I began my career in finance as a trader. Our compensation was based on a combination of trade volume and performance gains. We were given little in the way of training — pretty much thrown into the deep end of the pool, while the head trader screamed “Swim!”

These were the early days of multi-player gaming. I would spend the day scratching out small gains, before going home flat. (Carrying an overnight position involved more risk than we were allowed to assume).

Then came Quake. After the close, we would hijack a price server, and a dozen or more guys would jack into the trading floor network for a quick round of blast and run. Although mid 1990s game might appear crude compared to today’s HD rendered graphics and 3D physics engines, these were totally immersive experiences. You would get completely lost in the nether world; what was supposed to a quick hour to blow off some stress fragging the guys you sat shoulder-to-shoulder with. The RPG/Nail Gun/Hammer driven shoot ‘em up often lasted deep into the night. It was where I first understood what the phrase “glorious kill” meant.

The parallels between trading and the shoot ‘em ups was obvious: You feel your way around a shadowy world where perils and rewards lay around each turn. In the beginning, you get toasted regularly by people with superior kno0wledge and firepower. After a while, you develop a familiarity with the lay of the land, learn where some power ups and weapons were hidden, and start to out shoot your competitors.

I was reminded of those early days reading a piece in The Atlantic about the daily work of traders at a bulge bracket firms. Although a trader’s actual job is quite specific — a “complex combination of rules and triggers” to generate specific monthly returns relative to risk and volatility — the work itself increasingly resembles MMOGs:

“Mind you, the game the traders play is nothing like Mario or Zelda or Megaman. It’s not a shoot-em-up or racing game. What it is is more like Starcraft or maybe TradeWars: an intense, cerebral, massively multiplayer real-time strategy game. It’s a game grounded in information: prices, mostly, but also all kinds of news and rumors and oblique signals, whether by way of balance sheets or CNBC. It’s the kind of game that requires the player to immerse himself in data, distill from it a sort of strategical gestalt, and convert that high-level battle plan into a series of discrete maneuvers, in this case trades on the open market.

The difference here being, of course, that it’s all real.”

Situational awareness and the ability to juggle are not only required skills:

“What stands out instead is a whole lot of fine-grained maneuvering: flitting from an open chat window over to a spreadsheet to run quick scenarios based on a new idea; backing off from a trade to see where his risk is at for the day; tracing counterfactuals (“if I do this and the market does this and I do this…”); catching a position on the verge of a critical price, diving into “crisis mode” for two minutes, eyes fixed on a few specific numbers, poised to react with a chord of contrapuntal trades; leaning back to watch the market for certain thematic trends; shouting to one of the senior traders on his desk when he’s confused about something; blocking half an hour to drill down into the details of a contract’s code; working out a low-level tactical “line”; jotting quick calculations and graphs; executing a series of rapid trades, running through a mental checklist to avoid mistakes; kibitzing with colleagues; responding to e-mails; eating; and keeping an eye on the news.

He says that his attention span has shortened but that in return he’s picked up two abilities: broad situational awareness, i.e., the ability to juggle lots of disparate facts in working memory; and the pre-scandal Tiger-Woodsian knack for blocking out distractions when something big is on the line.”

I would imagine most traders can confirm similar sensations between gaming and trading.

When I shifted from, trading to research, I experienced two difficulties: The first was pulling the needle out of my arm. Trading is a drug that involves lots of dopamine. All of the psychological discussions we have here, at least in part, trace to an early recognition that trading for an adrenaline high is not a formula for making money.

The second? The end of those late night Quake games . . .

>

Source:
On the Floor Laughing: Traders Are Having a New Kind of Fun
James Somers
The Atlantic May 9 2011
http://www.theatlantic.com/technology/archive/2011/05/on-the-floor-laughing-traders-are-having-a-new-kind-of-fun/238570/

Category: Markets, Psychology, Technology, Trading

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

13 Responses to “Trading as a “Massive Multiplayer Experience””

  1. bobmitchell says:

    E1M7, and the maniacal “clanking” sound that the grenade launcher made.

