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Integrated STEM Education Conference

1

Foreign Currency Trading As An Inter-Disciplinary

Teaching Pathway For STEM Initiatives

Robert S. Colombo, President CEREBRONIX, thincker@cerebronix.com

Debora F. Colombo, Co-Founder The Granite School, coach@thegraniteschool.com

Abstract – Successful members of tomorrow’s workforce

must not only be demand learners, but must also be

capable of continually reinventing themselves, while

addressing, pondering and successfully resolving com-

plex inter-disciplinary problems. Critical to developing

these sustainable career capabilities and fluid thinking

skills is the introduction at earlier and earlier ages, of

learning environments that challenge students to process

real-time information, from multiple sources and in a

variety of display formats, while coaches help them to

seamlessly think across multiple disciplines. Using com-

modity trading within the foreign currency market as a

rich platform to introduce students to such challenges,

while helping them integrate knowledge from the disci-

plines of geography, sociology, economics, signal pro-

cessing, modeling, finance, statistics, politics and world

trade is the core of this initiative.

Index Terms - currency trading, foreign exchange, STEM

pathways, inter-disciplinary, sustainable, career, reinven-

tion, MBA programs, courseware, systems thinking, interac-

tive learning, distance learning and real-time laboratories.

INITIATIVE BACKGROUND

The ever increasing importance of the global currency mar-

ket as a liquid investment vehicle, a corporate hedging tool

and a mechanism to support commerce amongst Global

2000 companies has created a strong demand for members

of the corporate and financial services workforce to have

both theoretical and hands-on foreign exchange knowledge.

The Foreign Exchange (F/X) market is the largest trad-

ing market in the world with over $4 trillion traded daily by

its global participants that include individuals, funds, banks,

governments and corporations. In a global economy, easily

accessible sources of cross-market currencies is important to

these various participants to maintain investment objectives,

hedge commodity costs, manage reserve pools and purchase

materials, products and services in the world marketplace.

The behavior and function of the F/X market is like no

other world market in that it combines extreme leverage,

accessible liquidity, cross-factor complexity and inherent

volatility within the context of a center-less infrastructure

that operates around the world and around the clock – it is a

difficult and complex animal to understand, let alone tame!

The F/X market is not only an investment vehicle, but

is also a critical element of the global banking and business

infrastructure. Without an ample supply of money, no busi-

ness could be transacted within a country and without access

to money denominated by country no inter-country business

could be transacted. Add to that, the fact that every coun-

try’s performance and world position can be monitored and

measured in terms of their respective currency value fluc-

tuations and interest rate moves, and you begin to see the

impact that the F/X market has on everything we do and on

everything that is bought or sold in the global marketplace.

These considerations are driving the global need for

knowledgeable practitioners who can analyze, model and

trade the F/X market on behalf of potential employers in

finance, banking, investment, manufacturing and business.

Simultaneously, the market for equally knowledgeable

workers is increasing in all areas of information technology

where systems, algorithms and tools that support F/X analy-

sis, modeling and trading activities need to be developed.

The types of F/X knowledge and hands-on abilities that

are required by the financial services workplace, along with

its supporting information technology counterparts, include

practitioners that are fluidly capable of:

Analyzing, assessing and forecasting the time-based

behavior of single, multiple and baskets of currencies;

Trading individual, multiple and baskets of currencies

along with their respective agile derivative instruments;

Building mathematical models of currency, market,

country, system, instrument and trader behavior; and

Developing software, algorithms, tools, visualizations

and systems to build trading and trader metric systems.

In 2008, when this project was commissioned, although

there were more than twenty (20) educational institutions in

Pennsylvania, there was no available courseware or labora-

tory mechanism available to prepare students to capture the

high-wage opportunities in this burgeoning career area.

Most economics, finance and business programs addressed

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Integrated STEM Education Conference

2

the theory and impact of the global currency market on

world monetary behavior, but they did not extend that foun-

dation to an understanding or practice of real-world curren-

cy market analysis, assessment, forecasting or trading.

