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What an MIT professor learned by monitoring traders’ emotions

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Traders watching market reaction to U.K. PM's Brexit speech
Traders monitor financial data on computer screens on the trading floor at ETX Capital, a broker of contracts-for-difference, in London, U.K., on Tuesday, Jan. 17, 2017. The U.K. is likely to pull out of the European Union’s single market for goods and services and seek a completely new trading relationship with the bloc, Prime Minister Theresa May will say Tuesday as she sets out her plan for Brexit. Photographer: Luke MacGregor/Bloomberg
Luke MacGregor/Bloomberg

Andrew Lo is the Charles E. and Susan T. Harris Professor at the MIT Sloan School of Management and director of the MIT Laboratory for Financial Engineering. In his research, he straps sensors to traders and watches how their pulses and body temperatures change when markets dive or trades go bad. The technology could be used elsewhere in a bank to potentially address problems before they escalate.