Simulated Trading Competition Leads to Real Financial Win

Byron Chen has a lot to celebrate. In addition to a successful fall semester in Law and Business at the Ted Rogers School of Business Management, he just won top honours and a $10,000 prize in the Montreal Exchange Options Trading Simulation (external link) . The national student competition, which ran for eight weeks from September to December 2015, tasked teams made up of full-time students from undergraduate and MBA programs across Canada with using a simulated online platform to trade options in an attempt to achieve the highest possible returns. Each team was given a virtual cash account of $100,000 to build a portfolio and were required to follow certain rules including executing mandatory strategies and constructing their portfolios with specific options.

Over 1,900 teams from 37 universities participated in the competition. Among teams that fulfilled all mandatory components, Chen achieved the highest return. By the end of the competition, Chen held a final virtual balance of $260,000, which is a return of 160 percent. Ting Hei Adrian Lai from the University of Waterloo received second place, while a team composed of students from the University of Regina came in third.

Chen says that while he didn’t have an official academic advisor, Edward Blinder’s teaching in FIN 601: Derivatives was essential to his win. “It’s a funny story actually. In FIN 601, there is a trading simulation component to the course. I decided to sign up for the [Montreal Exchange competition] to practice for FIN 601. I guess you could say I signed up for a practice sim to practice for a practice sim. The Montreal Exchange simulation really builds on the concepts I learned in FIN 601. I would recommend the Montreal Exchange competition and FIN 601 to any students who want to explore other possible avenues of investing.”

Chen says his success in the competition and work in FIN 601 have given him a whole new outlook on investing. “Traditional investing stipulates you invest all your money into diversified ETFs then slip into a coma for a few years in order to realize a return. In FIN 601 and the Montreal Exchange competition, they push against traditional, passive investing and require investors to be more active. You're able to structure your risk profile and probabilities to whatever you find desirable. I plan to utilize both passive and active strategies in the future when deciding how to invest my own money.”