The multiple parameters, features, disciplines and inter-

dependencies that make foreign currency markets compli-

cated to engage, along with the absence of relevant real-time

laboratories or courseware, gave rise to the project described

herein where the F/X market was chosen as a rich learning

environment to create new career paths for MBA students,

while exposing them to rigorous inter-disciplinary learning.

GOALS & OBJECTIVES

Seeking to prepare MBA students to engage this rapidly

emerging career, while providing pathways for other K-20

academic community members to participate by distance

learning, the University Of Scranton in cooperation with

CEREBRONIX (a consulting firm with strong financial

services industry experience), undertook a groundbreaking

project within the context of a STEM initiative, to design

and implement a two-semester Foreign Currency Trading

Course along with a real-time F/X Trading Laboratory.

Additional goals and objectives of this Northeastern

Pennsylvania (NEPA) initiative included the following:

in creating the course and laboratory materials to train

students at the University Of Scranton, we would also

be creating a courseware package and outreach program

that could be utilized by other academic institutions;

secondary to training practitioners, was the added goal

of providing a viable mechanism for companies, to lo-

cate and expand their analysis modeling and trading op-

erations by recruiting students from our program; and

finally, a successful project of this type would demon-

strate the value and efficacy of using rich topics like the

F/X market as STEM-based learning foundations.

Because the project was funded in part by a NEPA re-

gional economic development program known as Wall

Street West (www.wallstreetwest.org), it was actively mar-

keted in PA and NY as an active mechanism to create a

leading-edge talent pool continuum (K-20) capable of at-

tracting new businesses to the region over a period of years.

APPROACH

The approach to achieving the goals and objectives of the

initiative within the time frame of the project and success-

fully sustaining them beyond that time frame were broken

down into two (2) focus areas as follows:

Implementation Model – Our deep history with trading

environments told us that successfully implementing a train-

ing mechanism for students to engage these new workforce

opportunities with rigorous inter-disciplinary F/X skills

required courseware that provided students with a continu-

ing combination of underlying theory, supporting infor-

mation, contextual application and hands-on practice over a

sustained interval of actively coached exposure.

Additionally, all the inter-disciplinary material had to

be self-contained within the course and pedagogical reason-

ing demanded that the course be built with a two-semester

framework where we could continually build and reinforce

the student’s depth of knowledge, while supplementing a

recursive education cycle with hands-on practice employing

real-world trading software and live F/X market data.

Implementation Methods – To bring this implementa-

tion model to fruition, the development of the currency

trading course and laboratory materials would need to result

in a unique set of tangible training deliverables as follows:

a self-contained custom course manual (Primer) outlin-

ing the theory (e.g., finance, economics, banking, busi-

ness, etc.), technical background (e.g., analytical tech-

niques, indicators, modeling methods, etc.), mathemati-

cal bases (e.g., calculus, statistics, filtering, etc.), psy-

cho-social background (e.g., trader mentality, win/lose

dynamics, crowd behavior, self-coaching, etc.) and

practical understanding required by an analyst, modeler

or trader planning to work in the F/X world; and

a self-contained custom laboratory manual (Workbook)

outlining the methods (e.g., fundamental, technical, hy-

brid, etc.), techniques (e.g., single-timeframe, multi-

timeframe, pivot points, statistical, etc.) and tools (e.g.,

indicators, news sources, collateral and reports, etc.).

The overall development of the course and laboratory

materials was directed at emphasizing fundamental, tech-

nical and hybrid market analysis approaches coupled with a

risk-mitigated financial engineering approach to understand-

ing indicators, news, behavior and other relevant collateral

information across multiple time-frames simultaneously.

Additionally, we would instill an acute sense of realism

into the student’s trading by utilizing actual trading accounts

stocked with “monopoly money”. Each student would re-

ceive a $50K starting account at the beginning of each se-

mester and their trading performance would be assessed

using the real-world measure of profit, loss and draw down.

