Content, progress and pedagogy of the module

This module introduces students to the world of trading and give them the opportunity to work with high-frequency live market data. In the beginning of the module the students will learn market microstructure concepts, such as bid-ask spreads, liquidity, concept of margin and marking to market, futures, interest rates, stock indexes, currencies, commodities, alternative investment products, leverage, forward contract, spot market, among others. Students will learn about the role of hedgers and speculators and other types of traders such as individual traders, portfolio managers, proprietory trading firms, hedge funds and market makers. They will receive answers to key questions: why trade futures and how does a trade work. This module will give an introduction to technical analysis; hence the students will learn how to identify patterns in market data to identify trends and make prediction. The module will also provide a discussion of how macroeconomic events impact financial markets, and how human emotions and psychological biases can adversely affect trading decisions.

During the module, students will experience trading futures and options in a realistic yet risk free environment. They will be able to trade the world’s leading derivatives products using live market data in simulated environment and track the performance. The trades will be performed on the CME Globex platform, futures products include agriculture, energy, equity, indices, FX (foreign exchange), interest rates and metals. As part of the course, students can participate in the annual CME Group University Trading Challenge and compete with peers for a prize award.

During the module the students will have to write a report in which they explain their decisions during the trading period, provide risk-adjusted performance indicators (for example, Value-at-Risk) and critically evaluate their performance from the risk and return tradeoff perspective. This module will help the students to improve their analytical, report writing, and presentation skills.

Learning objectives

Knowledge

The objective is that the student after the module possesses the necessary knowledge on:

• how the futures markets operate and multiple technical analysis techniques.
• comparing and contrasting technical analysis techniques with those of fundamental analysis.
• techniques for trading futures and the vocabulary of a trading floor (through an online simulator) and risk management issues related to market positions.

Skills

The objective is that the student after the module possesses the necessary skills in:

• applying graphical and numerical technical analysis techniques to real data.
• trading the world’s leading derivatives products through a simulated environment and assessing the applicability of various technical analysis techniques in different market conditions.
• evaluating data and market information; accessing data and other information from a range of sources.

Competences

The objective is that the student after the module possesses the necessary competences in:

• explaining techniques used in technical analysis and why trends are important and how to determine them.
• analysing market information and data and understanding how macroeconomic events impact financial markets.
• analysing various types of risk associated with short-term trading in futures and options.

Type of instruction

For information see § 17.

Exam

Exams