IMC Prosperity: A trading competition

Introduction to IMC Prosperity

The IMC Prosperity Trading Competition is a thrilling event designed to challenge participants' skills in both manual and algorithmic trading. The competition spans five rounds, each lasting three days. In each round, new products and data are introduced, providing teams the opportunity to trade these assets and bring their virtual island to prosperity. I had the privilege of participating in this year's competition and achieved a placement of 511th out of 9,000 teams, accumulating a total of 571,714 shells, the competition's currency. Additionally, I ranked #139 in the country.

Competition Structure

Manual Trading

The manual trading component of the competition involved solving complex probability and mathematical problems using the provided data. The objective was to optimize strategies to maximize profits. This part required deep analytical thinking and quick decision-making to navigate the fluctuating market conditions and seize profitable opportunities.

Algorithmic Trading

The algorithmic trading portion was particularly fascinating. Participants were given historical data from previous days and, in certain rounds, additional external information. The challenge was to develop algorithms that could analyze the data, predict market movements, and execute trades efficiently. This segment perfectly blended my passion for quantitative finance, programming, and mathematics.

My Journey and Learnings

My interest in quantitative finance drove me to take on this challenge. With a background in computer science and mathematics, I was eager to apply my skills in a real-world trading scenario. The competition provided a perfect platform to do so, allowing me to explore various trading strategies and understand their effectiveness.

Trading Strategies Explored

Throughout the competition, I experimented with several trading strategies, each offering unique insights and learnings:

Mean Reversion: This strategy is based on the concept that prices will revert to their mean over time. I learned how to identify overbought and oversold conditions and make trades based on these signals. While it worked in some scenarios, its effectiveness was limited by the volatility of the market.

Momentum Trading: By capitalizing on the momentum of price movements, this strategy aims to ride the trend until it shows signs of reversal. I discovered the importance of timing and the risks associated with sudden market shifts.

Pair Trading: This market-neutral strategy involves trading two correlated assets. When one asset is underperforming and the other is overperforming, the idea is to short the overperforming asset and long the underperforming one. This strategy taught me the intricacies of correlation and the need for continuous monitoring.

Statistical Arbitrage: Leveraging statistical models to find price discrepancies, I learned how to create and test models that could predict future price movements. This was particularly challenging but rewarding when the models worked as expected.

Looking Ahead

Participating in the IMC Prosperity Trading Competition has been an incredible learning experience. I have gained a much deeper understanding of algorithmic trading and the various strategies involved. Next year, I plan to compete again, armed with the knowledge and insights I have gained. I am confident that with this enhanced understanding, I will be able to develop more effective trading algorithms and achieve even better results.

The IMC Prosperity Trading Competition allowed me to combine my love for mathematics and programming in an exciting and competitive environment. It showcased my enthusiasm for trading and quantitative finance, and honed my data analytics, programming, and mathematical abilities. This experience has reinforced my desire to pursue a career in this field, and I am eager to apply the skills and knowledge I have gained to future opportunities.