In some ways, I was born to be a trader.
At the end of the street I grew up on, in front of the tall, concave wall of a recycling center, a lamp post and a telegraph pole stand four yards apart from one another, forming the perfect set of impromptu goalposts. If you stand between those two posts, take 10 big steps backward, and stare upward and between them, into the far distance, the light of the tallest Canary Wharf skyscraper will peek over that high wall, and wink at you.
After school, as a child, I would spend long evenings kicking battered foam footballs in and around those goalposts, wearing battered school shoes and my brother’s school uniform. When my mum would come and call me home for dinner, I’d look back and watch that skyscraper wink at me. It seemed to mean some sort of new life.
It wasn’t just the streets of East London I shared with those gleaming, towering temples of capitalism. There was something else too, some kind of shared belief. Something about money. Something about want.
When my mum would call me home for dinner, I’d look back and watch the tallest Canary Wharf skyscraper wink at me. It seemed to mean some sort of new life.
The importance of money, and the knowledge that we didn’t have much of it, was something I always felt deeply. In one of my earliest memories, my parents gave me a pound coin, and sent me to the Esso garage to buy lemonade. At some point in the trip, I dropped that pound coin, and lost it. In my memory, I searched for that pound coin for what seemed like hours—crawling under cars, scrabbling in the drains—before returning home, empty-handed, and in floods of tears.
In reality, it was probably only 30 minutes. But 30 minutes is a long time when you’re a child, I guess, and one pound was a lot of money.
I don’t know if I ever really lost that love for money. Although, now, when I look back and think about it, I’m not sure that “love” is the right word. Perhaps, especially when I was a kid, I think it might have been more of a fear.
Due West
The London School of Economics is not really a normal university. With no grand, leafy campus, the university buildings camouflage themselves as a cluster of innocuous offices, and secrete themselves down a side alley of London’s West End.
In spite of these relatively innocuous surroundings, the global elite funnel their children into the university with astonishing enthusiasm. It seemed that no Russian oligarch, no Pakistani Air Force commander, and no Chinese politburo member had missed the opportunity to send an ambitious son or daughter over to this unremarkable corner of central London to study simultaneous equations for a few years, before flying home to take over the running of the mother country, perhaps with a few years working at Goldman Sachs or Deloitte in between.
In 2005, when I arrived at the university to study math and economics, I was not a typical L.S.E. student. Three years earlier, I had been expelled from my high school for selling exactly £3 worth of cannabis. I turned up for my first day of lectures in an Ecko tracksuit of matching blue-and-white hoodie and jogging bottoms.
I didn’t really have much idea, before I got there, of anything about the university. But a kid at school had told me that a degree from the L.S.E. was a one-way ticket to a big-money job in the City, and that had been good enough for me.
Unsurprisingly, I didn’t really fit in. The Russian oligarchs didn’t eat at halal fried-chicken shops. The Singaporeans didn’t understand my accent. To save money, I was living with my parents, in Ilford, 10 miles east of the university.
Despite that, I was committed to doing well at L.S.E. I didn’t have any family connections, or any knowledge of the City. The most impressive extra-curriculars on my C.V. were an extremely uninspired career as a fast-rapping grime M.C. and two years’ fluffing pillows at the DFS sofa store in Beckton.
But math had always come naturally to me, so, the way I saw it, there was only one path for me into the City—beat all the Arab billionaires and Chinese industrialists to a top first-class degree, and just pray to God that Goldman Sachs noticed. My plan to achieve this was relatively simple: sit at the front of every lecture and class, and make sure I understood everything that every professor and class teacher said.
A kid at school had told me that a degree from the L.S.E. was a one-way ticket to a big-money job in the City, and that had been good enough for me.
The strategy worked pretty effectively, and I finished the first year of the course with a decently high first. I went away for the summer feeling as though my plan might just work. But when I returned to the L.S.E. for my second year, a couple of things had markedly changed.
Firstly, suddenly, unprecedentedly, and seemingly apropos of nothing, nearly every student in the entire year group had become an intensely studied junior banker. I don’t mean to say that everyone had actually secured jobs in the glittering skyscrapers of Canary Wharf or the City, but everyone, totally unexpectedly, to me at least, began to behave as if they had.
