A Secret Weapon Leads to a Trading Challenge Win

Image provided by CME Group

AT-A-GLANCE

A student team from Colombia recorded the highest-ever balance in the history of the CME Group University Trading Challenge by focusing exclusively on crude oil futures

The winning team for this year’s CME Group University Trading Challenge had a secret weapon: experience.

Santiago Chisco, a senior law student at University of Bogota Jorge Tadeo Lozano, and the team leader for Tadeofutures, was part of a team that placed fourth in the 2018 tournament. Tadeofutures’ win this year makes them the second consecutive team from South America to win, as last year marked the first time a team from Latin America came out on top.

Tadeofutures’ final account balance after 30 days of trading was $1,741,360, which is the highest-ever simulated balance in the competition’s 18-year history. This year’s challenge, which kicked off Oct. 3 and concluded Oct. 29, was open to undergraduate and graduate students around the world. It included 386 teams representing 167 schools across 24 countries. In total, 1,549 students participated in the four-week competition where they traded 112 different futures products. However, crude oil was the top contract traded overall, with 160,310 contracts changing hands, out of a total 659,955 contracts traded.

Students of the Markets

It wasn’t just Chisco’s prior experience in the challenge that gave him an edge over other students. He has also studied the markets since 2015, with the goal to work for a proprietary trading firm upon graduation. In 2018 his team achieved a fourth place victory in the challenge.

Since that time, Chisco has closely monitored E-Mini S&P 500 and crude oil futures, studying the markets in classes and on his own, and adapting different trading strategies over time.

For this competition, he and the team exclusively traded crude oil futures contracts, deciding on a mix of technical and fundamental analysis for their strategy. Chisco explains that the team focused on volume and price action generated on daily opening and closing levels, while also looking at weekly action. They acted when key price levels were triggered on daily and weekly chart points, but they also kept an eye on intraday volume and price action, sometimes trading based on five-minute charts.

Part of the trading plan was to use stops and take profits on schedule. The team also watched supply and demand fundamental data as it came out, in the event that it affected price action. Although Chisco had monitored crude oil prices for a few years, the CME Group University Trading Challenge gave him an opportunity to put the skills he learned into practice. He found it wasn’t always easy to stick to the strategy.

“It was psychologically challenging to execute the strategy during the challenge,” Chisco admits. “As a trader, it is important to have confidence.”

Focus on One Market

The team’s faculty advisor, Edgar Ricardo Jiménez Méndez, associate professor at University of Bogota Jorge Tadeo Lozano, helped to guide and motivate students, which included organizing teams and getting them registered to compete. Otherwise, he took a hands-off approach.

Team Tadeofutures traded only crude oil futures and outpaced the nearest competition by nearly $300,000 (simulated balance) over the 4-week trading challenge.

“My advice was focused on the importance of using daily information and interpretating the financial news from different sources like MarketWatch, Bloomberg, CME Group and Yahoo Finance,” Jimenez says, noting he also helped with student interactions and tried to solve any differences students may have had.

Jimenez says one piece of advice he gave the students was to focus on trading one or two markets, rather than several. During the competition, all CME Group futures contracts that trade on CME Globex were available to student traders through CQG’s trading applications, including agriculture, energy, metals, equity index, interest rates and foreign exchange markets.

The Upward Trend in Oil

Tadeofutures didn’t start out on top. Over the course of the competition, the team went from 300th place to 77th, to 17th, then to the top five before finishing first. Chisco credits a couple reasons for the team’s triumph: having a plan and sticking to it, and finding a market with a strong uptrend. During the four-week challenge, crude oil prices gained about 9%, with enough volatility to allow students to enter and exit trades.

“I think what helped us the most to win were the events with oil. It was easy to identify the upward trend,” Chisco says.

At the beginning of October, there was an OPEC meeting where the members decided to keep output steady, rather than increasing production to meet rising demand. This, in turn, helped raise prices.

What may have also helped the team was their familiarity with crude oil as a whole, being that Colombia is a crude oil producer, Jimenez adds. According to S&P Global Platts Analytics, the country produced about 780,000 barrels a day of petroleum in 2020 and then exported 79% of it, making oil a critical segment of the country’s gross domestic product.

“We all know about the real world of crude oil,” Jimenez says.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. The content was purely for informational purposes only and not intended to be investing advice.