Two weeks from now, SIMM will embark on another networking trip. Similarly to the fall’s networking trip to New York City, SIMM will be traveling to Chicago to visit companies and network with alumni. While this is typical for SIMM’s involvement, the trip to Chicago is very special for one group in SIMM: Algo Trading.
Algorithmic Trading is becoming a new trend in the finance industry. Algo trading, as it’s called, is a method used by financial institutions to trade stocks and other instruments automatically through pre-programmed instructions. These programs seek to trade large orders of securities in milliseconds. That’s 100 times faster than the average person can blink their eyes. The team has a collaboration of majors including finance, computer science and accounting. Algo Trading in SIMM is currently in its second year and enjoyed recent success during last year’s trading competition in Chicago.
The trading competition involves the competitors completing several simulations to test their algorithm’s performance against expected stock market data. This includes directional trading of buying securities and hoping the price will increase or short-selling securities and hoping the price decreases.
Spread trading is another simulation in which the team buys and short-sells similar securities to make the difference in-between. An example of a spread trade would be buying Coke and short-selling Pepsi. In this case, you’d want the price of Coke to increase more or decrease less than the price of Pepsi. Spread trades are beneficial since they eliminate risk to the entire industry. In this case, if the soft drink industry suffers because of demand or the high price of an input like sugar, your trade is protected since Coke and Pepsi should be affected about the same amount.
The caliber of schools participating in the competition include some of the best in the nation, such as Harvard, Princeton, The University of Chicago, University of Pennsylvania, UCLA and University of Notre Dame. Last year’s goal for SIMM Algo Trading was to finish in the middle of the pack, considering it was Algo Trading’s first year in the competition. SIMM’s Algo Trading team did just that, as they weren’t expected to finish in the middle and were highly praised by the competition’s developers and faculty advisors of other universities.
This year, SIMM’s Algo Trading team has bigger aspirations as they look to improve from their great performance last year. The team expects to finish in the first half of the competition for each simulation and believes that its second year will see improvement from the first.
Alex Massa, a senior finance major who is the Leader of SIMM’s Algo Trading Division, was not only excited to show off his finance and programming skills but also for the other aspects of the competition.
“I can’t wait to network and learning as much as I can in my second year,” said Massa. “It’s been a main talking point during my job interviews with proprietary trading firms, and it shows that I have the experience that these companies in the industry are looking for.”
The competition also features a tour of a market-making firm, which creates the buying and selling price for market products and networking opportunities for trading companies to talk with students that are looking for jobs as traders.
By Adam Talmadge, Staff Writer
talmadaj14@bonaventure.edu
