Web-Based Trading Simulation
Brian Buhr, an associate professor from the Department of Applied Economics in the College of Agriculture, Food, and Environmental Sciences on the Twin Cities campus, has developed for his students a successful WebCT-delivered trading commodities simulation that mimics conditions in the real market. The students analyze market conditions, observe trading behavior in both the classroom and the real-world markets, develop buying/selling strategies, and communicate the rationale for these strategies to Buhr and their peers.
Instructional Goals
Please describe the instructional goals you were attempting to achieve. Who was the intended audience? What strategies had been tried in the past? What did you hope to improve?
Brian Buhr first developed his trading simulation to help students in his commodities course understand futures and futures trading.
Needed to Convey Abstract Concepts
Unlike cars and houses--physical objects that have a tangible reality--futures and futures trading are abstract concepts. Buhr needed a module that, in his words, would help students learn how it is possible "with no ownership, no prior investment, [and] no actual physical commodity or asset" to "execute trades and to hedge risk on the future market."
Assigned Students Simulated Trading Activities
The only way to facilitate students' understanding of these concepts was to have them plan and execute trades and manage portfolios of their own. Because about half of his student population has only had minimal exposure to principles of micro- and macro-economics, he wanted to assign a concrete problem students could solve without actually having to risk any money on the real market. His solution was to create a virtual trading environment in which students would be introduced to all of the facets of real-life futures trading:
- a market that acts like a real market
- futures contracts constructed like their real counterparts
- an environment in which students execute trades and manage their portfolios just as they would in real life
Students also produced brief analyses of market indicators to demonstrate that their strategies were based on sound economic principles, research and analysis of commodities price and demand data, and other information.
Students Learned Real-World Skills Using Real-World Factors
This system worked well for a couple of reasons.
First, students were buying and selling options just as they would in the real marketplace, learning a lot of skills that they'd likely use in their future professions (e.g., managing margin accounts, and maintaining profit and loss statements). Perhaps more importantly, said Buhr, "they also get pretty good experience with volatility. You can lose a lot of money very fast and you can make a lot of money very fast in futures markets," and there really isn't any other way to learn about the concept of risk in such a vivid fashion.
Second, students were using real-world factors in their market analyses to make decisions about their commodities trades. According to Buhr: "[T]here are a lot of simulations out there where students are basically engaged in a speculative exercise. [By bundling] the trading simulation with market analysis--where [students] actually report on supply and demand conditions [and] state how those conditions affect their actual trading strateg[ies]--[I'm able to] keep abreast of whether what a student reports from the market information is consistent with his or her trading activity. [It really gives students a good sense of] what a commodity analyst or broker would do on a day-to-day basis in [his or her] job."
Strategy Was Administratively Complex, Instructor-Centered
Although the paper simulation gave students a realistic venue in which to apply the economic principles they studied in class, it had a couple drawbacks.
First, students submitted everything directly to Buhr on paper: he ensured market updates were submitted on time, recorded trades, calculated results, and then graded and returned analyses. "As you can imagine," remarked Buhr, "this turned into a paper blizzard."
Second, it was, as Buhr put it, "an essentially isolating experience" owing to the fact that the students' interactions were almost exclusively with the instructor. Because trading is heavily influenced by social factors"in the real world, analysts are always pilfering other analysts' strategies." Buhr wanted to get away from an instructor-centered approach by developing a system that introduced an element of transparency into the course's virtual marketplace.
TEL Strategy
What technology enhanced learning (TEL) strategies did you adopt to complete this project? Was the content presented differently to your students than in past (non-TEL) applications?
In trying to revise the trading simulation, Professor Buhr started thinking big:
"[W]hen I was an undergrad there was a simulation package called FARMMAN . [The application attempted] the sort of thing I'd ideally like to achieve with my own trading game: it actually recorded information from students who took on the role of farm managers and [kept] basic pro forma financial statements--balance sheets, cash flows, and so on. As you managed this farm, good things happened or bad things happened; all this information was recorded on the balance sheets. And it all happened in real time, so students were confronted by a dynamic management environment."
