Global Trading Competition

Are you the best student trader in the world?

Penn State's Smeal College of Business and Financial Trading System (FTS) presented the Global Trading Competition (GTC), an online contest for undergraduate and graduate students from Brussels to Buenos Aires, State College to College Station between March 1, 2003 and April 26, 2003.

Following the fourth-and-final round on April 26 of the inaugural Global Trading Competition, the first-, second-, and third-place competitors in the competition have been named. Bradley C. Barnhorst (Penn State U. U.S.), Michael Larkin (U. of Toronto Canada), and Christos Theophilou (U. of Reading U.K.) finished ahead of the field of more than 140 participating undergraduates and graduates representing 42 universities and eight countries from around the world, and will receive $5,000, $1,000, and $500, respectively.

Funds to support the first-place prize in the competition were provided by Don Wallace, Managing Director of Robert W. Baird & Co., and a 1969 graduate of the Smeal College with a B.S. in Finance.

"A lot of what you need to be successful in your career cannot be learned in the classroom," Wallace said. "When I heard about the Global Trading Competition, it struck me as an incredibly worthwhile way to build that real-world relevancy into the educational experiences of students from around the world."

Beginning with the first round on March 1, the Global Trading Competition called on competitors to analyze case situations involving financial markets such as fixed-income securities, equities, options, and forward contracts, and then make markets and trade securities over a fixed trading period on the same Internet-based FTS platform employed by cutting-edge business education programs around the world. The interactive markets allowed traders to experience how their bids, asks, and trades impacted other traders' behavior and market prices. As the real-time competition progressed, the cases became more complex, leading to the final round that allowed the top 50 traders to confront multiple financial markets simultaneously across eight independent trials, resulting in more than 125,000 transactions.

John O'Brien, associate professor of Accounting and Experimental Economics at Carnegie Mellon University and co-founder of FTS, independently verified the final results of the competition, which were determined by measuring the total trading performance in two weighted dimensions of risk (30%) and return (70%), and then combining the two to arrive at a final, singular ranking.

"Because of its design, the competition allowed traders to adopt strategies that reflected their relative comparative advantages," O'Brien said. "As in the real world, there was not one, predefined way to succeed. In fact, the top three performers each exhibited different trading styles with ultimately positive results."

Added J. Randall Woolridge, professor of Finance at the Smeal College and co-director of the Global Trading Competition, "We set out to create a competition with a true international flavor, and it's gratifying to see that the top three finishers came from three different countries. Because of the generous support of Don Wallace, and the enthusiasm of our student competitors, this event will serve as a foundation for future Global Trading Competitions, as we strive to provide an educational forum that accurately simulates the realities and movements of financial markets."

Barnhorst, the winner from Penn State's Smeal College MBA Program, employed a strategy of extremely active market making and buying and selling from other market makers, resulting in consistent trading profits with minimal risk. Like Larkin, the second-place finisher from the University of Toronto, he focused most of his attention on the more volatile equity and derivative markets, largely ignoring the fixed-income markets.

"Competing in an event like the Global Trading Competition gives you a better perspective of what traders do; of how they act and react," Barnhorst said. "Many of the skills I honed during the competition will be infinitely valuable in my career. For example, effective risk management was a key part of my strategy, and that's something you can only really learn by doing."

About Financial Trading System

The award-winning Financial Trading System (FTS) is a real-time trading and analytics system for financial education. It forms the backbone of educational trading rooms and represents one of the most significant innovations in business school education in the last decade. FTS creates a learning environment that integrates advanced trading room technology, hi-tech educational infrastructure and state-of-the-art knowledge. In 1996, the Financial Analysis and Securities Trading (FAST) Program at Carnegie Mellon University, which uses FTS software, won the Smithsonian-Computerworld Award for innovative uses of information technology. It's now part of the permanent archives of the Museum of American History at the Smithsonian.