SIG employees enjoy success in the financial markets in part because of the application
of game theory and risk management concepts to complex market dynamics. The activities
listed below highlight different aspects of the strategic landscape in which we
SIG commonly uses poker to teach new hires about decision making under conditions
of uncertainty. In poker, players must make decisions based on incomplete information,
using probability to determine the expected value of those decisions. Similarly,
SIG traders make risk decisions based on the limited information they get from the
markets and relate that to the expected value of each trade.
Magic the Gathering
Several employees at SIG hone their decision-making skills by playing Magic the
Gathering. While playing Magic, you have to be aware of numerous things going on
simultaneously. For example, you must be able to read your opponent, and be able
to perform card evaluation quickly. There are multiple factors that need to be analyzed
before doing a trade. Skills gained from Magic can help assess counterparty motives
and evaluate risks associated with a trade.
There is neither risk nor uncertainty in chess; you know everything that your opponent
knows about the game, and there are no outside forces that alter the course of play.
The best strategy in chess does not necessarily depend on what has already happened
in the game, but the past actions of your opponent can provide insight into their
thought process. This “shadow of the past” may also be considered in trading, where
understanding the actions of other market participants can improve a trader’s decision-making
There are many carryover lessons to trading that come from team sports. While the
image of the lone trader standing against the market makes for a good movie, in
reality many traders work collaboratively, each playing his or her part in information
gathering, assessing alternatives, execution, and risk management.
Successful bridge players are able to remember the actions of their teammates and
apply those actions to their strategy. Our traders rely on our common language in
discussing risk and strategy to make the best decisions in the marketplace, anticipating
the impact of their “teammates’” actions on other parts of the market.
Blackjack is a game of memory, which is extremely important in trading. Traders
need to remember orders, positions, and risks. Being able to remember previous cards
(in the game) or orders (in trading) allows our traders to better assess risk and
Strategic Board Games
Board games can be more than just ways to pass the time or simple games of chance.
Certain board games require strategic thinking, pattern identification, and quick
response time. Games that we find to be more strategic and relevant to trading include
Scrabble, Set, Settlers of Catan, Backgammon, Puerto Rico, San Juan, Powergrid,
and Dominion. In these games, players must work either collaboratively or independently
and act quickly or think strategically. All of these games highlight different aspects
of the decision processes that apply to various trading decisions.
Certain video games require quite a bit of strategy and can possibly incorporate
multiple (sometimes numerous) players at once. This environment can provide a helpful
platform for understanding the trading environment. Action games require quick reactions
to small changes in a potentially over-stimulating environment. This closely mimics
the trading environment, where traders keep track of many factors while looking
to react efficiently to important changes.