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Everybody’s Everything

“Knowing is not enough; we must apply.
Being willing is not enough; we must do.”
– Leonardo da Vinci

There are very few “renaissance” men (or women) around these days, so I don’t think Leonardo has any worries. Still, the need for individuals with vision, skills and ambition is not a luxury but rather a necessity for businesses today.

Every once in awhile, I come across students who understand this. Whether it is a project they have been assigned, a career they desire or a personal goal they would like to achieve, they understand what they want and what it takes to achieve it, and they put forth the necessary effort. Needless to say these individuals are in high demand.

Alicia Ranney says the real-world experience she gained while
attending Tulane University helped her secure a job offer
for post-graduate employment while she was a junior.  

Alicia Ranney, a student from Tulane University, was pursuing her degree in math and saw an interesting thesis topic when she viewed X_TRADER®’s MD Trader®. MD Trader’s vertical price display shows not only the current bid-ask spread, but also multiple levels of liquidity below the best bid and above the best offer. As orders were entered, changed and canceled in the market, questions arose in Alicia’s mind: What new market information is reflected in the changes in the order book? Can these changes be used to predict the market’s direction?

Now the truth is these questions do not represent some new revelation. The fact is that since the first trader set foot in a pit, traders have observed order flow to see if somehow an edge could be derived by studying it. Ms. Ranney’s thesis, “The Predictive Power of the Limit Order Book” (Tulane University, May 2011), is far more sophisticated than a simple observation. Using high-frequency data on crude oil futures from CME Group, she created a model that examines the bid-ask spread, order book and past responses to predict future price movements.

While her findings are interesting, the real story is how she achieved them. As simply as I can state it, she examined the order book for crude oil futures and compared it to its previous state, and then to its ensuing state. From here she determined whether there was any relationship between each state or whether the relationships were random. From there, she applied the results either as a stand-alone trading strategy or as a complement to an existing one.

What does it all mean? From an academic perspective, she investigated her topic using a multi-disciplined approach:

  • Computer Science: She used the visual basic programming language to pull and manage the data.
  • Mathematics: She incorporated both regression and time-series analysis to interpret the data.
  • Trading: She achieved the final results by applying what she learned in her energy trading classes.

Granted, the concept of analyzing order flow is nothing new. But having the skills to do it efficiently and then apply the results is something altogether different. Here we have an example of someone who not only saw information in the order book, she also had the skills to process it and then the understanding to apply it. In short, she took an idea, processed it and benefited from the results.

The Three-Legged Stool of Success 

Vision, skills and application have always been the three-legged stool of success. In the past, businesses may have sought out three employees specializing in each. But not so today.

Graduates are finding that industry is demanding that they understand how to do their job, why they do it a particular way and what they need to do it. As reported in the article “Key IT Skills That University Graduates Are Missing”, a survey of IT managers conducted by Computerworld showed that potential hires lack key skills, including:

  • Business Basics: “Why we do what we do,” so to speak. Most grads know their job; they just don’t know how it applies to the company. They may be able to program, but they don’t understand how it applies to accounting, human resources or any other department. At TT, all of our new hires go through “TT101”. This course walks through our business, explaining who our customers are and why they use our products. It also emphasizes why certain features of our products are important to our customers and TT’s success.
  • Technology: Yes, technology. Respondents said that so much emphasis is placed on today’s “hot” technology that there are gaps in candidates’ skills. Tech “basics”, legacy systems, system integration and emerging technology were all lacking.
  • Soft Skills: Probably the main soft skill lacking is the difficulty new grads have working in teams. The article points out that this is ironic because this generation has mastered social media. You’d think they’d have no difficulty working in a team, but survey results indicate that is not the case.

So while businesses may not be looking for the complete renaissance person, they are looking for graduates with skills that cover the gamut in terms of what the firm’s bottom line requires.

As for Alicia Ranney? Well, she had no trouble finding a job. When she interned during her junior year, she stood out among the other interns so much so that the firm hired her. As she put it, “I already had a basic knowledge of the energy industry, so I was able to go in and add value on day one, while the other interns had to catch up on the fundamentals and terminology. Though perhaps more importantly, my previous experiences had prepared me to bridge the gap from markets to technology and mathematics.”

Everybody’s everything.

Posted by: Leo Murphy, TT CampusConnect™ Program Manager

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