Wednesday, January 19, 2011

Stock Market Challenge

If you ask me what are my favourite subjects in school, I would blurt out: "math and economics". Ever since I was in junior high school, I've decided that going into business would be the path for me. Now which aspect of business? Well, the one particular thing in business and economics that has always captured my interest is the stock market.

Don't all these numbers and symbols fascinate you?

Over the years, I've gradually picked up bits and bites of knowledge about the stock market from my parents, teachers and friends. However, that prior knowledge is so minimal that when actually trading in the Toronto Stock Exchange, I am utterly clueless about everything. Certainly, I am not trading with real money but rather a million fake Canadian dollars in a stimulated stock market that functions like the real one. What makes it even more interesting is the fact that I'm not just competing with myself to make a profit but also 40 other stock market enthusiasts in my school who joined this game called VP SMaC.

I started investing in November and by now, I've managed to achieve a 12.4% gain, my best record so far. Such a percentage gain is still far from the one who has been holding the title "King of VP SMaC" for a while now (40% gain)! Anyways, my results have made top 5 out of 42 contestants so far, which is much better than I expected!

Actually, when I began this challenge, I knew close to nothing about trading in a stock market. The most ridiculous part is, I never even knew what "shorting" meant! It was only after carefully observing other people' profiles that I noticed that there was a section in their profiles that said "Shorted Stock" and whenever the prices go up, they would lose money. I began to formulate a trend, which is the obvious - shorting a stock is the exact opposite of buying it; as prices increase you will lose money will when prices decrease, you'll make money. Shorting a stock is like borrowing money to sell the stock first, and then buy the stock later. Undoubtedly, a trader would want to sell high and buy low. So whenever you feel that a stock is at its peak price, you should sell short and then when the price drops, buy to cover the stocks that you had already sold. It's quite complicated to understand at first, but you'll get used to it after a while!

3 comments:

  1. ooooo shiny numbers and letters :P

    ReplyDelete
  2. Steven - you know who I'm referring to, your majesty :)

    Lennart - yup, aren't they cool?

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