Trading Simulation Instructions - Term Paper Example

Trading Simulation Instruction s Introduction The idea of investing in the stock market is at times challenging.Heightened activities witness the stock market itself. These activities gained the investor’s interest increasingly. The stock market patterns have changed due to the current globalization and integration of the subsequent markets. Just to name some of the global markets are New York Stock Market, Hong Kong Stock exchange among others. Sometimes these market patterns have changed due to politico-economic backgrounds (Hamid Faruqee, 2008, p. 154). The equity valuation ratios as seen from portfolio compare the two shares I traded. This comparison enables me to compare a stock’s per-share price. It has become a major problem to control unnecessary volatility of trade market as seen in portfolio. This has triggered the corporate government to rule out and put in place a process of bringing the patterns to a uniform level. Globally, the economic environment has started taking a paradigm shift with the featured securities. Like for instance, the ‘dot com bubble burst’ and the soaring oil prices. It is very challenging when U.S economy is put into an account (Hamid Faruqee, 2008, p. 265). U.S economy has slowed down making the interest rate appear tightened, and the equation made more complex. To determine the right shares of my portfolio, I needed to have a conservative alternative. Microsoft appeared to have outstanding price Earnings Ratio in its book value. From portfolio performance, the shares I traded are not that bad. Their PE ratios reflect the book value they had. The expected daily returns from shares have a weighted portfolio exhibit significant to non-linear dependence. Shares from Facebook and Microsoft are mostly consistent with previous market research. This research shows complete evidence of non-linear dependence in returns expected from the stock market indexes. The indexes are based on the individual stock in the United States. My justification is based on trading Facebook shares. Facebook has been engaged in global trading of market securities. This has built social products in order to create utility for both its users and developers. Facebook shares have appreciated in the recent years. It is true to say the stock is currently upward trading to approximately high rates. Summary and analysis of the Facebook share price shows the price trend is strong. Price trend can be made strong by use of simple moving averages. Key moving averages are seen in the daily chart shown in the portfolio. Facebook trading is not a bad move in security market. This is because its averages are rising on a daily basis. This is a good signal to give an investor hope and encourage security trading. Facebook trading signal is neutral to bullish share price action in the short-term. Checking on Facebook Volatility, it implies that the volatility skew levels of Facebook Trading. This has participated in helping investors determine whether the trading is bullish, bearish, or neutral. Alnylam pharmaceuticals Inc has a high impact on the portfolio value compared to Microsoft. This is because it has a big change (Information, 2014). According to the Alnylam pharmaceuticals Investment report, its shares are highly volatile. This has enabled them to be more favored than those of Microsoft. Any potential investor, who wishes to start security trading, would give Alnylam pharmaceuticals Inc the priority. The Alnylam pharmaceuticals financial report portrays outstanding market trade results. In the recent years, there have been several private ventures that have improved the market trade of Alnylam pharmaceuticals. The private ventures have either attained through the public listing or intention declaration. The impacts of this private move resulted to the public listing. However, the total returns of Alnylam pharmaceuticals exceeded the Microsoft shares. This is as a result of the unemployment rate. Central bank of Russian released this rate. It indicated the portfolio performance of several retail sector in a short time. The comparative analysis carried out shows that the dividend announcement is as a result of stock returns behavior. This provides investors with evident stock volatility around the expected dividend announcement day. From the portfolio values, stock volatility is expressed by Alnylam pharmaceuticals market trade. Gross Domestic Product (GDP) has a huge influence on investment returns that one can be expecting from hi portfolio. GDP only measures nation’s economic health which has a high impact on stock market returns. If this happens, my portfolio will have a drastic change. A rise in US GDP would mean that Microsoft and Alnylam pharmaceuticals would report good earnings and growth. The better the earnings they make, the higher the profits they would make. Great profits would encourage investment in these companies. By investment, I mean the number of shares would increase. Profits belong to shareholders. On the other hand, fall in GDP would have the opposite effect on the stock prices which would discourage current and willing investors. This is because shareholders are would not receive good profits from their investment. For instance, when a company (Alnylam pharmaceuticals Inc) makes huge profits after deducting all operational expenses, the company is left with only two options (Information, 2014). One option is to re-employ the profits back to the business or to pay its shareholders as dividends. Another strong indicator for stock trade is the rate of unemployment. Just like the GDP, the rate of employment illustrates both the strength and the development of the economy. According to the U.S Bureau of Labor Statistics, the level of employment is approximately 80% (Information, 2014). The level employment indicates the no of workers who produce the Entire Gross Domestic Product of U.S. If the GDP is high, investors tend to invest more in Stock Business. Employment levels are used to predict the future levels of economic activities in the country. High employment level would increase portfolio returns while low employment levels would reduce returns I expect. Companies like Microsoft do not take a strategic view of