By adding self-measurable “win-loss” performance, we

not only ensured a heightened trading experience for the

students, but provided them with the feel of a gaming envi-

ronment – closer to what a real trader would see and feel

while working, what students in their age bracket could

appreciate from their typical leisure activities and what their

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Integrated STEM Education Conference

3

instructors could use to gauge where their technical, psycho-

logical and stress-related performance levels were hovering.

LEVERAGE

A key success element of any innovation investment pro-

gram initiative is leveraging funding to produce the most

outcome potential for every funding dollar invested. As it

relates to this initiative, our effective use of leverage can be

broken down as follows:

a body of practical and proven knowledge about analyz-

ing, modeling and trading the F/X market existed with-

in CEREBRONIX. This knowledgebase of documenta-

tion, process models, methodologies, information links,

software modules, practical examples, course structures

and indicator methods provided the basis of the initia-

tive and part of our core investment;

this body of knowledge, coupled with the contributions

provided by members of The University Of Scranton

faculty, allowed us to accelerate progress towards creat-

ing the finished trading course and superior laboratory

materials, while providing a team-work environment

where faculty folks could gain exposure to real-world

trading methods and inter-disciplinary training as well;

as a commercial consulting company, CEREBRONIX

had developed long standing relationships with plat-

form, software and data-feed providers that could be

called upon to “donate” products and services to the ini-

tiative, making for even more efficient use of funds;

having regionalism as an overarching goal of the Wall

Street West program, and recognizing that not all other

area schools could afford a trading laboratory, we engi-

neered into both the courseware, supporting materials

and laboratory hardware infrastructure the ability to de-

liver the course in a distance-learning mode; and

finally, the course, its pedagogical foundation, its asso-

ciated teaching materials and its testing materials were

packaged in a form that could be used by other depart-

ments, institutions, grade levels and businesses as a

model for the creation of similar instructional and la-

boratory materials in their specific challenge domains.

STEM FOCUS

The methods and techniques that underlie the design of

the trading courseware and laboratory are predicated upon

an inter-disciplinary hands-on approach to teaching and

coaching within a rich subject area as depicted in Figure 1.

To accomplish this, we utilized aspects of our proprie-

tary market models and analysis methods to teach students

how to combine price action observation in multiple time

frames (e.g., daily price action, hourly price action and

quarter hour price action) with coordinated analysis (e.g.,

reports, news, trade flow, interest rates, trading behavior,

political volatility, etc.) to uncover and exploit trending

price action, recurring price pattern behavior and shock

market effects that suddenly drive prices to extremes.

Using this rigorous observation and analysis approach,

while introducing typical MBA students to physics, math,

sociology and information fusion techniques neither typical-

ly experienced nor regularly included in an MBA curricu-

lum, expanded the student’s minds and capabilities to new

and satisfying levels. Over time, their self-confidence im-

proved from being able to absorb knowledge outside their

core MBA focus and from their hands-on experience in

making trades and seeing the results in real-time.

Additionally, feedback from students that the lessons

and experiences that they were garnering from the trading

course began to cross-pollinate into their other courses and

projects. These reports proved our thesis that exposing stu-

dents to new inter-disciplinary ways of observing and think-

ing in one domain could have tremendous collateral benefit

in developing overarching skills to integrate knowledge and

information from multiple potentially disparate sources.

Furthermore, we noted that by creating a component of

the currency trading course as an elective offered to com-

puter science or applied mathematics students, we would be

providing those students with a better understanding of what

currency analysts, modelers and traders do in practice,

thereby opening up potential career opportunities for infor-

mation technology and applied mathematics graduates to be

better equipped to build the appropriate analysis tools and

superior trading systems.

Our industrial experience shows that technology folks

with cross-knowledge make superior information technolo-

gy professionals. Cross-knowledge professionals typically

receive higher salaries, greater respect and more opportuni-

ties for career advancement than their less trained peers.

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Integrated STEM Education Conference

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IMPACT

The design, development and delivery of the courseware

and the trading laboratory rated as one of the most success-

ful projects amongst the $14M in projects that were funded

under the umbrella of the Wall Street West program.

