Tulane University’s Master of Management in Energy students look forward to trading simulation days that are hosted in Tulane University’s trading room. On select occasions, Tulane’s professors are able to moderate trading exercises that genuinely reflect a trading floor. While the simulations do in fact immerse students in the mindset of a working trader, the program’s interest is in energy. Therefore, these simulations are focused on trading energy commodities.
Personally, I have had the opportunity to partake in trading simulations while enrolled in Professor John Foreman’s Fundamentals of Trading class. On separate occasions we have traded Henry Hub Natural Gas future contracts, West Texas Intermediate (WTI) Crude Oil future contracts and WTI Crude Oil future contracts for the purpose of establishing a refinery’s crack spread.
Prior to simulations the class is divided into teams of four students. To accurately emulate markets, teams are then assigned different occupations: broker, consumer, producer, or speculator. Within the teams, individuals are further delegated into a selection of four roles: fundamental analyst, technical analyst, book strategist, or marketer. After a week of market analysis and technical preparation, teams are eager to begin trading.
From the perspective of an average bystander, the trading room would appear to be pit of chaos. However, Tulane’s Masters in Management of Energy students are clearly able to navigate the system complexities that can only be experienced on a live trading floor. Teammates support each other and execute their strategy, and teams actively adjust their investment positions based on the market’s behavior.
After the trading simulation many students are delighted with their results. On the other hand, some students are disappointed at their results. They realize that their teams’ strategies and forecasts were not optimal for the simulated market. In some respect, unlike anywhere else, these students are able to step into the life of a commodity trader; experiencing the preparation, execution, financial results and emotional fallout that are typical of this career path. I have talked to students whom find this to be an invaluable experience when it comes to deciding their future career path.
Ultimately however, Professor Foreman brings the trading room back to reality where teams present their results to the classroom. In the span of a few minutes teams are given the opportunity to summarize their trade books. Students rationalize their forecasts, strategies, adjustments to the changing market, and discuss how the aforementioned actions impacted team results.
Having already experienced several simulations in Professor Foreman’s class, I personally find the Tulane Trading room simulations to be extremely rewarding. Moreover, this is a unique learning experience only available at Tulane University.