  2. TechnoGoddess says:

    BR, you should grab a copy of Bad Company 2. The multiplayer Rush mode is fantastic on Xbox Live. I assume it’s as good on Playstation and PC.

  3. dead hobo says:

    Some people, such as myself, can’t think like a day trader. HFT is the ultimate day trader and proof that you can make a lot of money if you have a lot of facts and can quickly implement what they mean. Or you can lose a lot. Given there appear to be so many day traders, it means that some free money is being passed out and they are simply collecting it AND, at some point it becomes a zero sum game. When the money stops flowing, it becomes a game of musical chairs and some poor goofs are left standing in their underwear, most likely mumbling “WTF, it should have worked … remember how much I made before someone stole my pants?”

    I can only think medium to long term. 3 or 6 months is about as short as I can go with respect to financial prognostication. I finally learned it’s all about liquidity, animal spirits and volume (HFT being one form of volume). In fact, you could probably associate each factor with a number, either add or multiply the numbers, and use the result to predict the future with fair accuracy. I don’t do that, at least yet. BTW, you have to have a visceral knowledge of useful economics to do this well. Not craponomics like debt=wealth, magic charts are visionary, and other easy answers to complicated questions which glorify stupidity.

    I took my first tip toe into my reactive bond fund and plan to put another toe in fairly soon. I hope to average down due to an unexpected equity rally that attracts cash out of bonds, but will chase rising values early on if I have to. My plan is to put about 50% in at the start, wait, chase momentum, then cash out after the rally looks spent enough to have squeezed out most of the gains.

  4. PseudoNoise says:

    TradeWars shout out, nice. Happiness is a three jump ore route and a Class M base.

  5. Julia Chestnut says:

    Wherever there was a network and a group of men during the 90s, I think that there were multiplayer games going. My husband used to show up late from work often enough that I checked up on him once — and discovered that he and the rest of the geeks in his office weren’t cheating on their wives, they were killing each other late into the night on the office server.

    My son discovered rail shooters at the ice skating rink when he was 5; it’s been downhill from there. He’s 10 now and plays Starcraft, regularly beating my husband. I only let him play on weekends because otherwise it would eat him alive. Geez, I hope that this doesn’t mean I’m raising a trader.

  6. skeptic9 says:

    So what is the trader’s analog to the BFG9000?

  7. franklin411 says:

    Barry,
    You left out one element that applies to both the gaming and trading experiences:

    In both cases, many of the guys who are supposed to be uber-skilled would be nothing without their aimbots.

  8. carrottop says:

    Quake is not a Massive Multiplayer Game (MMORPG).

    ~~~

    BR: Ahhh, but the markets sure are !

  9. [...] Why trading can ramp up your dopamine levels.  (Big Picture) [...]

  10. EdDunkle says:

    Only tangentially related, but the world champ in blocking out distractions has got to be Alex Honnold.

  11. Blunt Instrument says:

    @carrottop:

    True. It’s technically a FPS (First Person Shooter). The orginal Starcraft was a RTS (Real Time Strategy).

    I was just conveying a similar story to my children about the many, many days “working late” in the office fragging each other on networked Quake. Those were the days. Just the name “reaper bots” sends shivers down my spine.

  12. Anurag says:

    I found your post on Trading as a MMOG intriguing for many reasons. First of all, were you playing Quake in the mid-90s when you would have been say mid-thirties? How did your wife and kids take that :p I’m about 15 years younger than you and work on a trading floor and find the long hours are damn hard with two young kids.

    Like you, I too was playing Quake back then – and Doom before that – and spent countless hours in college and then grad school doing a CS PhD afterwards playing all sorts of FPSes. I agree with you on the similarities in terms of keeping many small bits of info in the “working set” of the brain simultaneously and also the strategizing and the counter-strategizing.

    Also, didn’t you train as a lawyer? How did you get into trading from there. That would make a good blog post if you haven’t covered it already. Love your blog!