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A Formal Education In Trading

07/01/10 10:51:34 AM PST
by Karen Wasserman

Is it possible to get a degree in trading? Here are some opportunities to pursue degrees or certificates in finance or trading-related disciplines. We'll also look at some university facilities geared toward instruction in trading.

Sometimes learning on the fly isn't prudent when there's real money at stake. A little training to prevent disaster might be in order, and for some, even a formal education might be desirable. Learning to trade well and profitably takes time and practice, but the trial-and-error trajectory can be shortened with some professional guidance. Opportunities are available for learning more about how to trade, invest, and analyze securities. Among them are seminars; training centers and prop firms; brokerage demos and brokerage training programs; tutors or mentors; practice software or paper trading; trading books and blogs; not to mention universities.

For those looking to hit campus either personally or virtually, here are some college and university programs (especially those with on-campus trading labs or with concentrations in practical trading subjects) with a brief rundown of what they offer -- starting with the first place most people think of when it comes to trading and finance: New York.

New York Institute of Finance
http://www.nyif.com
Though not a university per se, this is is where Wall Street meets campus. For nearly 90 years, the New York Institute of Finance (NYIF) has trained business professionals for financial services. Now owned by media conglomerate Pearson, the institute offers courses to the public in subjects ranging from accounting for financial instruments to yield-curve analysis. Professional certificates are available upon qualification.

According to NYIF's mission statement, its courses "combine academic rigor with an in-depth understanding of how business and finance work in the real world." All aspects of finance are covered here, including programs in technical analysis and trading, all divided into beginning, intermediate, and advanced course levels.

Besides its headquarters in midtown Manhattan, there are additional NYIF classrooms in venues from Chicago to San Francisco to St. Petersburg, FL. Virtual classrooms are also available for home study.

Sample courses in NYIF's program of studies on trading include:

An Introduction to Commodity Trading
Electronic Trading; Equities Trading; Exchange Traded Funds
Fundamental Analysis 101
Global Trader Simulation
Insider Trading
Overview of Foreign Exchange and Money Markets
Bond Trading; Foreign Exchange
Global Trader Simulation
Introduction to Simulation for Financial Professionals
Introduction to Stealth Trading Using Fusion, Algorithms, and Derivatives for Professionals
Options Volatility Trading
Special Topics in Options Trading
Trading Options at Expiration

Sample courses in NYIF's technical analysis program of studies include:

CMT Examination Preparation/Technical Analysis
Essentials of Fusion Analysis
Advanced Technical Analysis Workshop
Advanced Technical Analysis/Real Time Usage

New York University
http://www.nyu.edu/
If you're interested in a more traditional method of learning, you can study for an undergraduate degree in finance or pursue a master's degree in business administration (MBA) through the Stern School of Business. You can also pursue a master's of science degree in global finance or risk management. See current program information at: http://www.stern.nyu.edu/AcademicPrograms/index.htm

Sample courses at NYU leading to a finance undergraduate degree include:

Foundations of Financial Markets
Corporate Finance
Risk Management in Financial Institutions
Topics in Emerging Financial Markets
Debt Instruments
Behavioral Finance
International Financial Management
Real Estate and Capital Markets
Equity Valuation
Futures and Options
Investment Banking
Mergers, Acquisitions, and Restructuring

Pace University
http://www.pace.edu
At Pace University's Lubin School of Business on the New York campus, you'll find the Global Portfolio Analysis Center (G-PACT, also known as the "Trading Room") equipped with PCs running StockVal and other analytical software, along with stock and news information tickers. The center is intended to give students a feel for a hands-on trading environment with simulated market trading tools.

As a student, you can also help manage a $250,000 university-sponsored portfolio through the Student Managed Investment Portfolio upon acceptance into this program. Students research individual companies and recommend purchases and sales. The class then votes on the recommendation. This is intended to prepare the student for a career in equity analysis or simply give the student the opportunity to apply real-world knowledge toward investment decisions. A competition against 300 other students puts your knowledge to the test, as does a place on the Lubin team in the Investment Research Challenge sponsored by the New York Society of Security Analysts.

Finally, Pace's Center for the Study of Equity Markets sponsors faculty and student research on US and international securities market problems.

University of Toronto, Rotman School of Management
http://www.rotman.utoronto.ca/
Pursue a traditional MBA at the University of Toronto, a newly launched master's degree in finance, or a master's degree in financial economics. Or combine your financial studies with law, applied science, or Asia-Pacific studies for a joint degree.

Study topics such as derivatives, portfolio management and trading risks, financial statement analysis, investing, and risk management.