patent prosecution and management of a portfolio. This is what increases patent assertion. It also brings the likelihood of aggressive-asserted patents. These patents at times face significantly valid and enforceable challenges. The market trade controllers considered the adoption and investing in several strategic approaches (Hamid Faruqee, 2008, pp. 220-235). The methods taken by the market trade controllers can enhance the volatility of Microsoft. The approaches are directed to prosecution and management of their patent portfolio. It is this move that triggers several suggestions for the improvement of quality and assertion values. The suggestions triggered are Drafting better patent applications and forestalling invalidity and unenforceability challenges. Microsoft market traders take the two suggestions, and then the portfolio value can be volatile. However, patent assertion is the major change for Microsoft to take. Benefits of patent assertion can be felt on a broader scope and high commercial value. Alnylam pharmaceuticals market trading is the most volatile according to the portfolio. Alnylam pharmaceuticals market has become a major problem to control unnecessary volatility of its stock market. This has triggered the corporate government to rule out and put in place a process of bringing the patterns to a uniform level. From an overview of these two market portfolios, the volatility of Alnylam pharmaceuticals is higher than that of Microsoft. Globally, the economic environment has started taking a paradigm shift with the featured securities. Like for instance, the ‘dot com bubble burst’ and the soaring oil prices. It is very challenging when US economy is put into an account. US economy has slowed down making the interest rate appear tightened, and the equation made more complex. To answer this critique, it is good to begin with pointing out that Microsoft had an identity crisis. Identity crisis was a temporary problem, and with time, Microsoft was able to overcome. Qualitative analysis between the two market trading portfolios shows a significant big difference. This portrays a comprehensive look in the trade market. The trade market is fundamental for both trade portfolios and technical analysis. It also enables one to carry out a simple and good comparison between the two stock market traders. The qualitative analysis acts as one of options for market trading. It provides us with a daily market commentary for a whole month. This opens the investor’s view of market portfolios. A very good example is between these two markets portfolios where qualitative analysis is can drive out possible comparison options. Making the right decision is an easy thing from a range of market portfolios as in this case. The analysis gives out the volatility of the market trade. The main risk of an individual trader in the current trade market is market volatility. Volatility of the market trade is based on the market volatility index. Volatility index is also known as the ‘fear index’ (Hamid Faruqee, 2008). To control the market volatility, market professionals have come up with high-frequency exchange. Professionals have themselves been challenged by this move. Nevertheless, there has been a better approach by investors on this challenge. Investors want to find a way to carve these challenges. Individuals are on a daily basis trying to intra-day trend with more than one or two trades. This can be referred to as ‘speeding ticket.’ Trade stimulation has played an important role in market trading. Stimulation helps in formulating trading ideas especially in the current market. After the study market trading portfolios, several factors have been outlined. One of these stimulators is listed below. Test risk-free before planning to trade-The stimulator guides an investor on the right approach to the market trading. It is based on real-time and no-cost trading experience. The best thing about stimulators is that capital for investment in market trade is not risked (Hamid Faruqee, 2008, p. 25). Exploring of new market with new strategies is another thing to consider. This is a factor that plays a very crucial role in guiding investors on market trading. The market trades are not frequently updated to the latest market strategies. Investors must take this responsibly. New strategies come with new markets. Every market is navigated by its strategies. Market trades that perform poor use outdated market strategies. If the market trade performance is poor, then the market trade portfolios will also be poor. In respect to the current market portfolios (Microsoft and Alnylam pharmaceuticals), it is evident that if Microsoft had new and upgraded strategies, then it would have been as better as Alnylam pharmaceuticals. The use of limit orders by Microsoft reduced the level of risk although at a minimal percentage. This reduction happened very slightly above the market price of a stock (Information, 2014). Different suggestions made to correct this error included the offers of substantial intra-day volatility. This is a good recommendation for the future personal investment in the stock market. Taking into considerations of all those suggestions listed above that it is not easy to predict that future investment will be successful. Conclusion The control of market trade portfolios advises to take into considerations the above roles and suggestions. From the above review, it may be concluded that the presence of abnormal stock returns for several companies like Microsoft is as a result of volatile stock behaviors. Example of these behaviors is the event announcement of dividend. The same abnormal returns are not subjected to all companies like Alnylam pharmaceuticals. The abnormality of these returns varies from one sector to the other. The significant abnormal returns for many companies indicate the failure of market strategies in use. The comparative qualitative analysis shows that companies have different sector index to the market index. References Hamid Faruqee, P. B. (2008). Exchange Rate Volatility, Pricing to Market and Trade Smoothing. London: International Monetary Fund. subject, S. F. (2014, 03 16). Market Portfolio. Retrieved 03 17, 2014, from Market Watch: http://www.marketwatch.com Read More