At a Glance
- A team from Singapore tops nearly 500 teams in global trading competition
Team Alpha did not enter the CME Group Trading Challenge expecting to win. Their goal was simply to get experience against students from some of the world’s top finance and business programs.
But after a month of trading futures, the team from Nanyang Polytechnic in Singapore earned more than a 100 percent return on their trades, and topped 467 other schools to claim the top prize in the 2016 competition.
“We entered the challenge mainly for the experience because we knew we were going up against Ivy League schools,” says Darrell Lim, one of three students on Team Alpha. “We were not exactly looking to win it, but to take away some experience. We wanted to compete against the best and see how far we went.”
In recent years, the Trading Challenge has become a proving ground for international teams of graduate and undergraduate college students looking to test their skills at trading financial and commodity futures contracts. Nearly 2,000 students participated this year representing 200 universities from 30 countries. Teams spend two weeks in a preliminary round, with the top 10 percent there moving to a final round in March. Ten futures contracts are available to trade covering metals, agriculture, energy, foreign exchange, equity indexes and interest rates. The Nanyang Poly team is the third straight school from outside the United States. to win the competition after teams from Spain and Turkey won the last two years.
Lim says they looked to the results of those teams to gauge how well they would need to perform in order to finish near the top of the standings. They carefully plotted their approach.
“Throughout the competition, we were waiting and looking at the charts for a while before trading,” he says. “We thought the winning level might be near $500,000 because it’s a 100% return (on a $250,000 starting balance for all teams). We also looked at the champions from the previous few years, and saw that if you can secure 80 – 100% return on your portfolio, we had a good chance to win the competition.“
Following The Trends
In terms of trading strategy, Lim says his team, which also includes Chong Li Shi, Toh Qin Yi and faculty advisor Anthony Ng, decided to trade economic trends, looking at the situation around the globe and focusing in on smaller time frames. By focusing much of their trading on gold and oil, they were also following trade volume trends of first quarter 2016.
On real markets – Trading Challenge accounts are simulated — gold futures at CME Group reached their second highest quarter for average daily volume ever, while West Texas Intermediate crude oil reached record average daily volume for both futures and options trading in Q1.
Though they are college students, the team formed their approach from experience. Nanyang Poly is home to the Financial Training Center in the School of Business Management. Team Alpha students spent seven weeks in a course there trading foreign exchange and equity contracts that honed their market knowledge and technical analysis skills. They did well enough in the Training Center that Ng, their faculty advisor, suggested entering the CME Group competition.
“The takeaways from the Financial Training Center are huge,” says Lim. “The appreciation of risk management, understanding stop/loss, max exposures, correlation – these were things we were able to apply in the trading challenge.”
Asked about advice for teams who may enter the competition in the future, Lim points to his team’s experience having traded and studied markets before entering.
“Read up on your market knowledge. It’s not easy to look at the chart and understand it. Also, try to get involved in competitions where you have a demo balance to trade FX, equities or derivatives. You then learn how the market is working at different times, you learn about volatility.”
Lim, Yishi and Yi are all recent graduates in banking and finance. Li Shi is planning a career as a wealth manager for a private bank. Lim and Yi must fulfill two years of service in Singapore’s military, a mandatory requirement for all males at age 21. After that, Yi is looking to enter asset management and Lim plans a career in M&A, equity trading or fixed income trading.