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Note: At a time when the risks associated with derivative instruments have never been greater, the new simulation technology updates training methods to match developments in the markets themselves.
Games used to be a standard rite of passage of the junior trader's upbringing. And it is surprising on closer examination how much of financial market activity can be captured by relatively simple games. Ideas around bidding and offering, position management, inventory and liquidity are embedded in the framework of card and dice games. Beyond these structural elements, can be found the less tangible psychological factors: the fear of loss, the value and dangers of decision-making under the influence of adrenalin and the need to discern truth from misrepresentation.
And of course there is theory: statistics after all was developed at the outset for the formal analysis of gambling.
Generations of traders have been raised on versions of Liar's Poker and on paper trading an arbitrary number such as the average age of people in the room. Whether managers used the label or not, such training is a direct manifestation of an approach known as gamification. In other words, relying on the strong parallels between a game and an actual business function to be able to use the game as a highly effective teaching tool. Note that this goes beyond mere offline replication of the business function. Gamification of a task aims to power-up training to be more effective than mere simulation. And when executed properly, it does just that.
So how does gamification in technology work? Most importantly, by making a simulation hugely enjoyable. A game that is enjoyable immerses the player in the moment and in the activity. By centralizing the players themselves within the action, learning comes almost effortlessly and...