Trading Game Paper

Trading Summary Report

Our group took an overall long position in the OANDA Forex Game. That is, we opened many transactions in the beginning of the game and left them open for the duration of the time we were given, unless something happened that forced us to cut our losses or there was an opportunity to cash in on a big return and we collectively thought it was too risky to continue pushing our luck. For the majority of our transactions, we planned on holding the currency we purchased in anticipation of that currency appreciating. We did not attempt to sell short at all for this game; we felt that we would be able to turn the greatest profit by analyzing which currencies we thought would appreciate the most over the period of time we were given and focused on buying and selling those currencies over long periods of time. We felt this was much less complicated and far safer than trying to short the market and its collective wisdom on a daily or weekly basis.

The currencies traded by our group for the entirety of the game are as follows:

* The AUD for the CAD, JPY, NZD, and USD.

* The CAD for the CHF

* The EUR for the AUD, CAD, NOK, and USD

* The GPB for the JPY

* The NZD for JPY and USD

* The USD for the CAD, HKD, JPY, SGD, TRY, and ZAR

As you can tell, the majority of our trading was done with the USD, JPY, and EUR. This is primarily because these currencies are three of the most heavily traded currencies in the world (see chart below). As a result, there is much more data collected and discussed among investors, which for our group meant more advice on how each currency was likely to move. Another major currency we traded was the AUD. We chose this currency because it seemed to have hit a trough in June of this year and we wished to capitalize on the rally that typically follows a sharp downturn. Overall, we had what I would call a mildly successful first attempt at foreign exchange. We ended up making a small amount of...