UQ Business School students placed 6th overnight in the Rotman International Trading Competition hosted by the University of Toronto – beating the likes of MIT and Duke University.
Lecturer in Finance Dr Jason Hall accompanied the team of Christopher Catanzaro (Kangaroo Point), Matthew Thorne (Taringa), Nathan Jackson (Springwood), William Jensen-Manfield (Paddington), Dee Oh (St Lucia), and Benjamin Riley (Bracken Ridge).
With four cases to contest, the students first had to facilitate institutional orders on shares, attempting to make money by trading on the bid-ask spread and by speculating on stock price movements.
Dr Hall said the aim was to buy shares for just a few cents lower than the price you sell them for, maintaining little overall exposure to market movements.
“We placed second in this case having honed our risk minimisation strategy over the past two months,” he said.
The second case saw students trading a futures contract on a simulated index in a trading pit.
The index responded to macroeconomic information which was conveyed to the traders by runners who signalled – they weren’t allowed to speak – whether the economic news was good or bad and the magnitude of the impact.
The third challenge was the arbitrage pricing theory case where traders buy and sell on the basis of a fundamental valuation model they have developed – and which is updated by live information from the market.
“A strategy of taking early positions on a fundamentals basis and refusing to speculate on ‘noise’ gave the team a 3rd place result,” Dr Hall said.
The team took some large losses in the final round which involved trading an extremely volatile index futures contract, placing 31st.
“Thankfully, our risk management strategy meant that it was far less costly overall to lose money trading the futures contract relative to the shares traded in cases one and three,” Dr Hall said.
“Two top three results in the most quantitative aspects of the competition meant that even the disappointing finish in the final case couldn’t take away a top six overall result.
Mr Jackson, Mr Jensen-Manfield, and Ms Oh are in the honours year of the UQBS commerce program. Mr Thorne, Mr Riley, and Mr Catanzaro are completing the undergraduate commerce program and are likely to join next year’s honours cohort. Team members have already attracting considerable interest from banks and trading houses.
For more information contact Cathy Stacey (07) 3365 6179 or 0434 074 372.
