Best Practise in Using Finance Simulations in UK Higher Education

By:

Neil Marriott and Siew Min (Amy) Tan

Overview

• A quick tour of TraderEx

• Introduction

• Guidelines:• Simulations infrastructure

• Promoting trading simulations to students

• Using trading simulations in teaching

• Incorporating trading simulations in assessment

• Possible improvements

• Conclusion

A Quick Tour of TraderEx

Introduction

• Finance, a highly theoretical subject

with complex mathematical models,

is a popular choice in UK higher

education as evidenced by the

significant increase in growth rate.

IntroductionStudents Growth Rates since 1996/97

(Adapted from Higher Education Statistics Agency 2012)

Introduction

• Finance related simulations

• new teaching trend in this subject area

• enhance students learning experiences

• encourage their engagement

Case Studies

Scope of study

Simulations Infrastructure

• Teaching facilities• Trading room

• Trading software• TraderEx Simulations

Teaching Facilities

• Trading room

• Purpose-built

• Virtual trading floor

• “real” trading environment

• Capacity is limited by number of computer terminals

Trading Software

• TraderEx Simulations

• Electronic trading system

• Web-based

• Highly reliant on the stability and speed of internet connection

• Annual workshop

Promoting Trading Simulations to Students

• Advertising on programme’s page

• Open days

• Taster session

• Module outline

• Other promotional channel• Students society• Six-form visit

Advertising on Programme’s Page

Open Days

• Interactive session

• Engage potential students

• Engage parents

Taster Session

• Taster session in Corporate Finance module (semester 1)

• One-off two-hour workshop

• Students found trading simulations interesting

• Looking forward to Investments and Behavioural Finance module (semester 2)

Module Outline

• Promote the idea of the trading simulations

• Allow students to prepare for the sessions especially when the trading simulation forms part of the module assessment

Other Promotional Channel

• Student Societies

• Cardiff Business School: Cardiff University Finance and Trading Society

• Winchester Business School: Investment and Trading Society

• 6th forms visit (Cardiff Business School)

Using Trading Simulations in Teaching

• Modules

• Introduction to the simulations

• Simulation type: stand-alone vs. network

• Familiarising with the trading simulations

• Scheduled teaching session

• Trading guides

• Post-simulation evaluation

• Length of the simulation

Modules

• Under- and post-graduate courses

• Finance modules related to the market structure and the trading mechanism

• Cardiff Business School: Financial Markets and Institutions module, undergraduate

• Winchester Business School: Investments and Behavioural Finance module, postgraduate

Introduction to the Simulations

• Discuss the underlying theory before introducing the simulations

• About 10 to 20 minutes

• Explain key information contained on the opening screen and other practical facts, e.g. difference between limit and market orders, actual versus target level of positions.

Simulation type: stand-alone vs. network

• A stand-alone simulation means that students are interacting only with the software itself.

• A network simulation allows students to interact among themselves and participate in the market influencing share price fluctuations

Familiarising with the Trading Simulations

• It is advisable to provide students a reasonable time to familiarise themselves with the software

• 30-minute stand-alone session

• Students were encouraged to repeatedly operate the stand-alone session

• To establish students’ confidence in trading and fostered their engagement in learning

Scheduled Teaching Session

Time allocation for a 3-hour trading simulation’s session

Trading Guides

• Students can become overwhelmed by the information contained on the trading screen.

• Provide trading guides before the start of the simulation.

• Students were encouraged to keep record of their activities using the guides.

Post-simulation Evaluation

• To ensure that the students learned from the trading simulation

• Display the Leader Board after each trading simulation and discuss with students

Length of the Simulation

• Ideal length of the simulation: 2 - 3 hours

• Allows students a reasonable duration to understand the mechanism and familiarise themselves with the system before the simulation begins.

Incorporating the Trading Simulations in Assessment

• Types of assessment

• Mock simulation

• Alternative assessment

Types of Assessment

• Winchester Business School:

• Self-reflection report

• Do not earn marks on how well they performed in the simulation

• Simulation type: Network Quote Driven market

Mock Simulation

• Lack of previous experience in trading simulations

• Not confident with the assessment

• Allows students to experience the “real” trading simulation without the fear of poor performance

Alternative Assessment

• Possibilities of unforeseen technical issues

• Prevented the operation of the network simulation

• Alternative set of assessment using stand-alone trading simulation

Other Issues

• Student engagement

• Technical support

Student Engagement

• Cardiff Business School• Tutor 1: Lack of assessment, students did not

take them as seriously

• Tutor 2: 20% assessment to ensure students are “learning”, positive feedback from students

• Winchester Business School• Students engaged when they knew that it

formed part of the assessment activities

Technical Support

• Technical breakdown during the simulation session could be a dysfunctional learning experience for students

• It is important to receive good and timely support from the software provider’s and university’s technical support team

Possible Improvements

• Pre-simulation check

• Support from the software provider

• Community of practice

• Variety of trading software

• Continuing development workshop

Pre-simulation Check

• Before operating the simulation for the purpose of assessment:• tutors are encouraged to make the

university’s technical team aware of the session

• to check the computer system and network

Support from the Software Provider• Before the assessment:

• Contact the software provider’s technical team

• Online software: subject to the stability of the provider’s server

Community of Practice

• Community of finance-related simulations users in UK higher education

• Information sharing

• Mutual-benefits

• Self-support group

• New technology

Variety of Simulations Software

• Trading simulations is becoming a trend for teaching finance modules

• To encourage the practice of using simulation

• More trading simulation packages

Continuing Development Workshop

• Trading simulation: an effective way to encourage students’ engagement

• Practical aspect: challenging, complex of software design and unpredictable technical problems

• Attending workshops: improve the learning and teaching of using the simulations

Conclusion

• Benefits of the trading simulation:• very helpful in stimulating students’ engagement in

learning• enhancing employability of students• improving students’ satisfaction• increasing academic performance• useful tool in bridging the gap between theory and

practice

Conclusion

• Research limitations:• Two case studies• One type of simulation software

• Recommendations:• More case studies• Other simulations• Cross-country comparison

Questions & Feedback