FAQ

Steps to start trading
 
1.    Click on “Games” in the main screen.
2.    Click on “Go to Games” on the right hand sIde of the selected game.
3.    The trading table will appear for the student to start trading.
4.    The student can choose the Order Type (buy/sell), input the Quantity and finally confirm the transaction.

Option 1: Hold

Just keep the security in the portfolio. Most of the investors keep their positions most of the time.

Option 2: Close out a position

This means that a long position will be sold, or a short position will be bought.
This action will eliminate the risk associated to this position completely.

Option 3: Reduce (i.e. take partial profits or losses)

The investor will make the current position smaller. Either sell part of a long position or buy part of a short position to reduce risk. The investor needs to input the amount of the decrease.

Option 4: Increase

This means the investor is willing to take a bigger position in the current position, because he is confIdent about the outcome of that bet.  The investor needs to input the amount of the increase.

Option 5: Turn and Reverse

This is simply a combination of Closing out a Position and then adding a new position at the current market Prices.

This graph shows amounts on the vertical axis and rounds on the horizontal axis. It is a bar graphs where the blue color represents the Total Profit and the yellow color represents the Realized Profit.

Total Profit by Round:  Realized Profit by Round + Unrealized Profit by Round

Realized Profit by Round

The Notes are a tool provIded to the student user to keep his Ideas and information organized during a game. Notes are simple and easy to use. They are available to the user through every page when logged in. The student user can add new notes, edit existing notes and view the list of notes. 

The security history is found in the trading page.
Steps=
1. Click on “Games” in the main screen.
2. Click on “Go to Games” on the right hand sIde of the selected game.
3. The trading table will appear where the student can make transactions.
4. Right below the trading table the user will find a link: “View Game History” that will show the list of past transactions organized by round. The user will need to choose the round to be displayed.

This graph shows amounts on the vertical axis and rounds on the horizontal axis. It is a bar graphs where the blue color represents the Total Profit and the yellow color represents the Realized Profit.
Total Profit by Round:  Realized Profit by Round + Unrealized Profit by Round
Realized Profit by Round

Realized Profit: Results from trades in a security that are already closed. Results can be a profit or a loss.
Unrealized Profit: Results from trades that are still opened in the portfolio. Results can be a profit or a loss.

This option will display two graphs. The graph on the left sIde shows the Current Profits including the current round, by securities. The graph on the right sIde shows the Realized Profits by securities.

1. Click on “Games” in the main screen.
2. Click on “Go to Games” on the right hand sIde of the selected game.
3. The trading table will appear where the student can make transactions.
4. Right below the trading table the user will find another table with the list of closed positions in each security. On the very right of the table there is “Detail” option that will display Order Details for the corresponding security.

The student with the highest Total Profit in the last round, not consIdering the current round that is still available to trade in, is the “Last Round Best Student”

The team with the highest Total Profit in the last round, not consIdering the current round that is still available to trade in, is the “Last Round Best Team”

This Standings option shows the list of traders according to Places Up column, which shows the students improvement in their performance compared to all students in the same game. The Hot Trader is the change in positions for the prior 3 days of trading.

This Standings option shows the list of teams according to Places Up column, which shows the teams improvement in their performance compared to all teams in the same game.

Steps to create team =
1. Click on “Games” in the main screen.
2. Click on “Games Teams” on the right hand sIde of the selected game.
3. Click on “Add New Team”.
4. Input the Name of the team and Update.
The student who creates the team is consIdered the Team Leader.

Steps to join a team =
1. Click on “Games” in the main screen.
2. Click on “Games Teams” on the right hand sIde of the selected game.
3. Click on “Join Team” on the Actions column on the right hand sIde of the selected team.

Steps to change the password=
1. Click on “Profile” in the main screen and the profile information will be displayed
2. Click on “Edit Profile” button to enable to change the information.
3. After entering the new password twice click on Update Profile.

  Curr: Currency in which the security is quoted.
  Security: Name of the Security.
  Order Type: Buy/Sell, transactions the user can choose.
  Quantity: Amount to be inputted by the user.
  Mul: Multiplier of the security used to calculate the P/L.
  Cost Basis: Price at which the original transaction of the security took place.
  Live Price: Current round Price of the security.
  Conv. (USD): Exchange rate between the currency of the security and the currency of the portfolio.
  Current P/L: Profit or loss expressed in the currency of the security.
  Current P/L (USD): Profit or loss expressed in the currency of the portfolio.
  Action: strategies for the user to choose.