The activities, methods, materials and outcomes of this

initiative utilized the knowledge, talent and experience of

participants from both the academic and business communi-

ties demonstrating the extreme possibilities of academic-

industry partnerships and set the stage for scaling the mate-

rials and participation to the K-12 and “retail” domains.

Students who participated in the two-semester course

learned to successfully analyze and trade the F/X market,

while developing new life-long skills for observing, analyz-

ing, understanding and building abstract models of complex

inter-disciplinary systems – clearly valuable career assets.

That year, the F/X students were more confident than

their classmates during job interviews and presented a better

employer value proposition because of their expanded capa-

bilities and hands-on trading experience. At a time when

offers were scarce, every trading student got a job offer!

Additionally, The University Of Scranton possesses a

modern trading facility that can host classes locally, engage

distance learners and perform live trading. This state-of-the-

art infrastructure can now be utilized to build other such

courseware and laboratory tools to benefit both undergradu-

ate and graduate students across their chosen “majors”.

The activities, methods, materials and outcomes of this

initiative are fully capable of being used as models for im-

plementing similar courses by participants from other aca-

demic institutions and business entities.

CEREBRONIX has now condensed the courseware into

a series of mini-programs for our new community-based

education entity known as The Granite School (TGS). TGS

will be offering to help educators in the K-12 space to ex-

tend inter-disciplinary program design, while teaching

working people, retired people and stay-at-home spouses

how to generate alternate income streams from F/X trading.

We are now looking for K-12 schools and educators

who are interested in creating similar academic-industry

partnerships that yield inter-disciplinary STEM initiatives

that can expand the capabilities of their students and differ-

entiate their institutions in the academic “marketplace”.

SUMMARY

Having inter-disciplinary thinking and problem solving

skills are the keys to career reinvention, satisfaction and

earning flexibility in a technical world where information

density, problem complexity and socio-economic dynamics

play a role in every aspect of life and sustainability.

Additionally, the expanding nature of globalization,

world commerce and global investing will only serve to

increase the demand for practitioners with F/X market

knowledge to assist with not only analyzing, modeling and

trading currencies, but with the design and development of

information technology systems focused on helping ana-

lysts, modelers and traders perform their functions.

This project initiative demonstrated concretely that new

STEM-based inter-disciplinary teaching programs, when

implemented via strong academic-industry partnerships, can

raise the educational bar, teach students valuable new ways

to consider problems and derive solutions, while creating

real value for the hosting school, its educators and its locale.

Combining the skills and experience of academic and

industry principals to create and deliver a leading-edge F/X

analysis and trading course and an advanced technology

real-time laboratory, not only created a hugely successful

Wall Street West program initiative, but also resulted in

differentiating the nine county region of Pennsylvania and

The University Of Scranton from most other regions and

universities in the country!

ACKNOWLEDGMENT

The principals in this project acknowledge the efforts of all

of its participants, agencies, institutions and students who

helped blaze a new trail in educational advancement.

We further acknowledge the funding and support pro-

vided by Wall Street West and the Commonwealth of Penn-

sylvania along with the software and services provided by

NinjaTrader, LLC 1236 Clarkson Street Denver, CO 80218.

AUTHOR INFORMATION

Robert S. Colombo, President, CEREBRONIX, Basking

Ridge, New Jersey. CEREBRONIX is a boutique manage-

ment and technology consulting firm specializing in enter-

prise development, knowledge management, extreme inno-

vation, mathematical modeling and systems engineering.

Robert has been an engineer, executive and entrepreneur for

over 35 years and an educator for more than 19 years.

Debora F. Colombo, Co-Founder, The Granite School,

Clinton, New Jersey. The Granite School is a community-

based school initiative bringing innovative teaching con-

cepts to students of all ages utilizing the foreign currency

market, small business entrepreneurship and alternate in-

come streams as subject cornerstones. Debora (now de-

ceased) was a life-long learner and inter-disciplinary educa-

tor focused on developing advanced thinking skills and

multiple intelligences in children and adults of all ages.