Considered a Completely Machine-Moderated Approach
Buhr considered developing a maximal system along the lines of FARMMAN, which would be completely machine-moderated and capable of presenting, recording, and acting upon user input in real time, but he quickly came to the conclusion that it would be technologically impractical. He met with Brad Cohen, a Digital Media Center consultant, to develop a strategy that would incorporate some of the benefits of a FARMMAN-type simulation, reduce the administrative complexity, provide some elements of real time data publishing, and convert the simulated community of isolated investors into a miniature market that worked like the larger real commodities market.
Decided to Use a Hybrid Strategy
Buhr ultimately decided to use several software tools to conduct parts of the simulation.
First, he and Cohen "discussed the possibility of using WebCT [as an environment in which students could] post their [materials]. We [decided to use] two [WebCT] components directly in the trading game: the Student Presentation tool, [with] which students could post their market analyses for all of their fellow students to read, and the Discussion tool, with which students could post their trades."
Second, he decided to develop a Microsoft Excel spreadsheet to manage trades for the whole class. It would be stored on the WebCT site so groups of students could take turns "recording students' trades, [calculating] net profits ... from those trades, and then reposting the spreadsheet so [all the] students could track their own performances and see how [their peers] were trading."
He also decided to have alternating teams of student moderators manually administer other aspects of the simulation in six phases. Although the students would experience trading as something like a series of data snapshots rather than as a continuous activity like the one in the FARMMAN game, Buhr expected that because the simulation was iterative, it still would enable students to learn from their peers' and their own trading strategies.
Hardware and Software
What hardware or software did you use to produce your project? Did you have to do anything unusual to make the software work for your specific applications?
Buhr and his students used a variety of software and hardware tools to produce, deliver, and access course materials.
Used a Variety of Software, Then Only Primary Tools
Buhr used a variety of software tools to produce and deliver learning acitivities and materials. His students initially used an array of tools to develop their market analyses as well, but this led to real support problems, since some lacked the necessary reader software to access the Adobe portable document format (PDF) documents, while others experienced significant difficulties in converting their Microsoft Word documents into usable HTML files. After some trial and error, Buhr and his students settled on Netscape Composer as their primary Web development tool since it is available for free to users of both Macintosh- and Windows-compatible systems. Using a single development tool significantly diminished the support problems.
| Software | Instructor uses | Student Uses |
|---|---|---|
| Adobe Acrobat | not applicable | developing market analyses |
| Macromedia Dreamweaver | not applicable | developing market analyses |
| Microsoft Excel | creating the trade management spreadsheet | not applicable |
| Microsoft PowerPoint | supporting lectures and delivering tutorial information (e.g., digitized photographs illustrating the system used to grade livestock) in the classroom | not applicable |
| Microsoft Word | generating most of the course Web site content with the "Save as HTML" feature | developing market analyses |
| Netscape Composer | modifying most of the course Web site content | developing market analyses |
| WebCT | posting student trades on the bulletin board and sharing the trade management spreadsheet and students' market analyses in the presentation spaces | Accessing course site materials |
Software used by Buhr and his students |
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Used a Laptop in the Classroom
During class presentations, Buhr made extensive use of a laptop computer: "I'd often bring my laptop to class, connect live to the Internet, and display several of the previous week's analyses for discussion. It really helped me to guide students' learning."
Project Team
How many people worked on the project? What were their roles? Did you work with any central support units?
The project essentially was developed by a team of two.
