While money may not grow on trees, University of Nebraska–Lincoln College of Business students nearly doubled their simulated financial position in the 2020 CME Group University Trading Challenge. Competing against 500 teams from 30 different countries, the students earned sixth place globally, third in the U.S. and first among U.S. undergraduate teams.
The e-trading competition mimicked real-world futures trading through a simulation. Futures trading involves betting on what the price of something will be at a certain point of time in the future. Each team started out with $500,000 with four weeks to multiply it.
“During the first week, we were trying a whole bunch of random stuff and it didn't really work out. We were losing money and were down nearly $30,000, but we quickly made that up,” said Daniel Elsner, junior supply chain management major from Minneapolis.
The loss did not deter the team, who quickly solidified their strategy. Elsner used his prior trading experience and focused on agriculture commodities, such as corn and soybeans, and equity index futures, like the NASDAQ and S&P 500.
“I would be betting on the price of the index of the S&P 500 and the NASDAQ as well as the price of agricultural commodities,” said Elsner. “I looked at different market reports I learned about in my agribusiness classes and would look for opportunities to buy when people were selling off, and then hold my positions for a couple of days.”
Daichi Yukinawa, a junior finance major from Ichikawa, Japan, utilized his technical analysis skills on the team. He examined the foreign exchange market data, identified trends and made predictions based around international currency exchange rates. The online courses offered due to the COVID-19 pandemic allowed him to be flexible with his time, allowing him to trade late into the evening.
“I started looking at the exchange market at 12 a.m. to see what was going on there. I entered trades mostly around 2-3 a.m. and held the position until morning, so during the competition I was awake until around 5 or 6 a.m., which was hard,” said Yukinawa, whose strategy in the foreign exchange markets paid off with a net gain of nearly $150,000 for the team.
The competition required strong communication and collaboration between the team since each student had different approaches to trades but shared the same pool of money.
“We had a lot of trust and communication going back and forth. If Daichi had a trade idea, he would let me know. If I had a position already open, I would sell some of that off so he would have more margin, or money available to trade,” explained Elsner. “There was definitely a lot of trust going on and it paid off.”
Their College of Business courses helped fuel their strategies. For Elsner, who holds a minor in agribusiness, Agricultural Economics (MRKT/AECN 325) provided useful insight into commodity markets.
“The course was helpful to me during the competition because what I learned in class I applied to our strategy, like learning about new market reports. I would go look at those reports and get trading ideas,” he said.
Meanwhile, Yukinawa’s original aspirations for investing derived from Personal Finance (FINA 260). This unveiled the many different career options in investing available.
“I had opportunity to learn about investors in that course, because before that I didn't know about them or how they can make money by using their money. That piqued my interest,” he said.
As the competition approached its final week, the Nebraska Business team ranked near 20th place. With a nearly $100,000 difference between them and fifth place, a crucial play rocketed them toward the top.
“Daichi encouraged me greatly the last week, so I got super focused. I made a big trade the day after that,” said Elsner, whose largest trade netted the team around $178,000.
The team closed out the competition with a total of around $878,000, netting them nearly $378,000 of profit.
“This competition was a great opportunity to represent Nebraska and the College of Business on a global stage,” said Elsner.
To learn more about a future career in investing and finance, visit: https://business.unl.edu/finance.
Published: February 11, 2021