Duration: 7:08
Level: Beginner

Dr. Germán Creamer, associate professor at Stevens Institute of Technology and joint associate professor at Columbia University, discusses his participation in the IBKR Student Trading Lab, which he finds has benefits that stretch beyond his computational finance curriculum and into the competitive job market.

Study Notes:

An interview with Dr. Germán Creamer

Q: At which colleges are you an educator, and what is your area of specialty?

I am from Stevens Institute of Technology, and I am also a joint associate professor at
Columbia University.

My area of research and professional work has always been about applying computational methods, especially machine learning, to problems of finance – in particular, about portfolio optimization, trading, and risk management.

Q: How long have you been participating in the IBKR Student Trading Lab, and what attracted you to it?

I have been working with the IBKR Student Trading Lab about four years already. Before I used this ‘Trading Lab,’ I explored many options across different brokerage companies. I used before another type of simulator that was specifically designed for microstructure problems. The only issue is that it was not based on real data, and I wanted to expose my students to real data, so that’s why I switched to the IBKR Student Trading Lab.

Q: Can you describe a bit about how you’ve used the IBKR Student Trading Lab for the courses you teach and how IBKR’s tools have helped you meet your learning objectives?

I have used this ‘Trading Lab’ in several courses. The one that I am teaching now is called ‘Investment Portfolio Construction and Trading Analytics’. I have also used it for a course on investment management, also microstructure, and trading strategies; and I teach at Columbia a course called ‘Machine Learning in Finance’. In all of them, I ask the students to develop a project where I use the IBKR Student Trading Lab.

On average, I have about 20 students – for graduate programs at Stevens; for undergraduate, I have had about 50, and at Columbia about 50 students – mostly professional and graduate students.

For portfolio optimization and trading strategies, I introduce the classical concepts of finance in the area of portfolio optimization … risk management. And then I explore some analytical perspective of how to use these techniques more from a computational or technical perspective and include also several Harvard cases of investment management.

So, the group needs to learn the exercises using the classical approach. The interesting part is that I asked the students to develop new techniques using the computational methods that I suggested, and also as part of the course, I have a major investment project and that is where I use the IBKR Trading Lab. And then I ask them to basically create a portfolio of about 10 to 20 stocks – long or short position, not indexes.

I used to teach a course on microstructure and trading for undergraduate students. So, in that case, we concentrated on the different orders, even the algorithms that are embedded into the IBKR Trading Lab, and we simulate a one-hour session or so; like we were acting really like day traders.

Q: What are some of IBKR’s tools you derive benefits from as an educator?

As a project manager, it is great, because I am able to generate reports of the complete group and also student by student. And then I can see their advance during the course, and as at the end of the period. So, what I asked the student is to submit their own report, and then I compare that … I show them what the system is showing and, of course, they need to make sure that the results are compatible, that nobody is trying to exaggerate their performance; but at the same time, it provides a certain intuition that is obtained when we put everything together. So, when we see the overall market and see that they even with the market down they beat their benchmark, then, of course, that’s a positive result, because they are able to understand that their performance was good, even during a bad period, and compared with the rest of the group, they are okay.

I believe that the tools in terms of performance and reporting offered by the IBKR Trading Lab have been very useful to monitor the advance of the course.

Q: What are some benefits your students have experienced from their participation in the IBKR Student Trading Lab? Are there any success stories you can share? And how does the IBKR Student Trading Lab help your students beyond your course – after they’ve completed it?

I always have students that are already very active. Some of them even are trading since they are 15 years old. The Trading Lab helps them to have a much deeper concept. They can go back home and have a new perspective in terms of the decisions that they were taking before. They are still getting the benefit of this approach, and on top of that, so many students at the end of the course, they tell me that they now are able to develop their own investment strategy, and they open an account. They are now being able to trade, because they learn the direct mechanism how exactly these tools work.

I have received several emails from the students that they get a job. They are working at Goldman Sachs and say, ‘Thank you so much, Professor Creamer. What you told us about microstructure and using the Trading Lab was extremely useful. I am in the high frequency trading team, and we are doing exactly all the steps that you would review in class and now understand the concepts. The other colleagues on my team – they are still learning how this works. But we already did that in advance, and I am already taking the next step, and I’m being promoted because … or becoming a team leader … because I already know how the system works.’ So, I would say the big benefit is in the job and, also, in the job interviews. Many of the interviewers are surprised when the students are able to describe extremely specific details of how the trading process works, how the tools work, and that definitely that gives them a big advantage in the very competitive financial job market.

Q: What would you say about the IBKR Student Trading Lab to other educators?

I believe that the Trading Lab could be very useful for a variety of financial courses. For instance, a course on derivatives or fixed-income valuation. So, any of the of the main finance courses that specialize in a particular financial instrument, the IBKR [Student] Trading lab is perfect, because it’s a valid use of using those particular financial instruments. On top of that, the API for Python or R will facilitate … make a connection between the tool any programming or computational approach that the students have.

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