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February 1996

Virtual Stress

Wargaming with New York commodities traders gives
senior officers "think-fast" training for info-based wars

By Capt. Mike Snyder, Public Affairs, New York

The New York Mercantile Exchange in New York City, famous for the biting financial dynamics which quickly devour the unwary commodities trader, recently served as an unlikely proving ground for a 21st century Marine Corps experiment.
At the close of the trading day on the first Monday in December, a team of Marine Corps generals and colonels tested their mettle with exchange traders as part of the first wargaming experiment conducted by the Commandant's newly created Warfighting Laboratory.

At the Mercantile Exchange, commodities such as cotton, gold, and coffee are bought and sold daily by anxious traders representing customers around the world. The traders for a commodity assemble on steps in a circular "pit," which is surrounded by banks of television screens flashing information on commodity prices, world news, and other financial information. Also surrounding each pit are digital clocks flashing ever-fleeting time down to the second.

In the pits, bodies shake, arms wave, necks strain, and shouts rise as traders hawk deals, hone terms and scheme to bluff one another. As new information flickers onto the massive screens, the traders make split-second decisions affecting millions of dollars worth of commodities.

Each day, exchange traders fight an information war where decisions based on digital data, experience, and intuition define the "battlefield."

"These guys make rapid decisions every day," said Col. Tom Harkins, director of operations at the Warfighting Laboratory, in Quantico, Va. "They've developed a sense of how to manage high volumes of information.

For two days, over a dozen Marine Corps officers, led by Gen. Richard D. Hearney, Assistant Commandant, teamed up with traders in simulations testing their ability to process information in an increasingly digital environment.

This one-of-a-kind wargame was the first in a Warfighting Laboratory experiment testing the decision-making process. The wargame's purpose was to glean suggestions from traders on decision-making techniques for fighting an information-based war.

On the first day of the exercise, the Marines received a brief by senior traders of the Mercantile Exchange on how to trade commodities. After the Exchange closed for the day, the Marines assembled in the copper pit for simulated trading -- each assisted by a trader experienced in information combat.

"Bid 10 at 85," shouted Gen. Hearney, beating the opening buzzer by milliseconds at the protest of his fellow officers.

Notwithstanding a tentative start, the officers, urged on by their trainers, were soon buying and selling commodities with flair befitting the Exchange.

According to Neal Wolkoff, executive vice president for the New York Mercantile Exchange, the Exchange accommodates simulated trading like this approximately six times each year.

The Marine officers provided the best simulation seen in a long time, according to Gary Lapayover, the Exchange's senior trader with 23 years of experience in the pits.

"Give those guys a few more days and they'd fit right into the rings," he said.

On the second day, the traders traveled to a Coast Guard installation on New York City's Governor's Island for computer-generated wargaming -- Marine style. Together, the officers and traders prioritized calls for fire in a high tempo environment featuring changing information and severe time constraints.

"We had good rapport," Gen. Hearney said. "The analysis afterwards will tell the tale."
Over dinner at the wargame's conclusion, the officers and traders shared ideas and lessons learned.

"I see similarities," commented crude oil trader Neil McGoldrick. "Plotting the mission is just like plotting the market." McGoldrick said he never begins a trading session without an initial plan and an expectation of where the market and other traders may go.

According to Wolkoff, this is a general practice of successful traders.

"But then the market takes over," he said. He believes traders each have a different way of making decisions in the face of information overload, redefining their initial plans in a rapidly changing market.

Final comments from Dr. Gary Klein, chairman and chief scientist of Klein Associates, who assisted the Laboratory by observing and analyzing the two days of wargaming, identified practices of the traders which could assist the Marine Corps. He noted that traders begin their day with a definite plan of action based on technical analyses of past market performance. They also keep their "edge" throughout the day by immediate feedback as delivered through advanced technologies. Traders have been able to build a sense of criticality into their work, and they've evolved the decision-making process. Finally, traders are very keen at limiting their losses. They know when to pull out, especially when ill or fatigued. Some days, they may not trade at all if they don't feel they can maintain the needed edge.

At the heart of the two-day wargame was "Sea Dragon," a larger experiment testing a series of advanced warfighting concepts intended to ensure that Marine Corps operating forces are prepared to meet 21st century challenges.

Sea Dragon marries emerging technologies, such as low-cost, lightweight digital systems centered on Global Positioning System, satellite communications, and target designators, with enhanced warfighting concepts, thereby enabling information at the small unit level to be passed with revolutionary speed and accuracy.

"Sea Dragon is not just a bunch of teams running around with a laser," Col. Harkins said. "It is three parts mental, one part technology."

This immediate transfer of combat information challenges combat systems and the chain of command, which must immediately prioritize fire support and make rapid tactical decisions. The dilemma is not new to the Marine Corps; however, the laboratory is working with the belief that 21st century technology will produce volumes of combat information exceeding levels experienced thus far.

General Hearney acknowledged that even though the Marine Corps has been wrestling with the realities and technologies of the Information Age, "we haven't seen anything yet."

The Commandant's Warfighting Laboratory will continue experimenting with the decision-making process, with full support from Gen. Hearney. His departing comments to wargame participants were "stay mentally switched on."

For the traders, Lapayover said, "After this, they (Marines) might have a different way of looking at things. I think most of the traders will remember this for the rest of their lives."


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