1/8/2016 Emily Scott
Two student teams from Illinois participated in the 2015 CME Group Trading Challenge
Written by Emily Scott
Two student teams from Illinois participated in the 2015 CME Group Trading Challenge, a competition for undergraduate and graduate students that simulates the experience of professional trading, and were among the top 10% invited to participate in the challenge’s championship round.
Of the two Illinois teams, Team UIUC-Stockii ranked 12th in the preliminary round, while Team UIUC-FE ranked 46th.
The challenge required teams of three to five members to execute trades on the CME Globex platform using the program CQG Integrated Client.
Over 500 teams entered the preliminary round, with 50 teams passing into the top 10% to participate in the final round. These teams were also invited to CME (Chicago Mercantile Exchange & Chicago Board of Trade) for a day of training and interaction with traders.
“Chicago is a world center for trading futures and derivative securities in general. CME and CBOE (Chicago Board Options Exchange) are two of the major derivatives exchanges in the world,” said ISE Professor Liming Feng, who had a number of his students participate in the competition. “Chicago’s derivatives market provides great opportunities for those UIUC students that are interested in trading derivatives.”
Junming Zhang, a visiting doctoral student in computer science studying quantitative finance, led the UIUC-Stockii team. He said he decided to enter the competition with his teammates, Fan Yang and Xiwei Tang, to see whether his experience in stock trading could work in the future market.
Zhang described the competition as “a wonderful experience.” But from the start, the competition proved to be a challenge for the team.
“The strategy that I used to trade stock seemed useless,” Zhang said. “It made us suffer a lot.”
In the first four days, their balance dropped by 30%, which Zhang said made the team feel “hopeless to get to the final round.”
Nevertheless, Zhang said he had a will to win. He described how one night he was rethinking the team’s strategy, and discovered that their previous one was “totally wrong.”
“In the stock market, you would like to start small positions and increase it if you were right with trend,” he said. “But the future market changes too fast, most of the traders are day traders which don't keep their positions overnight.”
So he tried a new strategy, one where he started big and cut the positions when he saw a resistance, and used indicators that he used in his stock market experience to identify entry and exit points.
Zhang said this strategy worked extremely well, allowing them to gain back what they had lost. They eventually made a 58.7% profit in the final week, placed 12th in the preliminary round, and 19th in the final round.
“I think [being a] trader is the most fantastic job in the world,” Zhang said. “Students can learn and enjoy this feeling from the competition.”
Yang, another member of UIUC-Stockii, said, “CME Group’s trading challenge is not only an opportunity for us to learn how to trade on a real-time professional trading platform, but also an opportunity to show how powerful the statics is.”
The other team representing Illinois was UIUC-FE, led by MSFE student Di Xiao, and included Chongda Liu, also an MSFE student. Their team placed 46th in the preliminary round.
For students interested in this field, the CME Group Trading Challenge is an opportunity for them to put their skills to the test and be immersed in the trading experience.
Qiasheng Zou, a junior in industrial engineering, said he hopes to participate in the competition in the future in order to learn more and be able to network with others.
“One thing that I would like to gain for these kinds of experience is to know more people in the trading field,” Zou said. “From other competitions that I have been into before, participants will have a lot of networking opportunities to talk with student traders from other universities and professional traders from the industry.”
Zou said these networking opportunities also allow students like him to see how market news can be interpreted differently by a number of people. “I basically gained a clearer understanding on the impact of the news through my conversation with them,” he said.
“[The competition] gives students a great opportunity to develop a deeper understanding of the futures market,” Feng said.