most to work stress. This was followed by
‘long working hours’, ‘time pressure’, and ‘fear of
mistakes’. The items ‘lack of work space’ and
‘lack of outside social support’ were rated among
the least important stressors (see Table II).
This pattern of relative importance of occupa-
tional stressors appears highly similar to results
from a prior study of European foreign exchange
traders (Oberlechner & Hocking, 1997) (see
Figure 1).
To determine the main dimensions of perceived
work stress, a factor analysis of importance
ratings of the stressors was conducted. This
method allows the identification of underlying
comprehensive factors that explain much of the
variance observed in the 14 specific stressors.
Four main stress factors resulted from a Principal
T. Oberlechner and A. Nimgade
Copyright © 2005 John Wiley & Sons, Ltd. Stress and Health (in press)
Table II. Traders’ ratings of the impact of 14
potential stressors on overall work stress. Scale:
1 =‘very little’ to 5 =‘very much’. Stressors are
arranged in descending order
Stressor Mean (SD)
Profit goal 3.76 (0.97)
Long working hours 2.90 (1.18)
Time pressure 2.87 (1.10)
Fear of mistakes 2.73 (1.07)
Concentration 2.69 (1.05)
Pressure from superior 2.68 (1.10)
Information overload 2.44 (1.01)
Competition (same organization) 2.42 (1.06)
Competition (other organizations) 2.27 (1.01)
Lack of social support at work 2.22 (1.03)
Decision uncertainty 2.21 (1.02)
Lack of space at work 2.20 (1.11)
Lack of social support outside work 1.98 (1.05)
Foreign language problems 1.48 (0.79)
3We prefer the term ‘trading department’ to the collo-
quially used term ‘trading floor’ as traders within a
company may actually be spread physically over mul-
tiple locations.
4Leading foreign exchange institutions in North
America which fulfilled at least one of the following
criteria were chosen: membership in the New York
Foreign Exchange Committee in 2001 or 2002; top 10
ranking in ‘Best Provider of FX Services Overall’
annual ranking published by Global Investor Magazine
in March 2001 or March 2002; top 10 ranking in
‘Global Top 50 Foreign Exchange Market Companies
by Estimated Market Share’ in Euromoney Magazine
in May 2001; top 10 ranking in the annual ‘Best Bank
Overall for FX Dealing ranking’ or ‘Annual Ranking
of Banks’ FX Revenues’ published by FX Week in
December 2001.

Components Analysis with Varimax rotation:
Decision Processing, Profit Pressure, Work Load,
and Social Pressure. Combined, these four factors
explained 58 per cent of the total variance with
each factor explaining 14–15 per cent of the total
variance (see Table III). A regression analysis
showed that these main stress factors predict
overall stress to a highly significant degree (F=
9.64, p<0.001): Work Load (beta =0.24, p<
0.001), Social Pressure (beta =0.17, p<0.02),
and Profit Pressure (beta =0.13, p<0.01) all sig-
nificantly contribute to the prediction of overall
work stress.
Various professional trading roles were associ-
ated with different levels of overall work stress as
shown by one-way ANOVA (F(307,2) =6.90, p<
0.001). Sales traders (M=4.45) reported a sig-
nificantly lower overall stress level (p<0.01) than
Stress and trading performance
Copyright © 2005 John Wiley & Sons, Ltd. Stress and Health (in press)
1
2
3
4
Long working hours
Time pressure
Foreign language problems
Decision uncertainty
Competition (same organization)
Competition (other organizations)
Profit goal
Fear of mistakes
Information overload
Concentration
Lack of space at work
Pressure from superior
Lack of social support at work
Lack of social support outside work
1=unimportant 5=very important
North American traders
(n=318–322)
European traders
(n=316–319)
Figure 1. Averaged importance ratings of selected stressors by North American foreign exchange traders. Com-
parison ratings of foreign exchange traders in Europe (Oberlechner & Hocking, 1997) are also provided.
Table III. Main stress factors resulting from factor analysis of stressor importance ratings. Extraction Method:
Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. Only item loadings
>0.30 are listed.
