Fast Start to FTS

FTS: Trading Room Components

Overview of an Educational Trading Room

The FTS system creates an immediate educational trading room. The "back office" support is provided by FTS, your only responsibility is to ensure access to the web! The building blocks for using an educational trading room is described below.

Component 1: FTS Interactive Markets

For Additional Information

From a teaching perspective you can see how the Virtual Classroom is designed for teaching by clicking on For Instructors. Alternatively from a student's perspective click on For Students.

Students and experienced investment professionals benefit from learning how to apply important concepts to the real world financial markets. The philosophy behind the FTS Modules is to let you solve real world investment problems with the same ease as solving a contrived textbook problem. Today's technology makes this possible. Students can immediately apply major concepts at the click of a mouse.

Overview of the FTS Modules: An extensive set of modules is available directly from the FTS Virtual Classroom. These modules are available in the categories of Equities, Fixed Income and Derivatives. Equity modules are designed to work with historical market data and let students apply important concepts such as Markowitz Diversification, CAPM, Single Index Model, Factor Models (including the Fama and French factors) to real world data directly or as part of a set of back-testing experiments. Fixed Income modules support the web directly and let students immediately work with the current ten years of US Treasury data or a data set of their choice. Students can study the dynamics of the spot curve, forward curve, using traditional graphical, and statistical methods (including factor analysis). The fixed income modules allow for smoothing the yield curve using either a Cubic Spline or the Nelson-Siegel Approaches. Back-testing experiments can be conducted for fixed income management using either duration/convexity or a factor approach. Finally, the derivative modules let students start by working with a simple binomial world and then considers limiting cases which takes them to the real world derivative pricing calculators. Derivative modules also support the web and so current option prices, implied volatilities, the Greeks can immediately be calculated for options of their choice. In addition, smiles, financial engineering, option trading strategies etc., are easily implemented.

Data Issues: Important Note The FTS Modules are designed to let you access current and or historical data. This is often done via Excel --- so if your data vendor supports Excel (the majority if not all do) then you are able to access this data. OSFTS does not support illegal uses of data. It is the responsibility of each Educational institution to ensure that the data they access in their educational trading room is an acceptable use given the terms and conditions required by the various source data vendors.

Manage your position by using the Real Time FTS Position Manager (RTFTS) and the Internet to manage your position of real world securities containing stocks, fixed income, derivatives, currencies and futures. This position manager lets you incorporate transaction costs, spreads, stock splits, dividends, futures and option expirations. It provides a complete set of online calculator support that can be launched from the menu items. Students access this module from the FTS Virtual Classroom any time from anywhere they have access to the web.

Classroom Applications: The real time FTS trader has been designed for classroom use and class project use. Let students immerse themselves in the financial markets and financial market commentary that is available on the web. Real time FTS is designed to let them apply and objectively evaluate, as part of their project, market commentary, trading support, to personal trading decisions. In this way students learn how to integrate classroom theory with real world markets on a day-to-day basis from their personal trading experience. Support is available from FTS for these purposes.

Instructor Controls: Instructors have control over which days trading is permitted, and what hours trading is permitted. For example, you can run a project that permits adjusting positions once a week if you want. Instructors also have the option of being able to have student trading history files locked so that they cannot be edited after the event.

Data Issues: A number of major data vendors are supported directly with the FTS Real Time Position Manager (e.g., Reuters, Bridge Telerate, Bloomberg (if open)). However, virtually all data vendors are supported because an FTS position management classroom exercise is designed around an Excel workbook. In this way data feeds, trading "back office," trading support and trading audit trails that cannot be edited, are coordinated within the Real Time FTS/Excel workbook environment. You can immediately access delayed data free from many web sites (e.g., MSN, Yahoo financial meta-sites that support a large number of international exchanges). You can also access (usually for a user fee) real time data from a number of third part sites now available on the web. For some of these you can access streaming data directly (for a low monthly fee). This makes available the extensive resources of the web to real time FTS. In addition, FTS can help advise you on data issues/vendors.

Component 3: FTS Modules

Component 2: FTS Real-Time Position Manager

Turn your classroom into an interactive market with price discovery. The FTS Interactive Markets lets you conduct both order driven and quote driven markets with price discovery on your own intranet or over the web. Your students are the trading crowd whose task it is to discover prices for the given trading problem. The advanced FTS Interactive Markets lets you conduct different types of auctions (call markets, opening price auctions, Treasury auctions, closing market auctions (without price discovery) and continuous double auction markets. In addition, margins and other important real world features are available. In a nutshell the Advanced FTS Interactive Markets provides the most powerful teaching and research software in the world, for testing and learning financial market theory.

Data Issues: With the FTS Interactive Markets data is not an issue because the trading crowd generate their own prices and history of prices. However, tools are available within the FTS system that lets you integrate real world live or historical market data into your trading exercises. For example, let the trading crowd trade a scenario that has historical significance!

The integration is done simply using Excel. So as long as your real world databases support Excel you can bring this data into the FTS Markets. In addition, you can also exploit Excel's web parsing ability to integrate data, you are permitted to parse from the web as an Excel user, into the FTS markets. This greatly enhances the scope of the markets you can conduct.