Warwick Virtual Trading Society
Investing
Basics
Wall Street Survivor
January 2015
Investment strategies
Active vs passive:
There are two main ways to invest; actively (picking your own
securities) or passively (letting your holdings follow an index).
Investing vs speculating:
Here at Warwick Virtual Trading society we warn against
speculation. Speculation is choosing to invest based on limited
information. Speculation is also a short term strategy which may
prove difficult to continue in the long run.
What are Stock Options?
A stock option is a contract between two parties in which the
stock option buyer (holder) purchases the right (but not the
obligation) to buy/sell shares of an underlying stock at a
predetermined price from/to the option seller (writer) within a
fixed period of time.
 There are two types of Option Class:
1. Call option confirms buyer the right to buy
2. Put option gives him the right to sell
 Strike Price is the price at which the underlying asset is to
be bought or sold when the option is exercised.
 In exchange for the rights conferred by the option, the
option buyer pays the option seller a Premium for carrying
on the risk that comes with the obligation in the form of
contracts.
 Expiration is the date by which your option is no longer
valid.
User Interface
1) My Home offers a quick look at your Investopedia account
as well as providing a location for you to change your profile
settings.
2) My Portfolio details a summary of your current portfolio
holdings, your stock watch list and your trading history.
3) Trading contains the part of the simulator that you’ll need
to input your trade orders and review any outstanding open
and failed trades.
4) Ranking shows your current placing for any specific
competition.
5) Markets contains tools for researching and selecting the
companies you want to trade, such as, a research section, a
ticker symbol look up tool and much more.
6) Awards contains various awards that you can earn in
exchange for completing simulator activities and/or goals.
7) Games allows you to create, manage, and review the games
you’re participating in and also join existing games.
Getting Started
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Create your Account and join our league
You will start with $100,000
Make a trade
Research about a growing a company and search for the stock
The automated calculator will display stock performance i.e. has
the stock price increased or decreased
 Example: AAPL (Apple Inc) per share costs $110.04
 If we buy 100 shares the total cost is [(Number of stocks x
stock price) + fees] 100 x 110.04 + the brokerage fees.
The process is similar for selling your securities.
How and when to
buy (or sell) a security?
 Follow the news because securities are impacted in real time by
real life events. Having email alerts or downloading application
services for the Financial Times or BBC Business will help you
decide when best to buy (or sell) a security.
 A successful portfolio is, in the long run, a diverse portfolio.
Different securities perform differently across time. If
something goes wrong, diversification ensures your total
portfolio will not suffer the impact of a decline in any one
security.
 For a stock, Google is your friend. Research the stock by
looking at Bloomberg, Yahoo Finance, or the company website
which detail company growth rates. The stronger and more
sustained the growth is, the better the stock is to invest in.
 Macroeconomic data has an influential impact on investing.
Look at country growth rates, inflation, and unemployment to
determine how general markets are doing.
 It is much easier to specialize in industries than to pick random
stocks. Companies within industries tend to follow similar
patterns which are useful when considering investments.
 Hedge your risk! After making an investment a popular
technique is to ‘hedge’ your risk or minimise your exposure to
market movements. This can be done by taking a position in
another stock or purchasing an option.