Component
Decision Processing Profit Pressure Work Load Social Pressure
Information overload 0.73
Foreign language problems 0.58 0.49
Decision uncertainty 0.56 0.49
Concentration 0.55 0.46
Lack of space at work 0.50
Fear of mistakes 0.50 0.50
Competition (same organization) 0.70 0.37
Profit goal 0.66 0.36
Competition (other organizations) 0.59
Long working hours 0.80
Time pressure 0.75
Lack of social support at work 0.77
Lack of social support outside work 0.73
Pressure from superior 0.44 0.37 0.54
Explained variance percentage 15.3 14.5 14.3 14.2

did both Interbank traders (M=4.98) and
Proprietary traders (M=5.15) as revealed by
pair-wise multiple comparisons using Bonferroni-
adjustment, a statistical compensation for the
increased probability of error when multiple tests
are performed.
Moreover, the main stress factors contributed
significantly differently among different trading
roles to overall work stress (multivariate ANOVA
F(8,578) =2.42, p=0.01). As Figure 2 shows, aver-
aged stress factor scores indicating traders’ posi-
tion on the four main stress factors suggest that
Sales traders attached a relatively higher level of
importance to all four main stress factors than did
Interbank traders and Proprietary traders. Figure
2 also shows that whereas Proprietary traders
attached more importance to Work Load than did
Interbank traders, Interbank traders attached
more importance to Profit Pressure than did Pro-
prietary traders.
High supervisor ratings of performance were
associated with less stress among Proprietary
traders only: Proprietary traders’ ‘overall contri-
bution’ ratings correlated significantly negatively
with ‘overall stress’ (r=-0.34, p=0.02). No such
significant relation was noted for Sales traders
(r=-0.13, p=0.13); for Interbank traders there
was a non-significant positive trend (r=0.14,
p=0.06). A more detailed examination of pro-
prietary traders also identified a statistically not
significant tendency for proprietary traders’
‘trading potential’ ratings to correlate negatively
with ‘overall stress’ (r=-0.25, p=0.06), and for
their ‘profit’ ratings to correlate negatively with
‘overall stress’ (r=-0.24, p=0.06)5.
Discussion
Overall stress, impact of specific stressors,
and main stress factors
Results from this yet largest empirical study of
foreign exchange traders indicate that traders are
not immune to mental stress, with over three out
of 10 reporting high or extremely high stress
levels. As one trader admitted, ‘There are defi-
nitely some traders who have snapped—this busi-
ness is clearly not for everybody’. Another trader
added dryly, ‘You make money based on risk, and
there’s stress associated with taking risk’. These
statements clearly point to the generally high level
of overall work stress among financial traders and
suggest that self-selection into this unique envi-
ronment may mitigate stress perception. More-
over, vigorous interview processes which often
include simulated trading exercises as well as trial
periods in the trading room may also screen for
workers able to withstand stress.
In addition, to match personal comfort levels
traders enjoy significant leeway regarding indi-
vidual trading styles (Oberlechner, 2004). This
may explain why no significant correlations
between overall stress and markers of trading
style, such as trading frequency or quantity, were
seen. Traders also enjoy significant latitude
regarding work breaks. One manager stated that
‘because the work can be extremely stressful with
emotional highs and lows, we dispense with many
conventional office rules. We let traders relax and
be noisy during downtime’. Another manager
admitted to letting traders ‘go home early if they
appear not 100 per cent’. Such latitude, as sug-
gested by the demand-control theory (Karasek &
Theorell, 1990), may lessen overall stress experi-
enced by traders.
A striking overall similarity of stressor ratings
with those found earlier among European traders
T. Oberlechner and A. Nimgade
Copyright © 2005 John Wiley & Sons, Ltd. Stress and Health (in press)
-0.40
-0.20
0.00
0.20
0.40
Decision-Processing
Profit Pressure
Work Load
Social Pressure
Sales Interbank Proprietary
Figure 2. Averaged main stress factor scores for Sales,
Interbank, and Proprietary traders. The importance of
the factors is proportional to their distance from the
center.
5For proprietary traders, ‘personal trading potential’
(r=-0.30, p=0.03) and ‘trading profit’ ratings
(r=0.40, p<0.01) correlated significantly negatively
with the stress factor Work Load; ‘overall contribu-
tions to the trading department’ ratings correlated
significantly negatively with the stress factor Profit
Pressure (r=-0.37, p=0.01).

(Oberlechner & Hocking, 1997) indicates a uni-
versal pattern of stressor influence on financial
traders. While European traders have rated most
stressors as slightly more important than have
North American traders, these differences might
simply arise from such external factors as the
study period difference of 7 years and different
contexts of the questions in the two surveys.