Trading lab
http://www.rotman.utoronto.ca/finance/lab
Students have 24/7 access to the Rotman Financial Research and Trading Lab, which offers live datafeeds and research databases; financial software; and applications designed to integrate theory and practice, including the Rotman Portfolio Manager and the Rotman Interactive Trader (RIT). RIT simulates an order-driven exchange and allows users to transact financial securities with each other on a real-time basis. Users will see each step of the transaction process as they submit their orders to the market and trade with one another. In addition, programmed agents can be added to the mix by instructors in the form of noise traders, liquidity traders, and buy-side institutional orders. Students gain experience through learning-by-doing cases in which they implement strategies such as arbitrage; market making; algorithmic trading; option and futures trading for risk management; and volatility trading. "These cases help integrate the lab into our business school curricula," explains Tom McCurdy, professor of finance at the university and founding academic director of the trading lab.

The RPM and RIT applications are also licensed to other schools for use in their trading labs.

Feeling flush with all that knowledge? Consider participating in the annual trading competition (http://www.rotman.utoronto.ca/finance/lab/competitions-itc10-home.asp) to show off what you've learned. Compete against other students from universities worldwide in a three-day event in downtown Toronto. Simulated trading cases mimic different aspects of real-world markets and prepare students to make effective financial decisions taking account of uncertainty about the future.

MIT Sloan School of Management
http://mitsloan.mit.edu/
With much cutting-edge research in the world of finance and securities analysis coming out of MIT, students can follow in the footsteps of these thinkers by pursuing a master's degree in finance at the Sloan School of Management. Designed to prepare students for careers in the financial industry, this one-year program consists of required and elective courses, a pro-seminar, and an optional master's thesis.

Here at Sloan, students combine studies in economics, finance, and accounting, and they also incorporate a special focus on mathematics, statistics, operations research, computer science, and engineering as it ties in to finance.

Trading lab
http://mitsloan.mit.edu/finance/stl.php
Opened in 1996, the MIT Sloan Trading Lab was the first ever built on a university campus. The lab was designed to be like the trading rooms found in the real world. An electronic tickertape carries price information from multiple markets, covering all 300,000 financial instruments worldwide; news and other financial information is fed from Reuters; and 23 trading stations await students to help them gain hands-on experience in trading and finance.

The lab is also intended to be a research facility. As with other research centers at MIT, cross-disciplinary collaboration is encouraged. Some research projects in the pipeline include developing visualization techniques for representing complex portfolios; studies on the psychology of financial markets and how human behavior influences trading decisions; and computational techniques that incorporate artificial intelligence and neural network theory in order to evaluate and learn from past market experience.

See our interview with Andrew Lo, professor of finance and director of the Laboratory for Financial Engineering at the MIT Sloan School of Management in the April 2009 STOCKS & COMMODITIES, http://www.traders.com/Documentation/FEEDbk_docs/2009/04/Interview.html and http://traderscom.stores.yahoo.net/stcov274anlo.html.

University of Pennsylvania
http://www.upenn.edu
At the well-known, long-standing, and often referenced Wharton School of Business at the University of Pennsylvania, students can pursue various degree or nondegree graduate or undergraduate programs in a flexible curriculum. (http://spike.wharton.upenn.edu/ugrprogram/advising/curriculum/overview.cfm)

Trading lab
http://www.wharton.upenn.edu/learning/index.cfm
Wharton offers a series of learning labs across several disciplines. The experiential and experimental labs rely on simulations, web-based exercises, interactive programs, and games, all as part of the learning experience to challenge students. Here are a few of the labs related to trading:

  • The Online Trading and Investment Simulator (OTIS) allows students to play act as fund managers to buy and sell securities, options, and futures contracts using real data from current markets. It's close to a real-world experience without the real-world risk.

    Working with data in OTIS's hands-on learning environment, students are exposed to concepts such as portfolio balancing and management; benchmarking; and the impact of large-scale fund buys and sells on market positions.

  • In the Backtester, students can test an investment strategy over prior time periods using historical data. Backtester allows the student to set up and run a backtest and then analyze the backtest results. Students first create an investment strategy using Backtester's wizard interface. Once the test has been run on the strategy and results have been generated, the students can use various analytical tools to review their outcomes.

  • With the Virtual Interactive Bond Engine, students build a bond portfolio, track it over time, and see the effects of interest rates and other variables. Students design each portfolio to perform in certain ways, depending on changes in interest rates. As virtual time passes, the effects of the interest rate changes are automatically calculated. Students can view the performance of their portfolios relative to other students.

  • At the Wharton Securities Exchange, students simulate buying and selling securities in a real-time classroom session using the tools of a real-life trader. Students trade a fixed set of simulated securities, using limit and market orders to determine the correct pricing of these securities. The application uses a multiwindow interface that includes an order window, an order history window, an active bid/ask window, and a chart window with graphical market volume and pricing displays. Groups of students log into the system, then set bid and ask prices for securities to trade against one another.