Worked with a DMC Consultant
According to Professor Buhr, only one other person helped him with his project: "Brad [Cohen], a Digital Media Center consultant,] was pretty much it. He was largely responsible for helping me retool the project for WebCT because when I started I really wanted to shoot for a high-end product. I'd been working with [Java and Web Services (JAWS)] on some projects utilizing real-time data from the real-world commodities markets and [as I've mentioned,] my initial idea was to try to create an interface for enabling students to trade using actual market data. That just wouldn't have worked in a reasonable amount of time at a reasonable cost. What Brad did is suggest that we move in the direction of using real data, and use WebCT's built-in presentation and discussion tools to facilitate interaction."
Instructional Outcome
What was the instructional outcome of your project? Did you achieve your goals? Why or why not? Do you intend to make any revisions to your project?
According to Professor Buhr, his technology-enhanced learning strategies were a big success.
Achieved Goals With WebCT-Delivered Activities
He reported that the WebCT-delivered aspects of the simulation helped him achieve his explicit instructional and administrative goals.
Students Learned From Each Other
The students engaged in more realistic trading behaviors. Professor Buhr noted that they engaged in much greater volumes of trading, used more of the strategies employed by professionals in the field, and based more of their trades on others' successful strategies. Buhr suggested that some of this behavior may have been related to greater-than-usual volatility in the real commodities markets during the semester. However, much of the activity on the trading side appeared to stem from students learning from each other because, as Buhr noted, "you could see students talking to each other on the [WebCT] discussion board [and gravitating] toward winning positions, which is exactly what happens in the [real] market. If a student was making a trade and it paid off, [his or her fellow students would often] replicate that trade and try to take that same position.
In effect, using the WebCT bulletin board enabled Buhr to replace one-to-one trading interactions between him and individual students with interactions that more closely mimick the behavior of real-world traders. Not only did this encourage students to trade more realistically, it also provided them with a laboratory in which they could observe, in a microcosm, the sorts of behaviors they studied, in abstract form, in their course texts.
The students produced more realistic, professional analyses. Transparency also tangibly affected students' market analyses. Buhr often highlighted methods of analysis and presentation in the student analyses presented each week. "You very distinctly saw that students [were looking] at other students' presentations," he noted, which soon led to "a sort of 'arms race' as students rapidly began to assimilate those features into their own reports. From the first analysis, where people were sort of naive as to how you might put one of these together, to [when] they had examples from other students that they could follow, the quality of the analyses rose rapidly over the course of the entire semester."
Instructor And Students Interacted More
The instructor was freed to spend more time on instructional activities. Buhr was able to have students take on the role of occasional moderators. This provided students with additional valuable learning experiences and took Professor Buhr out of the position of playing "the central 'deity' in the game" and greatly simplifed his role so that he had more opportunities to stand back and observe and comment on the students' performances.
The instructor and students became collaborators. Another administrative success, Professor Buhr noted, was his decision to ask students to attend short one-on-one meetings with him early in the term to familiarize them with the technologies used in the course and to walk them through the process of setting up the presentation space for their market analyses. Because these sessions were entirely informal--"no one was being graded here," notes Buhr--they seemed to foster deeper interaction between Buhr and his students. "In the process [of embarking on the exercise of making the technology-enhanced course work], we all ended up on common ground. [I was trying to figure out how to tell them how to accomplish this task and they were struggling to accomplish this goal;] we were having to work out together how to get these market analyses posted and accessible to the participants. It took us out of the normal teacher-student relationship and made us a collaborative problem-solving unit."
Students Rated Instructional Technology Use Positively
In addition to his own observations of the effects of the WebCT-delivered aspects of the simulation, Professor Buhr incorporated questions about the use of instructional technologies into an end-of-term student evaluation questionnaire distributed to each of the 27 course participants. Each is listed below.
| Question | Mean Score |
|---|---|
| Overall, how would you rate the use of the Internet for the course? | 5.3 |
| More specifically, how would you rate the use of WebCT? | 4.2 |
| How would you rate the [W]eb-based lecture notes? | 6.2 |
| Overall, how would you rate the "trading game" component of the course? | 5.5 |
| How would you rate the value of the market analysis for helping you better understand marketing? | 5.6 |
| How would you rate the use of WebCT for facilitating the "trading game"? | 4.6 |
Mean scores on a one ("very poor") to seven ("exceptional") Likert scale of Buhr's students' answers to technology use course evaluation questions |
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Professor Buhr noted that the two questions relating specifically to WebCT elicited the lowest reported levels of student satisfaction. He attributed this largely to two factors.