Among all stressors, traders perceived ‘profit
goal’ as being by far the most important. Infor-
mal discussions with traders indicate that the
ubiquitous metric for trading performance is
monetary performance. To maximize trading
profits, traders put in long hours, often eating at
work. Thus, not surprisingly, ‘long hours’ and
‘time pressure’ also dominate among the stres-
sors. These findings are supported by data from
a previous study of 317 European foreign
exchange traders (Oberlechner & Hocking,
1997), where traders reported an average of more
than 10 hours work per day. This workload may
impede trading performance as ‘people don’t
function well if they are constantly under stress’,
as one trading floor manager observed.
Traders also identified ‘fear of mistakes’ and
‘concentration’ as important stressors. These
stressors address important aspects of traders’
decision-making when pursuing their profit goals.
‘Pressure from superior’ is rated as yet another
important stressor which reflects intensive social
and competitive pressure when traders, for
example, experience losses while others actually
make money. ‘If you are totally immune to not
feeling stress [and] it doesn’t bother you to lose
money, then you are a better man than nine out
of ten guys out there’, one trader noticed. Com-
petitive and social pressure may also arise in the
relationship with customers, where traders have
‘to deal with all the aspects of competitive forces
out there [and to] be able to continue to bring
ideas’, as the trader continued to explain.
The finding that ‘pressure from superior’ is
only a mid-level stressor among traders of all
ranks, suggests that the ‘profit goal’ pressure
appears largely internalized, i.e. self-generated in
this population of ‘high-achievers’. Quite likely,
for most traders, their personal profit motive may
count more than overall corporate goals, espe-
cially in the context of a relatively high trader
turnover6. Parallel findings have been observed in
a study in which corporate financial performance
did not affect ‘felt stress’ for most middle-level
managers (Bruner & Cooper, 1991).
The analysis shows that the contributions of
various specific stressors to overall work stress
can meaningfully be condensed into four com-
prehensive aspects. These factors are Decision-
Processing (including such aspects as information
overload, decision uncertainty, concentration,
and fear of mistakes), Profit Pressure (experi-
enced, for example, in the pursuit of demanding
profit goals and when competing with traders
both from within the trader’s own organization
and with other traders), Work Load (resulting
largely from long working hours and time pres-
sure) and Social Pressure, which typically takes
the form of missing support both at work and
outside the work setting. Relevance and validity
of these main stress factors are supported by the
additional finding that these factors allow the pre-
diction of the intensity of traders’ overall work
stress.
Role differences
Results clearly show that traders in various pro-
fessional trading roles experienced different
degrees of overall work stress and that for various
trading roles contributions of the main stress
factors to overall work stress differ. Of all traders,
Sales traders reported the lowest overall stress yet
counter-intuitively attached higher importance to
the main stress factors than did Interbank and
Proprietary traders (Figure 2). Although different
trading roles may attract different personality
types, the demands of different roles vary greatly.
Sales traders must have every single trade scruti-
nized by clients. This may further reduce decision
latitude while also decreasing opportunities to
‘make up’ for single bad transaction through sub-
sequent transactions. As one Sales trader put it,
‘Stress on the sales side comes from having to
bring new ideas to clients to boost sales and
deliver results. Year after year you push yourself
to do more with the same client’. Moreover, dif-
ferent trading roles have different bonus schemes,
and, according to an interviewed trader, ‘uncer-
tainty surrounding bonuses is definitely a great
source of stress’. One supervisor estimated that
bonuses ‘can vary as much as 100–600 per cent
of baseline salary’ for senior traders at his firm.
While Sales traders have the greatest bonus
potential, Interbank traders have the least.
Stress and trading performance
Copyright © 2005 John Wiley & Sons, Ltd. Stress and Health (in press)
6One supervisor’s estimate of trader turnover was
approximately 10 per cent per year.

The statistically not significant trend for males
to experience more overall work stress than
females may merely reflect under-representation
of female traders in roles associated with higher
average stress levels, such as Interbank trading.
Compared to women, men were half as likely to
work in Sales but eight times more likely to work
in Interbank trading.