The Pennsylvania State University
http://www.psu.edu/
Meanwhile, over at Pennsylvania State University at the Smeal College of Business, you can pick up an undergraduate or graduate degree (an MBA or a doctorate) in a variety of business-related majors and minors including finance, in one of the largest programs in the country for business.

Students pursuing a doctoral degree in finance can expect to spend about two years in formal course work including finance, economics, and statistics, and about three more years completing a dissertation. Penn State reports that about 80% of their doctoral students in finance find jobs as faculty at colleges and universities, while the other graduates have found positions in consulting, research institutes, or government agencies including the Securities and Exchange Commission.

Trading lab
http://www.smeal.psu.edu/traderoom
The Trading Room was established in 2001 as an advanced learning laboratory for students at all levels: undergraduate, graduate, and executive education. The Trading Room replicates a real-world trading experience and functions as a classroom and a laboratory. Smeal was among the first business schools in the country to invest in a trading lab.

Inside the lab, televisions offer access to live coverage of CNBC, CNN, and other financial and news networks, and real-time tickers and stock boards announce important financial information. Each of the 54 workstations is equipped with two monitors and a computer with simulated trading software for deal capture, settlement, analytics, pricing, portfolio management, derivatives pricing, and other finance-related challenges. Software access includes Bloomberg Professional, FactSet, Morningstar Direct, TradeStation, and Rotman Interactive Trader/Rotman Portfolio Manager simulation systems developed by the Rotman School of Business at the University of Toronto.


THE TRADING ROOM AT PENN STATE

University of Illinois
http://www.illinois.edu
Earn a bachelor's degree or a master's in finance; a master's degree in financial engineering; or a doctorate in finance at the University of Illinois at Urbana-Champaign. Students can take advantage of the visiting speakers' seminar series (speaking at the time of this writing was Andrew Lo of MIT); the business library; the business and trading labs; and a student-managed fund that manages real money for real clients following guidelines from the CFA Institute.

Trading lab
http://www.business.illinois.edu/finance/mil.aspx
The Margolis Market Information Lab (MIL) and the Infinium Trading Lab (TL) at the College of Business, University of Illinois, are equipped with analytical software platforms such as Morningstar Direct, Bloomberg Professional, Capital IQ, and Crystal Ball. Part of the lab's mission is to integrate the research and analytical software applications into the curriculum.

Northern Michigan University
http://www.nmu.edu/
Northern Michigan University's College of Business offers a relatively affordable master's degree in business administration (MBA). It also offers a bachelor's program in finance: Choose from programs to prepare you for the Series 7 exam, CFP, or CFA exams, or choose the personal financial planning major.

Trading lab
http://webb.nmu.edu/Colleges/Business/SiteSections/Programs/Majors/FinancialTradingRoom.shtml
The newly developed trading lab at NMU gives students an opportunity to learn to trade in stocks and bonds as well as study market trends, company performance, and national economies. Continuously fed stock quotes and other financial information and computers equipped with industry-standard software provide a setting that mimics a Wall Street stockbroker's office. The lab has 24 student stations and one faculty station. The lab complements the Superior Fund, a student-managed investment fund.

When not used by students, the trading lab is available to the local business and educational community for instructional and training purposes.

Florida Atlantic University
http://www.fau.edu/
Florida Atlantic University's College of Business in Boca Raton set out to bridge the gap between classroom learning and business practice when they built their trading, research, and teaching facility. The FAU trading room (http://business.fau.edu/index.php?submenu=trading_room&src=gendocs&ref=tradingroom_technology&category=TradingRoom) offers market simulation and trading courses, and features two types of trading software applications: eSignal Pro and Financial Trading System (FTS).

The eSignal trading platform is a trading analytics and market data platform used by professional traders. The FTS trading platform combines both academic and real-world trading applications to provide a practical approach using real-time data.

The trading room has three areas. On the first floor, there are 25 computer workstations; a ticker with live market data; applications such as Bloomberg, Telerate, and FTS Reuters; and an LCD panel with a satellite television feed make up the equipment. On the second floor, you'll find 24 additional dual-screen computer workstations, an audio and video connection to the trading room below, and an overlook window. A server room located behind the main training room permits faculty to instantly deploy specialized desktops to meet the needs of a variety of business disciplines.

These facilities were designed to help students learn financial market principles and develop trading techniques. Research databases allow historical analysis and backtesting, while live datafeeds support strategic decisions. Students engage in realistic case exercises and simulations.

Trader Talk Series
http://business.fau.edu/index.php?submenu=trading_room&src=gendocs&ref=tradingroom_seminars_events&category=TradingRoom
In addition to hanging out at the trading room, budding traders will want to take advantage of the talk and advice bestowed on students by the visiting financial professionals in the FAU Traders Talk Series ("Bringing Markets to Life"). Speakers include traders, hedge fund managers, and analysts.

Students learn about trading techniques and strategies used to make money; tactics of successful traders; takes on the current market outlook from active traders; and the latest risk-management techniques used by traders today.