Profit or loss made when the position is open. This is not the actual P/L. This is the amount of money the user can make or lose if we close out the position at that point of time.

It is the P/L the user makes when closing out the position. It is the actual money which the user made by trading.

It is the sum of Realized Profit and Unrealized Profit.

For a long position:
P/L = (cost basis – Live Price) * Quantity * Multiplier
For a short position:
P/L = (Live Price – Cost basis) * Quantity * Multiplier
P/L should be converted into required currency depending on the base currency of the portfolio.

Different performance lists showing relative position of the participants, as indivIduals or as teams. The available options are =

  Overall Student Standings
  Overall Teams Standings
  Last Round Best Students
  Last Round Best Teams
  Hot students standings:
  Hot teams standings:
  Downhill student’s standings
  Downhill Teams standings

1. Hold
2. Close the position
3. Reduce the postion
4. Increase the postion
5. Turn and Reverse

You can see the Leaderboard / Standing from your Dashboard OR within the game.  In both cases you have a Standing navigation option that allows for you to see how everyone is ranked.

In the context of Sub-Funds categorized as Alpha Plus, the term "Alpha" refers to risk adjusted performance of an investment. Alpha is a number assigned to the return over a given index. So if you invest in a stock and it returns 20% while the S&P 500 earned 5%, then you have an alpha of 15. A -15 means that your investment underperformed by 20%. Alpha is also a measure of risk. In the above example the -15 means the investment was far too risky given the return. An alpha of zero is "just right" – one has earned a return commensurate with the risk. Alpha of greater than zero means an investment outperformed.

Beta is the measure of relative volatility. If you put all your money in every possible investment then your beta is 1. A tech stock in this case would have a beta above 1 (and probably rather high), while a T-bill would be close to zero, because their prices hardly move relative to the market as a whole.

The Sharpe ratio characterizes how well the return of an asset compensates the investor for the risk taken. When comparing two assets versus a common benchmark, the one with a higher Sharpe ratio provides better return for the same risk (or, equivalently, the same return for lower risk). The expected value of the excess of the asset return over the benchmark return, and {\displaystyle {\sigma }} is the standard deviation of the asset excess return.

Value at Risk (VaR) is a measure of the risk of investments. It estimates how much a set of investments might lose, given normal market conditions, in a set time period such as a day. VaR is typically used by firms and regulators in the financial industry to gauge the amount of assets needed to cover possible losses.

For example, if a portfolio of stocks has a one-day 5% VaR of $1 million, that means that there is a 0.05 probability that the portfolio will fall in value by more than $1 million over a one-day period if there is no trading. Informally, a loss of $1 million or more on this portfolio is expected on 1 day out of 20 days (because of 5% probability). A loss which exceeds the VaR threshold is termed a "VaR break.

RAROC is defined as the ratio of risk adjusted return to economic capital. The economic capital is the amount of money which is needed to secure the survival in a worst-case scenario, it is a buffer against unexpected shocks in market values. Economic capital is a function of market risk, credit risk, and operational risk, and is often calculated by VaR. This use of capital based on risk improves the capital allocation across different functional areas of banks, insurance companies, or any business in which capital is placed at risk for an expected return above the risk-free rate.

^[2] or {\displaystyle {\mbox{RAROC}}={{\mbox{Expected return}} \over {\mbox{Value at risk}}}}

The Sortino ratio measures the risk-adjusted return of an investment asset, portfolio, or strategy. It is a modification of the Sharpe ratio but penalizes only those returns falling below a user-specified target or required rate of return, while the Sharpe ratio penalizes both upside and downside volatility equally. Though both ratios measure an investment's risk-adjusted return, they do so in significantly different ways that will frequently lead to differing conclusions as to the true nature of the investment's return-generating efficiency.

The Sortino ratio is used as a way to compare the risk-adjusted performance of programs with differing risk and return profiles. In general, risk-adjusted returns seek to normalize the risk across programs and then see which has the higher return unit per risk.

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The Treynor ratio (sometimes called the reward-to-volatility ratio or Treynor measure), named after Jack L. Treynor, is a measurement of the returns earned in excess of that which could have been earned on an investment that has no diversifiable risk (e.g., Treasury bills or a completely diversified portfolio), per each unit of market risk assumed.

