Data Analysis of Lumber Futures Trading Strategies

Olympic Industries

Will Hao
Be self-motivated and take actions as quickly as possible instead of purely planning or imaging. An ideal project will not drop from the sky until you really prove yourself.

What made you interested in pursuing your project?

Doing my internship at Olympic Industries as an analyst provided me an ideal platform to utilize the data analysis skills I learned from MFRE. The skills obtained from my core and elective courses in applied econometrics, commodity pricing and hedging strategies were particularly useful. I knew that I wanted to gain the experience of working in an industry-leading foreign company, which would be beneficial for my future employment and career establishment in Canada. In addition, the forest industry is the pillar of BC’s economy, consisting of one-third of BC’s total export. All of these important factors lead me to pursue my graduating project at Olympic Industries.

Describe some of the key tasks and/or deliverables you were responsible for during your project.

My main task was to identify futures and options trading opportunities based on data mining, and structuring the valid information into applicable trading strategies. For example, I would provide a hedging strategy brief in the weekly derivatives meeting. The hedging strategy was developed based on historical basis data, which I collected from a third-party provider and refined through Excel. The current basis of the majority lumber products we trade in the cash market would be matched and compared with the historical basis data which is sorted in different time lengths. Then, an optimized hedging strategy for each wood product would be generated according to the current market basis level. Surely, I would then simplify the results. The major part of my role was to provide guiding information effectively for our daily cash trades.

What did you learn that was most memorable and valuable during your project?

Communicating more with your colleagues will always help you. When I stagnated in a new task, (which can be a recurring case for a rookie), I could derive new ideas or at least relieve my anxiety when I had a chance to talk it over with senior traders; in the process, this also allowed me to learn a lot from their expertise and experience.

How did you apply the skills you learnt during MFRE in your project?

Practice is always something different from theory. My job was 80% linked to the knowledge I learned from MFRE. When I figured out that several of my tasks could be solved using methods learnt from MFRE, I found that the best way for me was to review my notes and slides from coursework. During my project, my Faculty Supervisor Carl Bayard, provided me with many useful ideas and shared his previous trading experience. He even came to my company and had a nice conversation with me and my boss, which turned out to be a valuable experience for me.

Any advice you would give prospective students as they begin searching for their Graduating Projects?
Be self-motivated and take actions as quickly as possible instead of purely planning or imaging. An ideal project will not drop from the sky until you really prove yourself.

Project Field
Project Discipline
Project Year
2019
Project Area