Virtual Trading Games - what strategy to use?

sunnypoker · #1 12-23-2006, 11:52 PM

so i'm still a student and i'm thinking of trying a virtual trading game.
it started on the 18th december (5 days ago), and goes on till the 26th of january, so its about 40 days.

i'm a management undergrad student with alot of modules focusing on finance/investment management, but while i learnt alot of stuff, i have no idea how to put it into practice.

anyways i was just wondering, with such a short scope (40days) of trading time,what sort of strategy should be implemented in order to do well?
i'm guessing buy-and-hold won't be of any effect with such a short term.

the markets i can trade in are: United States,Euronext,Frankfurt,London,Milan (for stocks) and just US (for futureS)

what sort of basic analysis should i be doing when lookng at the quotes (eg in Yahoo finance) . I know roughly what P/E is but I have no idea how to put it into use, (seeing as i don't know what the benchmark is to compare it with)
+ should i be using past share movements to analyze return-risk etc?
I've learnt about CAPM and all those stuff but i really don't know how it can be put to practice when actually trading.

what about the January effect? can that be of any significance? I heard smaller/newly starting businesses tend to perform well during january, i'm assuming this was referring to share prices becoming overrated.
is it a possibility that i buy small cap shares now in the hopes of january effect? correctly if i'm totally off track and thinking bazzard.

any help is welcome.

oh and starting capital is GBP100,000...supposedly, but it says my buying power is GBP200,000 , wtf? why's the difference?

IdealFugacity · #2 12-24-2006, 02:06 AM

January effect is discussed in the latest Money magazine (Jan 2007, p.64) I am not informed enough to give my own opinion, but you might want to read theirs before applying it to any of your real financial strategy in the future.

IdFug

gull · #3 12-24-2006, 02:32 AM

How do you win the game?

Are you shooting for the highest chance at the highest score?

Or are you shooting for the highest average score?

RedJoker · #4 12-24-2006, 03:08 AM

100,000 is the cash you own. 200,000 is the cash you can spend, 100k of it is margin. Margin is like a loan, you have to pay it back afterwards. This allows you to leverage your position, making profits and losses faster.

stinkypete · #5 12-24-2006, 04:25 AM

if you're trying to win, you just want to maximize variance. buy futures. diversify as little as possible. use your margin.

OrangeCat · #6 12-24-2006, 12:00 PM

[ QUOTE ]
if you're trying to win, you just want to maximize variance

[/ QUOTE ]

Right. To win, you usually have to what most people should never do if investing with real money. That is why investing contests are stupid.

sunnypoker · #7 12-24-2006, 12:19 PM

top 10 wins gift vouchers/ first round interview with a certain investment Bank

so i'm aiming to get in the top 10, or better, to win

first place right now already has 60% return (unfortunately u can't see his portfolio)

ok so how do i use the futures? i have hard time grasping its use, isn't futures agreeing on a price now and i buy it later at a certain date?
if so, what difference would it be to me buying the asset now?? (correct terminology = underlying asset??)

I can buy/sell(to close)/sell short/cover short on Commodities shown here:
http://www.stocktrak.com/2005Version...ommodities.php

and then i select a month/year.

+ how do i know what sort of futures contract will be useful? where do i start my research.
(looks like this can be an opportunity for you gurus to teach me about trading futures!)

IdealFugacity · #8 12-24-2006, 01:01 PM

Wow, they give you an interview for luckboxing on a cheap stock in hopes of 100s of % returns??

at least the gift vouchers will be worth something [img]/images/graemlins/tongue.gif[/img]

john kane · #9 12-24-2006, 02:09 PM

[ QUOTE ]
oh and starting capital is GBP100,000

[/ QUOTE ]

put it all into a savings account.

pig4bill · #10 12-25-2006, 05:34 AM

40 days is too short to worry about PE ratios. The only time earnings come into the picture is if they announce earnings during the contest. The way these contests are won is by putting most or all of your whole wad on a fast moving stock. Then dump it while you still have a profit and look for the next one.

As for futures, if you don't even know where to start, forget it. The chances of you making a big profit by someone posting "go long Feb winter wheat" are very small.