When electronic trading was in its infancy, exchanges held simulations for members and clerks to practice trading various markets on a computer screen. These sessions often broke down into sophomoric attempts to amass the largest gains or losses by throwing around unrealistic positions sizes.
It was all sort of a joke, but today the screen is where prices are discovered and there are not the massive active trading pits for traders to "learn by fire." CME Group and partners have put together a more dynamic Low Latency Simulator to teach traders, hedgers and anyone involved in the trading world the ropes.
CME built the trading simulator featuring real-time and historical data on cash, futures and over-the-counter markets. It partnered with Trading Technologies and Thomson Reuters on the technology and information side and is working with Tulane University and Energy Management Institute (EMI) on the education side.
In September, classes will be offered in natural gas, crude oil and power trading in New Orleans and Chicago, with instructors from Tulane, EMI and CME teaching students all aspects of trading and operating the various software applications.
"This is one of the most dynamic opportunities that I have seen in a long time to educate thousands and thousands of people from all around the world," says EMI founder Dominick Chirichella. "We are not only in a trading room but in a live functioning trading room."
The simulator allows students to trade in a live market environment or a specific volatile time period with CME market data, TT trading software and Reuters news feed and analytics.
Long-time energy trader and course instructor Parker Drew says, "One of the most powerful tools you have in natural gas is [where] you can pull up the California crisis, [Hurricane] Katrina [or the] Amaranth blow-up. You can have a specific course and say, ‘This is your mandate; this is your specific position. What are you going to do?’"
John Conolly, CME Group associate director, program development, says a large target for the simulator and courses is commercial hedgers. He adds, though, that they are looking to their partners to help develop ways to utilize the simulator. "This is a great way to develop education that is relevant," Conolly says.