The M Demon fund is currently the only student-run proprietary foreign exchange fund in the nation, trading a spot EUR non-discretionary, non-coded low frequency algorithmic model incorporating exponential moving averages, stop losses and limits set by GIRTH. Alpha produced by a trend following system. Highest beta is operational risk. Fund leverage is approximately 2:1. Owner/Managing Director of M Demon Fund Leslie K. McNew and is treated as an experiential learning tool.
Preparing students to enter careers in trading, modeling, risk management and operations requires the student to self-regulate their learning, applying traditional academic knowledge to practical market issues and increasing their professional, quantitative and behavioral skillset. The M Demon Fund is a self-regulated learning vehicle to promote the acquisition of this knowledge, demonstrating that the student can both produce returns above and beyond what was expected (“alpha”) and actively take ownership of their own learning process. The Fund is a student managed proprietary foreign exchange vehicle trading spot EUROs, using a non-discretionary, low frequency algorithmic model. Besides trading and modeling, students develop a framework for risk management, operations, compliance, and marketing; the results are quarterly reported to an Advisory Board by the more outstanding students. We demonstrate that directed tasks for the goals of a business can lead students to gain understanding of the value and application of financial knowledge; team members are encouraged to choose the method to complete the task based on individual and team skill sets, with an eye towards successful execution and sustainability. Accountability is left to the individual department, the team and the professor. Students that grasp the importance of learning more complicated knowledge are rewarded with leadership positions within the fund, the ability to present quarterly to the advisory board, networking opportunities, internships and exciting careers. Our challenge empowers and embeds within the students the concept of self-sufficiency; as markets change or the trading models are improved, students must improve foundation knowledge to adapt to real time markets.
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