spaced 12 pt times new roman text W r i t i n g

spaced 12 pt times new roman text W r i t i n g

Trading Simulation Report

Some commonly seen trading goals in practice are:

Capital preservation: investors want to minimize their risk of loss, usually in real terms. They seek to maintain the purchasing power of their investment – the return needs to be no less than the rate of inflation. This is a strategy for strongly risk-averse investors or for funds needed in the short-run.

Capital appreciation: investors want the portfolio to grow in real terms over time to meet some future need. Growth mainly occurs through capital gains instead of income like dividends. This is an aggressive strategy for investors willing to take on risk to meet their objective.

Current income: investors want the portfolio to concentrate on generating income (such as dividends) rather than capital gains. This strategy suits investors who want to supplement their earnings with income generated by their portfolio to meet their living expenses.

Total return: investors want the portfolio to grow over time to meet a future need. This strategy seeks to increase portfolio value by both capital gains and reinvestment current income. It is like a combination of the above two strategies.

(4) Trading strategy: A full analysis showing how you construct your initial strategy, including your analysis on the underlying stock and reasonable projection. This part is about your initial ideas about pick stocks. Focus on describing the idea and why you think it is reasonable.

(5) Trades analysis: A full report showing what happens on your profit/loss, how and why you change your trading strategy as the game progresses. Depending on the number of stocks you held, you can focus on analyzing your portfolio as a whole, or focus on several stocks only. Try to figure out the reasons (at economy, industry, and firm levels) that caused you to gain/lose money.

(6) Biggest winner and loser: Rank the performance of all the assets in your portfolio from the best to the worst. Identify the two stocks perform the best and the worst. Provide the reasons why you include them in your portfolio initially. Comment on their performance and provide the reasons why they become the biggest winner/loser. If you do not have enough data to rank, just try to identify a big winner and a big loser (no need to be the biggest winner/loser) that performed beyond your expectation. Try to figure out the reasons (at economy, industry, and firm levels) that caused the surprising performances.

(7) Trading conclusions. Based on the entire trading experience, state what general factors lead to your profit/loss, the appropriateness of trading strategy and change, and the lesson you learn for investments.

  • (8) Appendix. Attach a table showing your weekly profits and losses, any calculations supporting trading strategies you used, graphical depictions of your portfolio positions, data and information resources, etc. If you do not have complete data, just ignore the weekly profit/loss table.
  • The results of the trading should be written up in a formal report that does not exceed 10 pages of double-spaced 12 pt Times New Roman text (not including cover page or appendix). Set margins to 1’’ for top, bottom, left, and right. However, keep appendix to a reasonable length.
  • Option 2
  • If you have not collected any data, or do not think you have enough data to follow our original guideline in Option 1. Please imagine that you are going to start over your investment, and include the following parts in your report:

(1) Cover page. Show your name and account name (you can make up one).

(2) Trading overview and trading goals: A brief introduction of your goal(s) for the trading. You need to make an assumption about your holding period – are you doing this for long-term, mid-term, or short-term and why. The trading goal indicates what you would like to achieve from your portfolio – are you investing to prepare for your education, your house, your retirement, or just for fun etc? Some commonly seen trading goals in practice are:

Capital preservation: investors want to minimize their risk of loss, usually in real terms. They seek to maintain the purchasing power of their investment – the return needs to be no less than the rate of inflation. This is a strategy for strongly risk-averse investors or for funds needed in the short-run.

Capital appreciation: investors want the portfolio to grow in real terms over time to meet some future need. Growth mainly occurs through capital gains instead of income like dividends. This is an aggressive strategy for investors willing to take on risk to meet their objective.

Current income: investors want the portfolio to concentrate on generating income (such as dividends) rather than capital gains. This strategy suits investors who want to supplement their earnings with income generated by their portfolio to meet their living expenses.

Total return: investors want the portfolio to grow over time to meet a future need. This strategy seeks to increase portfolio value by both capital gains and reinvestment current income. It is like a combination of the above two strategies.

(3) Trading strategy: A full analysis showing how you construct your initial strategy. As we have already learned fundamental analysis and technical analysis, please be as detailed as possible in this part which will be the main body of your report. Please try to explain your strategy at economy, industry and firm levels. If you only plan to focus on a couple of stocks, you can show your analysis on just one or two stocks. Again, the emphasis here is that if you can provide persuasive and reasonable explanation why you think it a specific stock is a good buy/short.

(4) State that if during your holding period, if something beyond expectation happens, how you will adjust your strategy and portfolio.

(5) Appendix. Include any calculations supporting trading strategies you use, data and information resources, etc.