Stress and performance
Proprietary traders with relatively better perfor-
mance ratings reported lower stress. The follow-
ing alternative explanations may help interpret
this finding. First, the experience of winning may
mitigate stress; winning competitions has been
associated with hormonal changes and mood ele-
vation (Mazur & Booth, 1998). Second, a trader
who has already exceeded personal yearly trading
profit goals (and thus has a larger profit ‘buffer’)
may be able to ‘coast’ for the remainder of the
year and may thus perceive a small loss differently
than a trader on a ‘losing streak’. As one inter-
viewed trader admitted, ‘when you are under the
gun, stress definitely shows up worse’. Third, high
stress may impair trading performance. As one
author on trading noted, ‘the composite profile of
a losing trader would be someone who is highly
stressed and has little protection from stress’
(Schwager, 1990). It is unclear why no correlation
between performance and stress was found
among Interbank and Sales traders; but this dif-
ference further emphasizes the need for evaluat-
ing findings in terms of trading role.
The present study did not find evidence for
lower performance among workers reporting
high stress. Quite likely, traders are self-selected
for high achievement and will defend work per-
formance even in the face of high stress. Perhaps
assessing performance in non-work domains (e.g.
marriage and personal relations) may help clarify
the relationship between work stress and trading
performance.
Research considerations
The present study must acknowledge some intrin-
sic limitations. Trader performance can be
affected by many factors other than stress, and
thus relationships between performance and
stress here are speculative. Reliance on self-
reported stress also allows for the possibility of
reporting bias. Self-reports, however, take into
account perceptions of stress, which are often
more important than the stressor itself
(Koslowsky, 1998). Time constraints of study
subjects precluded use of existing validated scales
of stressors. These pre-existing scales, in any
case, do have weaknesses (Hurrell, Nelson, &
Simmons, 1998; Quick, 1998), and survey instru-
ments devised for ‘standard’ workers often prove
inadequate for specialized populations (Hurrell
et al., 1998).
Performance in the present study was gauged
solely through supervisor ratings, which are not
necessarily good substitutes for objective ratings
(Vinchur, Schippman, Switzer, & Roth, 1998).
For instance, a high degree of acquaintance
between worker and supervisor can pull rat-
ings in a positively-biased direction (Sundvik &
Lindeman, 1998). However, an industry-specific
reliance on quantitative trading performance
may mitigate this bias—supervisors continuously
receive objective data regarding each trader’s per-
formance. Furthermore, because participation
was voluntary, the study protocol precluded
probing non-participants, and the study may have
missed cases with differing profiles. A further lim-
itation derives from the cross-sectional nature
of this study, which prevents drawing causal
relationships.
Future research directions regarding stress
among traders should include the examination
of the role of personality and study the impact
of minority membership in a high-pressured
occupation. For example, gender differences
for stress have been observed also within the
finance industry (Dias, 1997; Jones et al., 2003;
Webster & Bergman, 1999). Moreover, while a
thorough trader selection process may lead
to a ‘healthy worker effect’ of stress-resistant
traders, the need for studying profession-specific
coping mechanisms is suggested by one manager
who noted that the tendency of some traders to
‘react violently in stressful situations means
having to replace a number of telephones or
keyboards’.
In this self-motivated group, supervisors likely
do not need to impress further the need for
emphasizing ‘profit goal’. This study provides no
evidence that boosting work stress improves per-
formance; if anything, it indicates an association
between higher performance and lower stress. In
some cases, bonus incentives designed to boost
performance might unintentionally boost stress.
Future research collaborations between trading
T. Oberlechner and A. Nimgade
Copyright © 2005 John Wiley & Sons, Ltd. Stress and Health (in press)

firms and academicians may help unravel causal
links involved. Such collaborations can also
clarify the role of decision latitude (Karasek &
Theorell, 1990) and reward systems (Bosma,
Peter, Siegrist, & Marmot, 1998; de Jonge,
Bosma, Peter, & Siegrist 2000) in moderating
stress, as indicated by current theorists.
Acknowledgments
The authors wish to thank the following individuals for
their invaluable insights and comments: Eileen
McNeely, PhD, Harvard School of Public Health;
Suresh Krishnaswamy, MS, Fleet Financial Services,
Boston; Anurag Pandit, MBA, John Hancock Financial
Services. Financial support for this research by the FWF
(Schrödinger Scholarship #J2219 and #J1955-SOZ) is
gratefully acknowledged.
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