This past weekend, four students from the University of Michigan won second place at the University of Chicago's Midwest Trading Competition. The students were among 100 competitors across 40 teams selected from universities across the country to participate.
Teams developed algorithms to make automatic trading decisions for three different trading cases. The first case focused on uncovering the relationship between prices of assets; the second on making an algorithm that is able to adjust to various market conditions; and the third on managing a portfolio in a hypothetical stock market. Each case was scored according to profits and losses. The University's team placed second in the third case and second overall in the competition as runner-up to the University of Texas at Austin. The team earned a total of $5,000 in prize money.
The event also provided networking opportunities with a number of corporate sponsors of the competition. Four platinum sponsors, Citadel, DRW, IMC and Optiver, hosted unique receptions to get to know competitors.
Robert Xu, Business and Engineering freshman, said he learned more about trading from the competition.
“The competition definitely increased my interest in trading,” Xu said. “Even though I knew the basic premise of what it was coming into the competition, I didn’t really know what the industry was like. The competition was a great way to meet experienced professionals who could shed some light on that, and also connect with others interested in the field.”
Business freshman Benen Ling said he joined the competition through the Maize & Blue Endowment Fund, an investment management club. The University of Chicago extended an invitation to the club, and Benen Ling gathered a team of coders to apply to the event. Once they were accepted to participate in the competition, the team began preparing.
Benen Ling said he focused more on the financial aspect of the competition, preparing research for the rest of his team to implement with coding.
“I just read a lot of research papers,” Ling said. “The problem with quantitative trading is those algorithms you have to use — nobody publishes them because they’re proprietary, and that stuff is worth millions of dollars. Obviously not the stuff we do, but things along those lines are worth a lot of money, so you have to come up with it yourself, and most of that involves looking at research, looking at what’s been happening in the field, and synthesizing for yourself.”
Engineering sophomore Bhavish Gummadi said the team worked on their algorithms extensively in preparation for the competition.
“We spent long hours together every night for two weeks, trying, failing, generating a new approach and then repeating,” Gummadi said. “Even after all that effort, we expected to win nothing because of our lack of experience compared to the competition. I’m happy to say that our hard work paid off and we beat teams with far more experience than us."
Wen Hoong Ling, LSA and Information junior, said he felt the competition was a good opportunity to apply his coding skills in a new way.
“I thought it would be a good experience,” Wen Hoong Ling said. “I was kind of interested in trading, and because I have a background in Python and I’m in the School of Information, I thought I would put my skills to good use. I’ve never used programming outside of classes before so I thought this would be a good opportunity for me to try making use of the skills I’ve learned in class.”
The team members said their success against some of the top schools in the country, including Massachusetts Institute of Technology and Columbia University, came as a surprise. Benen Ling said they owed their victory to the quality of their team.
“The technical people (are) top of their field,” Benen Ling said. “So right off the bat we have impressive technical people — and we’re going up against juniors and seniors from these top of the line schools and we’re freshmen and a sophomore, so we’re at a disadvantage — but we have top of the line freshman, and I’ve done finance for a very long time, so there it is.”
Wen Hoong Ling said the competition taught them to be more confident in their abilities.
“I think overall we learned not to underestimate ourselves,” Wen Hoon Ling said. “Even though there were so many other Ivy League schools and all that over there, I think that shouldn’t hinder anyone, or make us feel intimidated.”
Benen Ling echoed this sentiment.
“It was exciting,” Ling said. “We’re definitely going back next year, we also want to go to a lot more trading competitions, because we’re putting Michigan on the map … Showing up those schools (is) definitely a good motivator.”