The Stock Market Game is a 3 month long virtual investing simulation, where individuals or groups of two use virtual money to invest in real-life stocks in the New York Stock Exchange (NYSE) and the Nasdaq to increase their equity as much as possible. The Nasdaq and NYSE are stock exchanges located in the United States of America. The markets are open Monday-Friday, from 9:00am-4:00pm ET.
local & program rules
Before you jump right in, it's good to know a few things before hand. Here are some program wide rules and local rules that are very important to you!
- Program: Your spending money cannot be spent all in one stock or company. You will be capped and not allowed to invest more than 20% of your equity in one stock. This is to promote diversification.
- Program: On all transactions in the Stock Market Game, there will be a 1% broker fee. This means that for every transaction made, you are also charged an extra 1% of your equity (not 1% of transaction price) to your broker (the guy who makes the transaction for you). This applies for buying and selling, so make sure that you sell high by a large margin (I recommend $100) so your sale does not go positive to negative.
- Local: The 5x5x5 rule is a local rule that states, by the fifth week of the simulation, you must currently have invested $50,000 or more in at least 5 different stocks. If you do not comply you will be kicked out of the simulation.
- Program: Purchases and sales of stocks will not go through until 4:00pm ET when the markets close. The stocks will be bought or sold at the price the stock closes at, which may be much different than prices from earlier in the day.
How to: invest in a profitable stock
This is how you want your stocks to be moving!
How should one make decisions to buy certain stocks? Think about your process and how it evolved as the game went on.
The way I decided whether a stock was worth investing in is based on upcoming releases. Example, if Apple was about to release the new iPhone, I would invest because I know lots of people are going to buy it because of Apple's reputation. Another way to determine a good stock in by looking at their graphs in the past month and see their results. If they are at a low point, then you should invest because it is most likely to go up. If it is a a high point or record high, you most likely shouldn't buy because there is a good chance that the stock will soon plummet. My process changed throughout the simulation to more of the graphs because there are only so many stocks you know but only some are profitable which makes it hard to invest in lots of different stocks. Being able to invest in companies I do not know of that seemed profitable allowed me to invest in more different field and more companies while keeping the idea of making good profit.
Resources for use
What resources were most helpful? Think about how you conducted research for this game.
The resources for the Stock Market Game that were most helpful or useful by far were Yahoo Finance, CNBC, and The Street. Yahoo Finance was given to us at the start because it covers all the basics and more, and shows you everything you need to know when picking stocks to invest in. CNBC is a good resource because it is a market based channel that often broadcasts shows that talk about markets, patterns, and predicting the future of stocks. I watched it a couple times and the advice I picked up from it was tremendously helpful for the future and helped build equity. Finally, The Street is a website that tracks hundreds of stocks in many different areas and fields, and uses current data to rank the top stocks to invest in for that field. It is really helpful for finding out stocks that are highly profitable that most people have never heard of. All these resources are extremely helpful and I encourage you to use thee a lot to provide vision for your simulation.
Simple steps for ultimate success
Daily to-do list
Follow these simple steps to keep up in the Stock Market Game
- Check equity every day, Monday-Friday (Markets closed Sat. & Sun.)
- Monitor stocks prices in the "Account Holdings" section. Buy more stocks and sell purchased stocks according to increase in stock price (Buy low, sell high)
- Keep up with national news (CNN, NBC, CNBC) and base purchases and selling on upcoming events and predictions.
Ask your parents! They probably know lots about investing and stock markets so it's worth asking about it!
It is my hope that this advice will help you in your Stock Market Game endeavors and lead you to success. Best of wishes and good luck in the simulation!