The insider's guide to the Jerome Fisher Program at the University of Pennsylvania

M&T Club Trading Simulation: A Fun Way to Learn About Trading

by Ella P., M&T Class of 2016

by Ella P., M&T Class of 2016

On November 2nd, I sat with many other freshman M&Ts (and a few sophomores) in a Hunstman Hall classroom, excited for M&T Club’s latest event – the M&T Trading Simulation.  The point of the event was to learn about trading by competing to see who could win the most money buying and selling “mystery items.” With our competitive spirits awakened, we were ready to try our hands at trading.

After we settled down, the simulation was explained to us like this: We would split off into pairs, with one person in each pair designated as the “market-maker” and the other as the “price-taker.”  The market-makers would sit in a desk during each round, deciding on the prices at which they would buy and sell the item. At the same time, the price-takers on each team would go around the room to each market-maker, comparing prices and buying or selling items depending on what they heard. As the round progressed, more and more clues about the item’s identity would be revealed until finally we would find out the identity and its real price. Whichever team had made the most money at the end (buying for less than the item is worth and selling for more) would go home victorious.

After one practice round in which we unknowingly bought and sold small bottles of apple juice, clear strategies started to form. When it came to the real round of trading with a prize involved, many people knew what they were doing. Some enthusiastic pairs sold hundreds of the item at low prices, hoping to make a large profit off of a sort of high frequency trading. Others tried to break even, continuously profiting by buying and selling in equal amounts.  Everyone walked around frantically looking for the best deals amidst changing prices as more and more clues were revealed.

Eventually, we all found out we had been buying and selling a pair of 17 dollar headphones for prices ranging from two to 200 dollars. At the end of the day, crazy deals were made, two people emerged victorious with M&T sweatshirts (including myself) and a 500 dollar imaginary profit, and we all had a great time learning a little bit about what trading is like.

Ella is a current M&T freshman in the Class of 2016. She is considering majoring in Computer Science within Penn Engineering and has yet to declare her concentration in the Wharton School.

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