First, some students had problems accessing WebCT during critical periods. Many were using modems to connect to the Internet and encountered exceptionally slow service. Students connecting via the campus network also encountered occasional slowdowns or system downtimes.
Second, some students had problems uploading and linking their market analyses. Buhr noted that this was in part due to the students' unfamiliarity with HTML file structures and linking techniques; to problems they encountered in using applications like Microsoft Word to generate their HTML documents; and to difficulties they had with using WebCT's file transfer protocol.
In terms of general satisfaction (5.3/7.0) and the value of the computer-assisted simulation (5.5/7.0) and market analyses (5.6/7.0), Professor Buhr described the feedback as a "B or so." In the future, he intends to modify the types of technology he'll encourage students to use to develop their HTML documents (e.g., Netscape Composer rather than Microsoft Word), and when connections to WebCT course sites become faster and more reliable, he said he is sure that students' opinions of the module will continue to improve.
Innovative Feature
Please describe the most innovative aspects of your project.
Professor Buhr said that the most innovative aspect of the trading simulation was the way that using WebCT communication and presentation tools led students to create a classroom market that functioned very much like the real marketplace.
Use of WebCT Stimulated Unexpectedly Realistic Behavior
According to Buhr, this outcome was all the more exciting because it was serendipitous: "[Y]ou'd like to say that that was your objective to start with, but my intention in creating this module was to give [students] something to work on outside of class that helped them think about concepts like price. The market analyses dealt with price analysis issues-- 'how do you look at government reports on inventories, stocks, and prices and make a coherent analysis out of that?'--that sort of thing. So that was the only real goal, to take this analytical piece outside of the class and get the market analyses, etc., to run alongside [class discussions of economic principles]."
Once students were able to see their peers' market analyses and trades, though, the effects were much broader. For example, a student who performed technical analysis as part of his job with a trading firm in Minneapolis began to do so while trading in the simulated market as well, and this began to pay dividends. Professor Buhr noticed that a number of other students also adopted these methods, something he didn't see happening during the six or seven iterations of the paper simulation. "Once a students had set up a model for [his or her] market analysis, you could assume that that was the model [he or she was] going to follow [for the rest of the term]," he explained. By the time students turned in their second market analyses, he observed that they also were competing to improve the style and appearance of their presentations, thus practicing their technical skills while deepening their understanding of economic principles and trading behaviors. "The possibilities for interaction piqued [students'] interest more than I though it would," Buhr confessed. "I really didn't expect to see [the improvements in analytical techniques and presentation skills] so quickly."
Advice
Do you have any planning, design, or development advice for other instructional multimedia developers contemplating a project like yours?
Professor Buhr advised faculty developers to take advantage of available University support resources.
Consult With University Support Personnel
For example, he recommended that instructors consult with collegiate and central technical support personnel, Center for Teaching and Learning Services (CTLS) consultants, and Digital Media Center instructional technology consultants. "Don't go it alone. Don't go down blind alleys. You're going to burn through a lot of time with computers if you're just searching around blindly for a solution," he said.
He further elaborated that the two keys to a successful consultation meeting are preparation and receptivity: "The thing that seemed to work best in terms of preparing for effective collaboration with technology consultants was to come in with a solid idea of what I wanted to achieve. My original concept was a bit too ambitious, but then the [DMC] consultants focused on how we could take the technical capabilities that were there and, within the constraints of that set, build and develop those objectives for the course. It is important for faculty [members] to realize that coming in [to initial meetings] with a blank slate doesn't work very well. We had a nice, defined set of activities, which helped us in both directions in coming to a solution; from there, [it is important] to be receptive to consultants' advice as to how the activity might be structured online, what tools [one] might use, etc."
