How to play your cards well in Wall Street

NEW YORK - Perhaps the most famous trading experiment ever conducted was when commodities investor Richard Dennis bet his partner William Eckhardt in 1983 that he could train a group of amateurs dubbed "the Turtles" - to be successful futures traders.

- Aaron Brown

The bet was to be settled by giving the Turtles real money to trade. In the end, the Turtles compiled an impressive record, handing Mr Dennis the win. Although the experiment settled the issue in popular imagination, it lacked the transparency, controls and statistical rigour demanded by academics. Ever since then, researchers have strived to understand trading success through various studies efforts that have not escaped the notice of firms that are in the business of trading financial assets.

The latest entry in this quest comes from the Federal Reserve Bank of New York, in conjunction with researchers at the University of Southern California and University College London.

For a paper titled Strategic Sophistication And Trading Profits: An Experiment With Professional Traders, the authors recruited 56 professional traders, plus an equal-size sample of students for controls, and evaluated their performance in a computer-simulated trading game.