The Equity Market Trading Course delivers information about the equity markets and hands-on experience
trading in them that is needed for an in-depth understanding of how these markets operate. We put participants
in the middle of a simulated marketplace where they make strategic trading decisions as market conditions unfold.
The simulated trading sessions are the backbone of the course. Using the networked software, participants
enter their orders into a computer-driven market that responds directly to the live players? orders. Participants?
orders also interact with each other, which means that the live players compete with each other as well as
with the computer. Based on parameter settings that an administrator can control, the computer generates
both order flow and news events so as to provide a real-life trading experience for the participants.
After each simulation run, participant trading strategies are discussed and their trades are assessed on
two levels: (1) with the use of individual performance measurements based on real life benchmarks (such as
VWAP and P&L), and (2) against each others? performance in the session (the inter-player contrast injects
an important element into the exercise ? it makes it a competitive game). Graphical displays of quotes, trades,
and market events are also used in the post-trade assessment of performance.
Simulations will be run for the following market structures:
- Continuous market, limit order platform
- Limit order platform with periodic call auctions
- Limit order platform with a block trading facility
- Quote driven, dealer market
A sub-set of the following topics will be included in discussion sessions:
- Economic functions of a stock exchange (e.g., liquidity creation, price discovery, and quantity discovery)
- Transaction cost analysis and performance measurement
- The evolving customer base of the broker/dealer intermediaries
- The ecology of an order driven market
- The economic role of broker/dealer intermediaries
- The interaction between continuous market trading and periodic call auction trading
- Current public policy issues such as the effects of dark pools and fragmented markets on market quality