Because he came to his initial consultation meeting with the DMC's Brad Cohen with concrete objectives and a realistic sense of the time and resources available to him, Professor Buhr found the process of realizing the plan he developed with Cohen to be relatively straightforward. "I began development January 2nd or 3rd, and had the basic information pages and the interactive tools developed and ready by the beginning of the semester, less than three weeks later," he said.
Choose Only One Student Development Tool
Based on his experiences this term, Professor Buhr also recommended that instructors who intend to have students develop Web-based materials should choose a single development technology. Although it's tempting to allow students to select a technology with which they are comfortable, many difficult support problems can arise, such as when he allowed students to use Microsoft Word, Adobe Acrobat, or Netscape Composer and had to deal with a number of problems related to those specific applications as well as with the conceptual problems students normally encounter when they earn to develop materials in HTML.
Learn to Teach With Technology by Doing It
Finally, Professor Buhr suggested that there is no better way to learn how to teach effectively with technology than by experiencing it: "There's not much you can't recover from, as long as you're flexible and you stick with it. You sort of have to just jump in to some extent."
Broader Lessons
Are there any broader implications you'd draw from your experience with this technology-enhanced course?
Professor Buhr identified two issues that have broad implications related to the use of technology in teaching.
Teaching With Technology Takes the Same Amount of Time
According to Professor Buhr, one issue he encountered is the amount of time it takes to teach with technology versus with traditional methods. Although he spent less time on administrative tasks when he transferred the responsibility for recording trades and calculating the outcomes to student groups, he simply re-directed his time into supporting students and observing the course of the simulation. "I think if someone were considering doing a class like this, they'd pretty much have to commit themselves to spending the time," said Buhr. "If they think that they can just set up the course site and the assignments and force the students to deal with everything themselves, I don't think it could possibly be successful, because the students are going to be frustrated, and even [though I spent] much of my time . . . devoted to the course, you can still see [from the student evaluation data] how much of a barrier technology can become to students having a good experience."
Students Should Take More Technology-Intensive Courses
Another issue is the variability in students' technology skills. Buhr observed, "What I've been seeing a lot ever since I started teaching courses using technology is the extreme variability of students' skills. We have writing-intensive courses where we see writing integrated more fully into the curricula of content areas; what I think we ought to have is more technology-intensive courses where students use technologies in the context of some body of content. As it is, you find students without a lot of knowledge of how to do very basic things, like managing file trees [a fundamental skill in effective HTML coding, a cornerstone of Web development], so we spend a lot of time in courses like this one addressing problems introduced by error and inconsistent application of skills."
Such problems "didn't prove to be a barrier to students' completion of the course," he added, but they did add significantly to his support burden, leaving less time to discuss content-related matters. He suggested that "it would be helpful for students to have some sort of entry-level introduction to creating materials using common technologies." Even though his students hadn't taken such a course, Professor Buhr felt that by using such skills in his class, they gained both content knowledge and the ability to employ technologies to communicate more effectively: "I will say that having an assignment to focus students' energy--like the market analyses--did give them a context for learning the technologies better. Once they'd finished this course, a lot of them had a much better idea about things like server management, [and] an understanding of what HTML is and how it works."
Related Resources
- Our consultants can help you plan and design technology-enhanced simulations for use in your courses.
- Take our Learning with Technology: Using Games and Simulations class (for class times, select the course title in the Technology Enhanced Learning list of classes on the University Technology Training Center page).
- Read the games and simulations page in the teaching strategies section of our Web site.
- Read Clark C. Abt's Serious Games (New York: Viking Press, 1970).
- Read Cathy Stein Greenblat's Designing Games and Simulations: An Illustrated Handbook (Newbury Park, CA: Sage Publications, 1988).
