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Talented young traders are 'too smart for their own good'

Fuseworks Media
Fuseworks Media

The twelfth annual CMC Markets University of Auckland Trading Challenge has concluded with Optometry students, Seung Min Song and Charles Yao winning first place from a field of more than one hundred teams.

Hosted in association with the University of Auckland Case Club (UACC), the annual financial services competition allows students to experience the volatility of the financial markets during two exciting weeks of virtual trading via the CMC Markets online platform.

At the end of the trading period, Song and Yao walked away victorious with an 81.42% ROI, while Clare Yip secured second place with a 58.88% ROI, with Nick Parkes coming third with a 38% ROI. Additional spot prizes were awarded to deserving teams - such as ‘Top Oil Trader’ and ‘Too Smart for Their Own Good, Biggest Trade Win’.

The competitors were able to strategise and compete with a range of financial derivative instruments, including cryptocurrencies, and gold and silver commodities, along with shares to test their knowledge and trade for the best possible returns.

Fourth year students, Seung Min Song and Charles Yao took out first place after forming a friendship during previous University Trading Challenges.

Song says, "We look forward to the competition every year, and each time, we’ve learned something new that we can apply to our own investing journeys. Early on, we recognised that in order to win, we needed to take huge positions rather than smaller trades. Accordingly, our strategy was to open to a few concentrated positions in sectors that we were familiar with."

"In previous competitions, we fumbled around trying to catch up to others on the leader board, but once we stopped worrying about how the other teams were doing, we started performing really well. And once we felt confident in our overall gain, we stopped trading."

In the runner-up spot was second year Accounting and Finance student, Clare Yip, who also won a spot prize for Most Diversified Portfolio, with 28 positions across all product types.

Yip comments, "This was my first year participating in the event and although I’d never invested before, I got used to the platform and process fairly quickly! I found myself getting more into it than I thought and was regularly checking the value of my investments to see how they were fluctuating."

"I didn’t go into the competition with a strategy, but I found that some commodities were providing the biggest returns, so I focused on those from that point onwards. Overall, I really enjoyed the competition and picked up some skills that I’ll definitely use when I start investing in the future!"

Third place was taken out by second year Finance and Business Analytics student, Nick Parkes with a final account balance of $690,000. Parkes says, "Although I’ve used a range of financial products in the past, this was my first time using them in a competitive trading environment, which was something I really enjoyed. My main strategy was to trade economic data releases, which eventually returned $22 million in gold futures."

"A key learning was to have confidence in my trades and let them run their course instead of exiting them at a loss. This was my first year participating in the competition, though certainly not my last as I aim to improve upon third place next year!" he concludes.

Chris Smith, General Manager at CMC Markets New Zealand, says, "It’s no secret that the markets have been increasingly volatile due to the ongoing pandemic, and in recent months with the Ukraine - Russia conflict. So, there was no better time to throw these eager young investors into the markets and allow them to experience all the highs and lows that come with trading."

"With the competition falling within US Earnings Season, this also created opportunities to trade some big-name stocks, such as Netflix. We’re impressed with the strategies that the students applied and look forward to seeing how it continues to grow in popularity amongst the younger generation," says Smith.

Donovan Rea, Specialised Events Lead at the University of Auckland Case Club, adds that the competition allowed students to gain valuable practical experience.

"The University Trading Challenge is a great way for students to apply their learnings from class to the real-life markets - and then extract returns. Over the last two weeks we’ve experienced some huge moves in the market. We saw some well-timed big trades in equities and currency, as well as some clever risk management. It's also been great seeing students with minimal finance knowledge getting involved and making trades."

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