Posted: February 9th, 2015

Stock Market Assignment

Paper, Order, or Assignment Requirements

 

 
Throughout the semester you will be making investments in the stock market, you goal will be to increase the value of your original investment. The VSE is a virtual online stock market where students will compete against each other. Students will be evaluated on the type of trades they do (e.g. long vs. short), use of limit orders, buying on margin, the number of trades completed and the underlying reason for the trade – not your overall return. At the end of the term students will be expected to prepare a 2-3 page report of their best and worst stock picks and their likelihood of investing in the stock market upon graduation.
Department of Business Administration and Tourism Hospitality Management

 

OUTLINE BUSI 2060

STOCK MARKET SIMULATION

Sept 15/14 – Nov 24/14

 

 

 

Summary:

1. URL for your game:

 

2. Password for this private game:

1. Click on the ‘Join Now’ button to get started.
2. If you are an existing Market Watch member, login. If you are a new user, follow the link for a Free account – it’s easy!
3. Follow the instructions and start trading!

 

Overview

Students in Business 2060 will compete in a Stock Market Game using the Virtual Stock Exchange (VSE)

The game will provide each student with $100,000 to invest.

→ Welcome

Virtual Stock Exchange is an online simulation trading game where you build and manage your own portfolios and compete in games against your classmates risk-free!

Whether you’re new to the U.S. financial markets or a seasoned trader, this is a powerful tool for building skill, testing and refining your strategy, or gaining important investing experience.

 

Virtual Stock Exchange is free and easy to use. Simply complete the brief registration form, choose or create your games, and set up your portfolios to include stocks and funds traded on the NYSE, Nasdaq and AMEX exchanges. We’ve even provided extensive research resources and current market news from MarketWatch to help you make informed decisions.

 

Once you’re in a game, tracking progress is simple. Real-time rankings are available for all members and you’ll see your own customized game summary on the VSE home page. You can also view portfolio summaries for you and other players in your games – and in all public games.

 

Before you begin, it’s important to read the Trading Rules and browse our helpful FAQ.

 

Here are your instructions to access the VSE and register for your game:

http://www.marketwatch.com/game/msvu-2060-01-fall-2014

This is a Private Game (i.e. open to our class only) and you will be asked to enter the game password:

Then click on: Sign In

Then click on: Get your FREE membership now

 

Email:

Password:

Pass. Confirm:

Display Name: make sure you use your real name so I know who you are

Fill in questions as you wish and click: Create Profile

An email will be sent to your email account, open it and click on the link to activate your account.

You will see toward the top of the page the headings: Front Page, News, Commentary … Games. Click on: Games

Then click on: Find a Game and enter in the box: MSVU-2060-01-fall-2014

 

 

Rules & Regulations → Virtual Stock Exchange Rules

Your use of Virtual Stock Exchange is governed by game rules. But it’s also helpful to be familiar with SEC trading rules. Please browse both pages in this help section to ensure you fully understand the online trading process and how VSE’s games are set up.

VIRTUAL STOCK EXCHANGE RULES

TRADING HOURS

9:30 a.m. EST – 4:00 p.m. EST; no after-hours trading is permitted.

SECURITY TYPES

All shares can be traded on the following exchanges:

Exchanges:

• AMEX
• Nasdaq
• NYSE
• OTC-BB

Security Types:

• Public Companies
• Funds
• ETFs

 

GAME LENGTH

The game creator establishes the duration of the game. During setup, the creator establishes a start and end date for the game. The game creator can make changes to the start date before the game has started and to the end date at any time during the game.

 

STARTING BALANCE

Starting balance is determined by the game creator. Your setting is $100,000 in cash.

 

COMMISSION

You will be charged a commission fee per stock transaction of any value and size. This flat rate is determined by the game creator. The default commission is $19.95 per trade.

 

INTEREST ON UNINVESTED CASH AND MARGIN

Your uninvested cash will earn a money market fund interest, which will vary depending on prevailing market conditions. This money market rate is usually around 4-6% and is set by the game creator. Margins will be charged with interest as well, set by the game creator.

 

RANK

Your portfolios will be ranked against others in your games. To view real-time rankings, click Players & Rank in the My Games area on the left-hand side of any VSE page.

 

MARKET ORDERS PLACED DURING MARKET HOURS

If you make a trade during market hours, your order will generally be confirmed within 20 minutes after your order has been placed.

 

MARKET OPEN ORDERS PLACED DURING MARKET HOURS AND DURING OFF HOURS

If you place a market open order, the order will be not be executed until the market opens on the next trading day. Only orders placed before the opening bell (9:30 a.m. EST) will be executed that day. All orders placed after (9:30 a.m. EST) will be executed the next day.

 

LIMIT ORDERS PLACED DURING MARKET HOURS AND DURING OFF HOURS

If you place a limit order (whether during market hours or during off hours) the order is submitted to the appropriate limit order book, where it will wait for the market price to move up to your order price (if it is a sell order) or down (if it is a buy order). Note, in extraordinary situations where the market price overshoots your limit order, your order will be executed to your advantage. Example: If you submitted a limit buy for shares of Company X at 120 and the market ask is only 119, you will purchase your shares at 119 each. On the other hand, if you submitted a limit sell for shares of Company X at 117 while the market bid is 118, you will sell your shares at 118 each.

 

TWO KINDS OF LIMIT ORDER TERMS

There are two kinds of limit orders you can specify:

• Day orders
• Good until canceled orders

 

STOP LOSS ORDER

Stop loss orders (“stops”) are limits set by traders at which they will automatically enter or exit trades – an order to buy or sell is placed in the market if price reaches a specified limit.

A stop loss order is set to limit a trader’s potential loss. A stop is placed below the current price (to protect a long position) or above the current price (to protect a short position).

Example: If you purchase 1,000 shares of Company Y at $90 you may decide to place a stop loss order. Example: Sell 1,000 shares IF price is less than or equal to $85. If price falls to $85, your order will be activated. Your loss is limited to $5.00 per share (plus commission).

 

SELL SHORT

When you want to bet against a stock by selling it short, you are selling the stock first and then buying it back later. When short selling a stock, you will be required to post collateral in your short account. This is to protect the broker in the event the shorted stock sees extraordinary gains in value and you are unable to buy it back. When buying back a stock you’ve shorted, you need to specify “buy to cover.”

 

BUY TO COVER

Buying shares of a stock to offset a short position, a position for shares of a stock you sold but did not own.

 

MARGIN

In the stock market, margin is the amount of cash that must be put up in a purchase of a security. VSE’s default position is to allow margin accounts. You change this by using this Advanced Settings feature when you set up your game. (See related help page, My Games → Game Setup.)

In a margin account, the asset is the market value of the stocks and the liability is the size of the loan taken out to pay for the order. The rule states the lowest equity percentage you can hit as a result of a transaction is 50%. This is called the initial margin limit. Example: You start with a $10,000 cash deposit and make a $15,000 stock purchase. You now have a $15,000 asset comprised of a $5,000 liability and $10,000 in equity. That’s over the 50% initial margin; this trade will be executed. Note that interest will be paid by your account for debt margin. The default interest rate is 6% but game creators can change this using the Advanced Settings.

 

END OF THE PORTFOLIO VALUE

Your final game ranking will depend on the portfolio value at the end of the investment simulation. At that point, your portfolio value is calculated from closing prices on the final day of your trading session added onto whatever uninvested cash you hold.

 

PERFORMANCE EVALUATION

While real fund managers are evaluated by the returns achieved by their portfolio adjusted for the risk profile, the VSE portfolio ranking ranks performance absolutely and does not adjust for the risk of the portfolio.