I had no idea how to react to this complete change in the students surrounding me. Many had stopped attending lectures altogether, so as to allow their time and energies to be devoted more completely to the arts of networking, applying for jobs, and learning the language and acronyms of the world of finance.
I was lost. I could do math. I could do economics. But in this new world of acronyms, I had nothing.
What saved me was the second change in my university experience, which was equally unexpected and inexplicable. When I returned for my second year, people suddenly knew who I was. Students who I had never seen before in my life, even sometimes from the clan of suit-wearers, would approach me in the library and start talking to me. None of it made any sense.
In my confusion, I raised this mystery with my friend and fellow student Sagar Malde, a tall, wiry Kenyan-Indian boy with a wonderfully florid accent, whose father owned the entire East African soap industry. “Of course they know!” cried Sagar, as if it was obvious. “They know how you did in your exams.”
This answer didn’t quite explain the mystery. My results had been good, but, as far as I was aware, they hadn’t been public, and besides, they were far from the best in the university. Sagar himself, for example, had done significantly better than me. “Of course, Gary,” he said kindly, when I put that to him, “but no one expects that from you.”
Sagar was a lovely boy—we’re still good friends. But in that moment I was genuinely shocked. I’ve always been good at math, since as far back as I can remember. Sagar’s offhand comment, though, made me realize something for the first time, something which had never even occurred to me before: a lot of rich people expect poor people to be stupid.
So while everyone else was applying to 37 investment banks, I started to study in my spare time. I asked even more questions of the lecturers. I started to challenge them when they made mistakes. I didn’t really have any idea if or how it would ever lead me to a career, to be honest, but I wasn’t really thinking too much about that, anymore. I just wanted them to know they weren’t better than us.
Unsurprisingly, I didn’t really fit in at L.S.E. The Russian oligarchs didn’t eat at halal fried-chicken shops. The Singaporeans didn’t understand my accent.
Then, one day, a strange thing happened. A gangly northern kid from Grimsby wandered over to me in the library. His name was Luke Blackwood, a fellow math student from the year above me.
“Are you Gary?” he asked me, and I told him I was. “Listen, Citibank have an event next week. It’s called the Trading Game, but it’s basically a maths game. If you win it, you can get invited to the national final, and if you win that you get an internship. I heard you’re pretty good at maths. You should go.”
I had never met Luke before, but he sat down next to me, told me the date and time of the competition, and briefly explained to me the rules of the game. I didn’t know anything about trading, but, as Luke said, I didn’t have to: it was essentially a relatively simple math game.
After showing me how it worked, Luke got up and simply walked off, leaving me sitting in front of a blinking computer and a few half-finished pages of math homework.
I don’t know why, but I was immediately sure I was going to win that game. I might not have known anything about C.D.S.’s or C.D.O.’s or asset-backed securities, but I knew about games, and I knew about math. Here, it seemed to me, was, finally, a path into the City that didn’t require me to have played the oboe. Here, finally, was a level playing field, a real competition.
I put away my textbooks and closed down my math homework. I opened up a spreadsheet and set about working out all of the math of the game.
I might not have known anything about C.D.S.’s or C.D.O.’s or asset-backed securities, but I knew about math. Here, it seemed to me, was, finally, a path into the City that didn’t require me to have played the oboe.
The first round of the Trading Game event was only a few days after my conversation with Luke. Inside, we were split up into groups of five and placed at separate tables. A huge man stood, gleaming, in front of a large flip chart at the front of the room. This was the first trader I had seen in my life.
Once we were seated the trader explained the rules of the game. The Trading Game was supposed to be a simulation of trading, but actually, it was just a numbers game. It ran using a special deck of 17 numbered cards: some higher, some lower.
In case you ever want to play it yourself, the full deck of cards was a -10, a 20, and all the numbers 1 through 15. Each player is dealt their own card, which they can look at, and then another three cards are placed, face down, in the center of the table. Your role in this game is to “trade”—to make “buy” and “sell” bets with the other four players on what the total of the eight cards will be. Five cards in the hands, three cards on the table. Simple, right?
All L.S.E. economics students do the same thing. They write down the distribution of the cards in the deck. They look at the card in their hand. They calculate, statistically, a mathematical “expectation” of what the total of eight cards will be. They bet using this number.
