June 23, 2013
June 23, 2013
June 26, 2013
23.1047.1 - 23.1047.29
Revolutionizing Financial Engineering Education: Simulation- Based Strategies for Learning On May 6, 2010, world financial markets experienced The Flash Crash,which affected trillions of dollars of securities in just mere minutes. Consensus ofwhat caused this dramatic change in the market evaluation of thousands of assetsis still not fully understood. To tackle problems like these, financial engineeringstudents need a comprehensive understanding of complex market microsystems.These students must have a multidisciplinary skillset that incorporates an ever-widening array of disciplines to address markets that have grown increasinglytangled. Fundamental understanding of today’s financial markets requiresstudents take courses in statistics, mathematics, computer programing, finance,and economics; however, due to the limited material that a single course cancover, traditional coursework cannot effectively teach the multidisciplinarycompetencies that are necessary. In order to reduce the course load yet still learn fundamental financialengineering principles, we suggest taking a constructivist approach using marketsimulations as teaching tools. Simulations allow financial engineering students tolearn the complex nature of markets more comprehensively and effectively byallowing them real-world experience in controlled, guided environments.Research supports their use and has shown simulations engage students and givethem real-time knowledge of cause and effect in a complex marketplace.Moreover, they go beyond simply providing factual knowledge to offeringstudents experience operating in the microstructure of markets. This environmentalso forces students to encounter unanticipated situations that traditionaleducation methods do not allow. In that spirit, this paper will present the use of simulations in an“Introduction to Financial Markets and Trading Strategy Development” coursethat will teach students how to devise and implement their own trading strategies,as well as give them invaluable experience in integrating the basics of statistics,programing, and design. This paper adds to the body of research that illustratessimulations have the ability to get students emotionally invested in learning andthereby more receptive to the minutia of financial markets and trading techniques.Simulation-based education can augment traditional education methods byproviding a learning environment that promotes more skills and techniques tofoster better fundamental knowledge.
Olfat, M., & Wold, K., & Hayes, R. L., & Paddrik, M. E. (2013, June), Revolutionizing Financial Engineering Education: Simulation-Based Strategies for Learning Paper presented at 2013 ASEE Annual Conference & Exposition, Atlanta, Georgia. https://peer.asee.org/22432
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