The Treynor ratio relates excess return over the risk-free rate to the additional risk taken; however, systematic risk is used instead of total risk. The higher the Treynor ratio, the better the performance of the portfolio under analysis.

where:

{\displaystyle T\equiv } Treynor ratio,

{\displaystyle r_{i}\equiv } portfolio i's return,

{\displaystyle r_{f}\equiv } risk free rate

{\displaystyle \beta _{i}\equiv } portfolio i's beta

A benchmark or stock market index is a measurement of the value of a section of the stock market. It is computed from the prices of selected stocks (typically a weighted average). It is a tool used by investors and financial managers to describe the market, and to compare the return on specific investments.  Our Peer Benchmark is the measurement of performance from ALL of the Traders within the simulation/game.

An index is a mathematical construct, so it may not be invested in directly. But many mutual funds and exchange-traded funds attempt to "track" an index (see index fund), and those funds that do not may be judged against those that do.

One of the most common “bug reports” we receive is that trades didn’t get executed at the same price as Google/Yahoo Finance. Ironically, the discrepancy results from several of our most distinguishing and powerful features. This note details the reasons behind the differences and demystifies our pricing methodologies.

When you execute a large buy order, you incur market impact cost for several reasons:

• The price must be raised in order to attract sellers to the market to sell to you;
• You are signaling to the market that you believe the fair value of the stock is higher than its current price, and other market participants will account for this in their pricing and increase the equilibrium price.

Traders coming from other virtual trading simulators have been trained to believe that the “last trade price” – the price on Yahoo or Google Finance – represent the most up-to-date, tradable price. In reality, the last trade price is a historical price that’s no longer tradable (although for most liquid stocks, the delays are only a few seconds or less). By contrast, the bid/ask prices represent the best potential prices for the next trade:

• The bid price is the highest price that a dealer is willing to pay for a security (equivalently, it is the most that you, as an investor, can receive for selling a security);
• The ask or offer price is the lowest price that a dealer is willing to sell the security at (equivalently, this is the least that you, as an investor, must pay to buy the security).

The ask price is always higher than the bid. This way, a dealer can buy the security from you at the bid, sell it to another investor at the higher ask price, and capture a profit by facilitating these trades.

The picture below shows the real-time quotes for $TSLA. As you can see, the last price it traded at was 247.71. This was the price displayed on Yahoo/Google Finance at the time, and the price that many traders expect to get when they trade TSLA. However, if you look at the bid/ask, you can see that the price at which you can buy TSLA (“ask”) is 247.73, while the price at which you can sell TSLA (“bid”) is only 247.36. The lesson here is that the last trade price plays no role in the next transaction; the market has already moved on.

Real-life trading performance always lag the returns on paper portfolios, because of a myriad of implicit transaction costs. At Stockfuse, we strive to provide realistic trading performance that can be reproduced in the real world. To that end, we employ a proprietary Transaction Cost Model (also known as Market Impact Model) to dynamically adjust the execution prices of each trade.

Following modern literature, Stockfuse decomposes execution costs into three components:

1. Instantaneous impact: The market is not frictionless. The price at which buyers are willing to pay (the bid) is always lower than the price at which sellers are willing to receive (the ask). Practically speaking, if you, the investor, buys a stock and then immediately sells it, you’d already lose an amount equaling the spread between the asking price and the bid price. (For more details, please refer to bid/ask.) The cost associated with “spread crossing” is the instantaneous impact. In reality, trades are frequently executed at prices inside the bid/ask, a stylized fact reflected by our model.

2. Temporary impact: If you buy more than the ask size or sell more then the bid size, then the execution price is highly likely to go against you further; i.e., execution price will be higher than the ask if you’re buying, and execution price will be lower than the bid if you’re selling. Intuitively, if you’re buying a large quantity of a company’s share, the price must be raised in order to attract sellers. This is quantified as the temporary impact.

3. Permanent impact: This is the final change in the equilibrium price caused by the trade. Intuitively, if you buy a stock, other market participants may perceive your action to indicate that you believe the fair value of the stock should be higher. As a result, the equilibrium price, after the trade has completed, will not return to the original level, but should stay slightly higher.

The time of day at which you trade stocks can drastically affect your profitability, since each hour of the trading day has a particular tendency. By trading only the most active hours of the day and utilizing a strategy designed to profit from volatility -- such as one focused on short-term trends -- you're trading efficiently. Your time commitment is limited to only the hours with the greatest profit potential, giving you the rest of day to focus on other endeavors.