This is all simple math, and it’s not difficult to do. Everyone at the table was able to do it. But it’s stupid. And I’ll explain to you why. I had been studying with L.S.E. math and economics and finance types for a year by this point. I knew how they thought.
If you bet using your mathematical expectation, you are telling me the card in your hand. But it’s worse than that. It’s much, much worse. If you have a 20, your expected total value is 68. If you have a -10, it’s 51.2. What if both those guys are at my table, betting using those numbers? I can buy at 52, and I can sell at 67. That’s 15 points, risk-free—pure profit.
I did that another 10 times. Those kids never even looked up from their calculators. Just like that, I won the whole competition.
I went up to the trader at the front of the room and I shook his huge hand. “Well done,” he said. “I’ll see you in the final.”
Here, finally, was a level playing field, a real competition.
It was about three weeks between the L.S.E. round of the Trading Game and the national final, and I barely went to a single lecture or class in that whole time. By the time the final had come round, I must have been the world’s pre-eminent expert on it.
The final was to be held in the Citigroup Tower, which at that time, in 2006, was one of the three tallest buildings in the country, with the HSBC tower and the blinking pyramid dome of the main Canary Wharf tower completing the triangle. Those were the buildings that I’d seen on the horizon, from Ilford, between the lamp posts at the end of the street. It felt like fate.
I put on a dark-blue checked shirt and a fat blue-and-yellow tie. Before the game, there was a brief reception of champagne and canapés. I didn’t know what a canapé was, and I didn’t drink any champagne. The other candidates mingled and laughed gently with the traders in attendance. Probably laughing about C.D.O.’s. But I wasn’t listening. I was there for the numbers.
We settled down to our tables. As the same massive, smiling trader from the first round at L.S.E. delivered some motivational words, I was sizing up the players at my table. My strategy would have to be totally different for this round. Everyone here had played in the first round and done well enough to go through.
While the other students were playing through their calculators, I was guiding their ears and reading their eyes. Start with a loud bluff, then rapidly assess every other player’s intelligence, level of complexity, and likely card. Once that was established, I’d decide whether I wanted to buy (bet the total would be high) or sell (bet the total would be low).
The strategy worked to perfection, and after the first five games, I was put through to the big final, the final of the final. Only five players now. One internship on the line.
I figured my chances were good. The cards came round and mine was a -10. This is a good card. The -10 is the furthest card from the average, which means it has the most power to change the total of the game. But of course, it’s only of value if other people don’t realize you’ve got it. Otherwise, they’ll immediately start lowering their own prices, and you’ll have no way to profit from it.
Only five players now. One internship on the line.
By the end of the game I had racked up about 300 sells. The final card went over. It was a 20. The four other players turned their cards over. 10, 11, 12, 15. It was impossible. With the exception of my single -10 card, the other cards were the seven highest possible cards in the game. The odds of that happening by chance are 1 in 11,440—0.0087 percent. The game had been fixed.
For just a moment, my blood ran cold. Who rigged the game? Why?
The table disbanded as the traders and other Citigroup staff members convened in the back of the room to count up the scores. Shortly after, the trader strode into the center of the room, his huge presence immediately silencing the crowd. A space opened up around him.
“I would like to thank you all for playing,” he called out. “We’ve calculated the scores, and I can announce the winner.”
The name that he called out was mine. I was the winner. It was me.
I stepped forward, in a daze. The trader addressed the crowd as he shook my hand. “Gary’s scores in the warm-up games were so far ahead of any other player that we decided to test him. We wanted to see how he reacted when every single thing turned against him, so we rigged the game. It’s important to know whether a trader will back himself, or back down. Gary, you backed yourself, and we like to see that. Well done.”
The trader reached his huge hand out to me once again, and I took it. “I’m Caleb Zucman. I’ll see you on the desk.”
Gary Stevenson spent six years at Citibank, eventually becoming the most profitable trader in the world. In 2014, he left the trading world behind, convinced that solving inequality was the only way to repair the world economy. He has since studied for an MPhil at Oxford, worked with economic think tanks, and founded a YouTube channel, Garys Economics, teaching people about real-world economics.
Gary Stevenson is the author of The Trading Game. He regularly appears on television and radio and has written for Fortune, The Guardian, and OpenDemocracy, among others
