ENRG 7200: Energy Fundamentals & Trading; ENRG 7300: Advanced Energy Trading and Finance
With a close proximity to the Gulf of Mexico, where a large number of energy firms are clustered, it’s not surprising that Tulane University’s business programs are energy-centric. The Tulane Master of Management in Energy (MME) program prepares students for careers with energy companies, utilities, banks, financial services and consulting firms, trading organizations, ISOs and regulatory agencies.
The program includes Energy Fundamentals & Trading (ENRG 7200), a required course that covers the fundamentals of energy trading, and Advanced Energy Trading and Finance (ENRG 7300), an elective that covers advanced trading concepts such as technical analysis, electronic trading algorithms and the trading of energy derivatives.
Because oil production is subject to supply shocks, unpredictable weather and geopolitical shocks, making it inherently risky, the course teachers, Professors Joe LeBlanc and John Foreman, wanted students to understand how to hedge against risk using energy derivatives. They felt it was important that students both understand and be able to trade energy futures and options.
Engagement with TT
Recognizing Trading Technologies’ position as a leading provider of software for trading energy futures, Tulane reached out to TT. The university joined the TT CampusConnect® program and installed the X_TRADER® platform in the A.B. Freeman Trading Center. Trading Technologies assisted with software installation, configuration and subsequent updates at the lab, where students can get hands-on experience with X_TRADER and other commonly used professional software and hardware systems.
In ENRG 7200, market concepts are illustrated using X_TRADER’s components, including the MD Trader® market depth ladder and the X_STUDY® charting and analytics application. The course also requires students to “trade for a grade.” For a single class period, students are assigned the role of either broker, hedger or market maker and are given specific trading-related tasks. For example, brokers are given orders they need to fill; hedgers are given production they need to hedge; and market makers are given a specific bid/ask spread and size they must accommodate. At the end of the session, students are graded based upon whether or not they completed their assigned tasks as well as their profitability.
ENERG 7300 builds upon the experiences of ENRG 7200 by incorporating automated trading. Students use TT’s ADL® (Algo Design Lab) to create simple automated trading algorithms such as iceberg orders and stop orders. They also experiment with ADL features like Excel linking to gain deeper knowledge of the mechanics that go into automated trading.
X_TRADER also served as the execution platform for the Tulane Energy Trading Competition held in 2009 and 2010. The competition, which drew more than 70 teams from universities throughout the U.S., consisted of four weeks of remote trading for all teams followed by a weekend of on-site trading for the top ten teams. The finalists were required to present their strategies to the judges, who were representatives from energy companies, before trading began, then discuss performance when trading concluded. Cash prizes were awarded to the top three finishers, and all finalists had the opportunity to network with the judges.
Students also used X_TRADER in extracurricular studies. For example:
- The Tulane Algorithmic Trading Club used X_TRADER, including ADL and TT’s application programming interfaces (APIs), in university-wide trading competitions that provided students with exposure to TT software and the capital markets industry. Students were encouraged to creatively use information and technology to develop automated strategies ranging from high-frequency styles that monitored market liquidity and took advantage of arbitrage opportunities to long-term strategies driven by technical indicators. Participants said they appreciated the opportunity to apply what they learned in class using real-world tools in a real-world setting.
- One graduate student studying math used X_TRADER to complete her thesis project, “The Predictive Power of the Limit Order Book in NYMEX WTI Crude Oil Futures.” The project helped her get her first postgraduate job as an energy analyst for a major bank.
As a result of these collaborations, the university invited Trading Technologies to join the Tulane Energy Institute’s advisory board. The group oversees the university’s energy program with a mission of educating students about the integration of energy markets, policies, technology and the environment through programming in energy finance, risk management, accounting, economics and trading as well as research.
Since the initial X_TRADER installation, Tulane began using Trading Technologies’ next-generation TT® platform. The web-based TT platform is inherently easy to use, requires no installation, and can be easily managed at both the New Orleans and Houston campuses.
By using Trading Technologies’ software in class, students better grasp concepts such as market depth, liquidity and volatility. Although textbooks describe these concepts, hands-on experience with the software brings them to life. Students also use TT’s charting and analytics tools to apply technical analysis to current market conditions and illustrate various technical trading strategies, which adds a dynamic and timely component to classroom exercises.
Through class and extracurricular projects such as the Tulane Energy Trading Competition, students gain invaluable real-world experience with TT’s software, making them very attractive to potential employers. As program graduate Alicia Ranney explained, “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. Most of the interns there didn’t know anything about energy. I already knew how futures contracts work, and I could just go in there and start working right away.”