Rotman Interactive Trader (RIT) application is an order-driven market simulator (which allows users to transact financial securities with each other on a real-time basis) plus a sequence of RIT cases. Each RIT case focuses on the risks and opportunities associated with particular securities or strategies. The RIT cases are designed to be run iteratively using multiple replications which implement a range of potential scenarios. The same strategy can yield different results depending on the final realization of the scenario. Students learn from the immediate feedback on the success of their strategies and practice until they find a robust strategy that works well across the whole range of potential outcomes. In effect, the RIT cases are designed to apply finance theory in a setting in which students learn how to make good decisions when faced with uncertainty about outcomes.
Our simulation approach to learning is ideal for understanding the risks and opportunities associated with financial securities and inherent in most investment or risk management strategies. RIT cases are designed to focus on specific financial concepts and present them in an easy to understand manner so that students can explore, learn, and practice strategies that achieve their desired goals. The RIT cases also sequence from introductory (generally 1 source of risk) to richer cases for which the decision maker has to manage several risks. Note that most cases have an associated Excel model that applies the relevant theory and links to the order-driven market in real time. This reflects our mission to integrate theory and practice.
How does Rotman Interactive Trader work?
RIT has been designed as a server-client application. The moderator of the session runs the server and specifies case parameters. Users can then enter the trading environment by using the client application and logging into the server via a TCP/IP (Internet/LAN) connection. The server creates and manages a centralized limit order book which is broadcast in real-time to all connected traders. Users can then interact with the orders book by submitting various types of orders.
Some Primary Learning Objectives
- Familiarize users with order-driven markets and (limit and market) order types.
- Teach users about the liquidity of markets and the impact of trading costs (real commissions and liquidity slippage).
- Provide a realistic borrowing environment that allows for margin loans and short selling so that users understand the implications of margin trading.
- Familiarize users with a trading interface that resembles real transactional software used by financial institutions.
- Teach users how order driven markets contribute to price discovery.
Some Advanced Learning Objectives
- Teach users how to value and price securities such as equities, bonds, options and futures.
- Teach users about the different types of risks associated with different securities.
- Provide an infrastructure to allow students to export and manipulate data in a real-time setting via custom designed Excel models.
- Provide a fair trading network to allow participants to quantify and compare certain trading skill metrics against other traders
Read about the features in Rotman Interactive Trader.
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