How testosterone can make a city trader earn a slicker million

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They found levels of testosterone, which drives competitiveness, rise during trading hours.

These can help generate higher returns by boosting a broker's willingness to take risks.

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Deal: The roar of victoroy, as a city trader strikes a bargain on the London market floor

Too much exposure to the male hormone can, however, trigger irrational risk-taking and lead to massive losses.

Researchers say their discovery explains why traders caught in a turbulent market often worsen the crisis by making poor decisions.

It also provides an insight into the behaviour of high-profile rogue traders such as Nick Leeson, who caused the collapse of Barings Bank in 1995 by making increasingly risky investments while trying to make up hidden deficits.

Professor Joe Herbert of the Cambridge Centre for Brain Repair, which conducted the research, said: 'Market traders work under extreme pressure and the rapid decisions they make can have profound consequences.

'Our work suggests these decisions may be biased by emotional and hormonal factors. 'Any theory of decision-making in market trading now needs to take these hormonal changes into account.'

The research team followed 17 traders in the City of London for nearly two weeks, taking samples of their saliva before and after each day's trading.

Testosterone levels were found to be significantly raised in those who had enjoyed a particularly good day's business.

The scientists also discovered that levels of the stress hormone cortisol rose in direct relation to market volatility and that an increase in cortisol leads to risk aversion and can exaggerate downturns in the markets.

The report's lead author, Dr John Coates, said: 'Too much testosterone can turn risk-taking into a form of addiction, while extreme cortisol during a crash can make traders shun risk altogether.

'In the present credit crisis traders may feel the effects of chronic cortisol exposure and end up in a mental state known as "learned helplessness". If this happens, central banks may lower interest rates only to find traders still refuse to buy risky assets.'