College of Business: University of Illinois at Urbana-Champaign

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Trading Training


12/17/2009

by Sarah Small

While many of his peers got summer jobs bagging groceries and mowing lawns, 16-year old Matthew Gitelis worked as a runner on the floor of the Chicago Mercantile Exchange for the Iowa Grain Company. For five summers he got more and more involved in the trading industry, until this year when he applied his practical knowledge to an academic competition and placed third overall in the Tulane Energy Trading Competition nationals.

For two weeks in October, eight ILLINOIS students participated in the regional competition of the Tulane Energy Trading Competition. The students worked in two teams of four trading natural gas and crude oil futures contracts. Based on their performance against competitors from other universities, Gitelis’ team qualified to compete at the national level.

Gitelis said he learned about the competition from his finance professor Virginia France who received an invitation to participate.

"This is just one of the ways in which we are using the new Margolis Market Information Lab to make oru courses more practical (and more exciting). My students had already had a chance to participate in a couple of  in-house trading simulations, one with the X-trader software and one using BP's proprietary system. But we were thrilled to be able to compete with other schools, and especially to make the nationals on our first try," said France.

“It sparked my interested,” Gitelis said. “It sounded like something that was right up my alley.”

For a weekend in November, Gitelis, a junior in finance, along with two of his teammates, Adam Schloss and Tanmay Khirwadkar, traveled to Tulane University in New Orleans for the competition’s finals.

“We were all together in it,” Gitelis said. “We were trying to win it for ILLINOIS.”

The national competition at Tulane University differed from the regional competition because the 28 students who went to the finals all traded independently of each other, while in the first round of the competition the students traded as teams.

“We traded as if the market closed Friday and we were picking up the next Monday,” Gitelis said. “We were trading a simulated day and it was all interconnected. It was pretty realistic.”

Trading Technologies International, one of the competition’s corporate sponsors, provided the X-Trader trading software for the participants to use, and spent months adjusting it for use in the competition.

The students also had access to Reuters datafeeds.

The 28 participants in the competition were all linked in the computer-based simulation, and the trading activities of each participant affected the trading for the rest of the group.
“Trading’s a really hard field to break into,” Gitelis said. “You have to have someone to show you the ropes. This is a good opportunity to get experience trading.”

Before beginning trading, each participant got a role to play in the competition. Gitelis was a producer, and he needed to be “short” on the commodity at a certain time-marker in the live trading. He said other students traded as consumers where they needed to be “long” on the commodity at a specific time-marker.

“I just went in there with the mentality of, ‘This is something you’ve worked with in the past, just go in and trade like you know how to trade,’” Gitelis said.

The students had two one-hour sessions of live trading during the day, and spent the rest of the time talking with judges about their individual trading strategies for the day. The judges were energy traders from leading energy trading firms, who helped sponsor the competition.

At the conclusion of the day’s live trading, the participants met with the judges to answer questions and so explain the effectiveness of their trading strategies.

The judges evaluated the students on their trading performances with risk adjustment. Gitelis said the scoring was not only contingent on how much money the student earned while trading, but also on how well he or she managed risk.

Satisfied with his result, and the result for ILLINOIS, Gitelis said he would be interested in participating in other trading competitions in the future and even the Tulane Energy Trading Competition next year.

“Once you get exposed to (trading), your eyes open up and you want to learn everything you can,” Gitelis said. “That’s what made me interested and want to learn more.”

 

For more information, visit: http://tulane.edu/news/releases/pr_1116b2009.cfm

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