On the list of topics to be addressed in the Spring 2010 FAU Trader Talk Series is: technical analysis & trading, and fundamental analysis & trading.

Texas State University
http://www.txstate.edu
The Department of Finance and Economics at Texas State University-San Marcos will put you on the path to a bachelor or master's degree in business administration with majors in both finance and economics, as well as a bachelor's with a major in economics. Certification programs in certified financial planning are also offered.

Trading lab
http://fin-eco.mccoy.txstate.edu/about/tradinglab.html
The T. Paul Bulmahn Research and Trading Lab offers 30 dual-monitor workstations for students. Each workstation has a full complement of software, including Crystal Ball, a predictive modeling software package, and FactSet. The lab also has two Reuters terminals and one Bloomberg terminal, on which students can reserve time. LCD screens and a 10-foot LED ticker display financial market information and headlines. Several classes are taught in the lab: econometrics, economics, financial information technologies, and a student-managed investment fund.

Incidentally, the University of Texas at Austin (http://www.utexas.edu) also has a trading lab and can also boast about being one of the first college campuses in the country to have one. The EDS Financial Trading and Technology Center in the McCombs School of Business (http://www.edscenter.utexas.edu/), installed way back in 1996 initially as a simulation trading room and technology showcase, also led the way for other study centers in the school that bring the lessons of the outside world onto campus, including a real estate finance center and an energy finance center, as well as others.

At the EDS center, audiovisual and distance learning systems are integrated into a three-room complex. Faculty and students have access to real-time datafeeds including Bloomberg, FactSet, Capital IQ, Morningstar, and Argus. These dataflows are used by undergraduate and graduate students in a variety of classes ranging from finance classes on portfolio management to information-impact management courses on the financial applications of information technology. The center also supports teaching, research, and community outreach programs.

Golden Gate University
http://www.ggu.edu
Graduate Certificate in Technical Market Analysis
Over on the West Coast, Golden Gate University (GGU) in San Francisco has been offering courses in technical analysis for more than 30 years -- at a time when the term was barely known and hardly embraced. In 1998, GGU became the first university to offer a certificate in technical market analysis. This certificate for prospective traders, brokers, advisors, money managers, portfolio managers, and other investment professionals encompasses five courses and can be completed in one to one and a half years.

The curriculum prepares the student for either the Chartered Market Technician (CMT) examination or the Chartered Financial Technicians (CFTe) examination.

Want to pursue this line of study without the commute? Some courses are also offered through GGU's CyberCampus.

Certificate courses can be combined with degree programs at the university. Prerequisites must be met or a waiver granted by the department chair before students may take the courses in the certificate program.

Henry Pruden, PhD (interviewed in the September 2007 Technical Analysis of STOCKS & COMMODITIES magazine (http://www.traders.com/Documentation/FEEDbk_docs/2007/09/Interview/interview.html), professor of business and executive director of the Institute of Technical Market Analysis (ITMA) at GGU, has been teaching for more than 30 years and trading for more than 20. He is also president of the Technical Securities Analysts Association of San Francisco. Pruden says of the program: "Golden Gate University is recognized around the globe as a pioneer and a leader in technical analysis education for traders. Starting in 1976 with the first-ever graduate course in technical analysis at an accredited university, the curriculum grew to meet the needs of practitioner-students. Courses and instructors were added in systems building and testing, trader psychology, and behavioral finance. Moreover, the Wyckoff method of technical trading is alive and well at Golden Gate."

Sample courses in GGU's graduate certificate program in technical market analysis:

Technical Analysis of Securities
Wyckoff Method I & II
Technical Analysis of Trading: Strategy and Implementation
Behavioral Finance
Systems Building & Testing

GGU also offers a master's of science degree in finance. It covers corporate finance, investments, and capital markets, plus courses in financial analysis and financial modeling to build on the student's background in accounting and computer applications.


GGU'S GRADUATE CERTIFICATE IN TECHNICAL MARKET ANALYSIS

IN CONCLUSION
While no means complete, this list is simply meant to provide an example of some institutions of higher learning that offer specialized facilities for study or for obtaining degrees in technical analysis and trading. As you can see, formal coursework in trading is available, some with hands-on practice facilities -- and this beats learning from your mistakes at the expense of real money any day.

REFERENCE AND RESOURCE





Karen Wasserman

Karen Wasserman can be reached at KWasserman@traders.com

Charting the Stock Market: The Wyckoff Method -- Books
Working-Money.com -- Online Trading Services
Traders.com Advantage -- Online Trading Services
Technical Analysis of Stocks & Commodities -- Publications and Newsletters
Working Money, at Working-Money.com -- Publications and Newsletters
Traders.com Advantage -- Publications and Newsletters
Professional Traders Starter Kit -- Software


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