Wall Street's Next Frontier Is Hacking Into Emotions of Traders

The trader was in deep trouble. A millennial who had only recently been allowed to set foot on a Wall Street floor, he made bad bets, and in a panic to recoup his losses, he'd blown through risk limits, losing 4.9 million in a single afternoon. The trader was taking part in a simulation run by Andrew Lo, an MIT finance professor. The goal: find out if top performers can be identified based on how they respond to market volatility. Lo had been invited into the New York-based global investment bank--he wouldn't say which one--after giving a talk to its executives.