AREC 310
Agricultural Marketing
Fall 2013
SIMULATION TRADING PROJECT
Specifics:
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Point Value: 150 points
Groups of two or three
Trading occurs between 09/09/13 – 11/15/13
Reports are due by 5:00 PM on Thursday, November 21, 2013
Responsible TA:
Anders Van Sandt will be your key contact for questions and issues
relating to the StockTrak project, and how to use the website.
Email: avansan@lamar.colostate.edu
I. OBJECTIVES:
1. To acquaint you with sources of market and price information available for
farm products.
2. To assist you in understanding the role and operation of agricultural
commodity markets.
3. To give you practical experience in commodity market trading.
4. For the student to apply the concepts and tools presented in the course to
identify logical chains of causes and effects determining price changes in
agricultural commodity markets.
II. COMMODITIES AND PRICES USED IN THIS TERM PROJECT:
For this term project you may trade any of the futures contracts listed on the StockTrak
page http://www.stocktrak.com/; however, you will have to do an analysis of your
transactions, so it is recommended that you trade in commodities for which you can find
information and for which you have an interest. Be sure to first go to
http://www.stocktrak.com/tradingrules.php to obtain registration materials/trading rules.
III. SIMULATION PROJECT REQUIREMENTS:
A. General Requirements:
You will want to approach the trading with the objective of making the
greatest amount of money since this is the objective of speculators in the
market. However, remember that the objective of the project is for you to
learn about the role and operation of agricultural commodity markets. The
focus of the evaluation of your term project will be on your analysis of the
markets. Extra credit will be given out to the top five teams who make the
greatest amount of money, and made at least 10 trades.
B. Specific Requirements:
1. Trade in ALL available commodities, but at least 6 trades must be in
agricultural commodities. (See the “Trading Instructions” listed below to
determine how to go about trading.) Your final report will include all the
trades that you made during the semester.
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2. Prior to entering a trade, research the commodity so you can justify why you
entered into that particular trade. You will want to maintain a journal of
articles used for research (WSJ, popular press articles, etc.) for the final report.
3. For each trade, present a fundamental analysis in this form: Ex ante analysis:
where you explain the reasons why you made the trade. Be sure to relate
national and international events that lead you to make the trade you did. Ex
post analysis: explain what happened to the commodity price after you
purchased/sold the contract. Did prices move in the direction you were
expecting? If not, what happened? Explain.
4. Always start your fundamental analysis with verifiable facts, and
appropriately reference the sources. Once you have laid out the facts, you can
start explaining how you interpret them (how you expect these facts to
influence prices). If you do not include at least one verifiable fact, the trade
will not count. Do not reference what your uncle John has told you about the
commodity markets. It does not count.
C. Written Reports:
The written report should be 5-6 pages in length (excluding title page, list of
trades, any tables and/or charts, and references). The format for the written report:
(double-spaced, typewritten, font size 12, margins of 1 inch, Times New Roman,
Align Left):
a. Title page
b. Body of paper (please use headings)
1) Introduction
2) Trades:
The reasons why you entered into that particular trade; be sure and
relate national and international events to the expected changes in
prices of your futures contracts and thus to the expected profits.
3) Conclusion:
Did you make or lose money, what did you think of your experience
speculating in the futures market, etc.
c. Reference page
1) Use MLA guidelines (for examples, see the following webpage:
http://www.aresearchguide.com/12biblio.html
d. Appendix:
1) List of trades including:
a. commodity (i.e., December 2013 Corn)
b. dates bought and sold
c. quantity
d. prices bought and sold
e. amount gained or lost
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2) Charts/Graphs (optional)
GRADING
This project will be graded as follows:
a. Title page (5 points)
b. Write a summary of your trading experiences
i. Market & Economic Analysis (80 points)
ii. Grammar (20 points)
c. Reference page (25 points)
d. Appendix (20 points)
IV. TRADING INSTRUCTIONS:
Go to http://www.stocktrak.com/tradingrules.php for your registration materials and
trading rules.
1. Your group will have a common password and account number. As instructor, I will
have access to your trades and will be able to monitor your progress through the
game.
2. You are required to make a minimum of ten round turns. (NOTE: This means that
you must make at least five buy and five sell decisions.) The purchase or sale of two
contracts of corn on a certain day is one, not two, decisions. Trade as often as you
like; five is just the minimum; the more you trade, the more comfortable you will
become with futures contracts. You are to close all trades by November 8th (i.e., you
will offset all contracts).
3. You may start trading on September 4th and all trades must be completed by
November 8th.
4. You will have an initial capital level of $500,000 for trading. Out of this capital base
you must pay commissions, post margin, and cover any losses.
5. You are not allowed to buy more capital. You may hold up to 25% of your initial
endowment in any one commodity.
6. You are NOT allowed to day trade for more than half of your trades, and if you are
not familiar with markets, you may not want to trade with this strategy.
7. Keep a record of all of your transactions for your personal use as you will be
asked to report your trades in your written report.
Final Note:
You are free to trade in any of the futures contracts or options, and you may use limit
orders, stop-loss orders, or spread orders, however, you are on your own for these. You
are NOT allowed to trade STOCK, BONDS, and MUTUAL FUNDS.
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