Interactive Brokers recently launched the third edition of its College Trading Olympiad. In the contest, open to undergraduate and graduate students from any country, participants have to elaborate a trading strategy and then write automated trading software to carry out that plan.
The student whose software generates the biggest profit takes the top prize: US $100,000 in cash. The 2nd and 3rd places receive $50,000 each, and there are still several $10,000 and $1,000 prizes for the remaining participants.
Interactive organized the Olympiad to findâ''and hireâ''talented engineers and scientists willing to work in the financial industry. Thanks to the competition the firm has recruited summer interns and at least two full-time employees.
We wrote about the Olympiad earlier this year in the article â''The Trading Test.â''
Steven J. Sanders of Interactive Brokers at the company's technical operations center in Greenwich, Conn.
â''The old trading world required big, aggressive, street-smart folksâ''now it's technology skills that count,â'' Steven J. Sanders, a senior vice president with Interactive, told me when I met him early this year at the companyâ''s headquarters in Greenwich, Conn. â''We just don't ever get enough good technologists.â''
Interactive Brokers is the brokerage arm of Interactive Brokers Group, a $3 billion securities firm that uses advanced trading systems to offer electronic brokerage services to institutions and individuals, as well as to trade for itself through Timber Hill, its market-making subsidiary.
To participate in the Olympiad, students can write their trading software in C, C++, Java, Visual Basic, and even Excel scripts. The program has to use an API (application program interface) to connect to Interactiveâ''s Trader Workstation program, which in turn connects to Interactiveâ''s online brokerage system.
The trading program has to gather financial data and analyze that data using technical or fundamental techniques to decide what trades to execute. Each contestant starts with $1 million in virtual money and can trade stocks, bonds, options, futures, commodities, and currencies. All trades are virtual, taking place on Interactiveâ''s simulation system, but the buying and selling prices are based on real market data.
The financial industry has long sought to hire math whizzes, physics PhDs, and other prodigy types to work as quantitative analysts, or â''quants.â'' Their job is to concoct pricing models, probe new ways to quantify risk, and mine mountains of data. Now, as automated trading systems take over ever more of the substantive work on Wall Street, many firms are seeking quants who not only know the math but the nuts and bolts of IT systems, too. (Our competitor Tech Review had a fascinating article on quants and the current subprime credit crisis.)
This â''revolution in financial innovation,â'' as Jim Finnegan, editor and publisher of Financial Engineering News, in Waltham, Mass., puts it, has led many universities with traditional finance and management programs to add more quantitative and computational finance to their curriculums. As a result, the number of financial engineering type of programs in the United States, Europe, and Asia went from 15 five years ago to about 40 today, Finnegan says.
For those interested in careers combining finance and technology, Interactiveâ''s trading contest is a rare opportunity to see how real-world applications workâ''and even win some cash to help pay for college. The competition, however, should get tougher. The contest, which was previously open only to students from the United States, Canada, and Mexico, now welcomes participants from anywhere in the world.
â''Weâ''ve noticed with interest that many applicants via the American colleges each year are peppered with high caliber international candidates,â'' says Andrew Wilkinson, an Interactive spokesman. â''So this year, we opened up the contest to the world!â''
In the last edition of the Olympiad, Brian Eckerly, an electrical engineering student at Ohio State University, in Columbus, took the top spot. Eckerly coded the initial version of his program in just two nights and left it running at his off-campus apartment. In seven weeks, the program made a 300-percent profit.
Some traders, however, are suspicious of Interactiveâ''s goals with the Olympiad. In one forum on Elite Traderâ''s website, a user wrote: â''It almost looks like [Interactive Brokers] is looking for trading ideas for their own trading. Anyone with any kind of worthwhile plan will not enter this contest and reveal the strategy.â'' Another added: â''Talk about rip-off!â''
Interactive says itâ''s not after the studentsâ'' plans. Most participants rely on trading techniques that are widely known in the industry, and Interactive has enough money-making strategies of its own, Sanders told me. What Interactive is looking for, he insists, are tech-savvy professionals that can help improve the firmâ''s trading algorithms and systems.
The Olympiadâ''s last edition had more than 200 contestants, and Interactive expects many more for the third edition. The deadline to submit applications is 31 December 2007 11:59 p.m. Eastern time. There is no cost to enter. The competition will last eight weeks from 7 January to 29 February 2008.