Interested in exploring the fast-paced field of international currency exchange? Thanks to the Davidson Research Initiative and math major Mason Lin '17, now there's an app for that.
Lin grew up in several cities around the world, and came to the United States to attend high school at Webb School in Claremont, Calif. He learned about Davidson from a college counselor there, applied and was accepted without ever visiting the campus.
His father works as chief operating officer of the company Financial Data Technologies in Hong Kong, and Lin was an intern in the company's marketing department during the summer of 2014. The company was working on an online financial education program for college students that simulated foreign exchange trading, and Lin helped plan for its marketing plan and publicity campaign.
He gained a thorough knowledge and interest in currency trading through the experience, and brought that back to Davidson. He noted that the simulation compiled a tremendous amount of raw data about individual student traders and their trading styles. Lin came to realize that the information could become more valuable through data analysis.
His Davidson major adviser, Associate Professor of Math and Computer Science Tim Chartier, is leading the campus initiative to develop data analysis of sports teams and athletes, and suggested that Lin could use that to analyze currency trading. Their collaboration eventually led to a Davidson Research Initiative project titled "Sports Analytics in Finance" that has occupied Lin throughout this summer.
"I started wondering if I could approach traders with the same analysis as Dr. Chartier was approaching athletes," said Lin. "Like athletes, traders all have different playing styles."
For instance, in analyzing the performance of a basketball team, it would be natural to compare the statistics for shooting guards and centers separately, against others who play the same position. Looking at stats for a single guard within the group of all guards provides a better idea of that guard's skill than a comparison of that guard to all players on the team. Likewise, Lin found it more useful to compare individual traders by first assigning them to groups based on their trading style, and then ranking them within those groups. His groups included day traders, trend traders, swing traders, scalpers and news release traders.
That type of "cluster analysis" is what Chartier has been developing with students to analyze sports performance. There are differences, though. Lin said, "In sports there's a win or loss at the end of the day. But in trading you're constantly looking at both profit and loss. The analysis is part mathematical science and part intuition and art."
Financial Data Technologies rolled out its "ForexMaster" (Foreign Exchange Master) as a free app in November 2014 in an event at the financial data lab at Oxford University. The 20,000 students who are currently using it each received $100,000 in virtual money with which to make trades.
The goal of currency traders is to generate profit by correctly predicting the change in value of one country's currency (dollars, yen, euro) against that of another country. Lin said the ForexMaster app is effective in giving students a taste of the profession. "They get to test the waters of the trading industry without risking anything," he noted.
The app uses touch screen technology to provide extensive real-time data, charts and graphs about the currencies, and calculates the traders' gain or loss as they make trades. A few traders have had tremendous success-one identified as "fjw123" has earned a 38 times return. But most traders, including Lin himself, have negative returns.
Lin regularly meets with Chartier about the project, and communicates regularly with Financial Data Technologies app team to improve the product. He spent most of his days this summer in the E.H. Little Library, filling white boards with notes, goals and information to keep himself on track as the project advanced.
While the app does not now issue any report of a trader's success, Lin said the company is considering offering some sort of certification of results that could be helpful for someone trying to break into the field as a professional.
Lin said the project has piqued his interest in data analysis, economics and computer science. "I've been a sports fan for a long time," he said, "and bringing that sports analytics culture into the field of finance is really interesting. I never thought I'd be doing computer science at Davidson, but I've gotten very involved."
Lin and Chartier will present their work at professional conferences in the fall semester.
Lin's other primary interest at Davidson is music. He is an accomplished guitar player who holds a Zachary F. Long Jr. music scholarship that funds weekly lessons from adjunct instructor Dustin Hofness. He plays regularly with the campus bands Free BBQ and The Culprits, and hopes to play with the college's Jazz Combo this year.