Case Study: Trading Simulation
Throughout the ETFs of the portfolio, only IGHG exceeded my expectation. On the other hand, ACC, CWB, LEMB, PCY and VCIT have underperformed during the trading simulation.
The price of IGHG at the beginning of the game was $73.76 and it’s now $74.81. IGHG was the only ETF among the portfolio that showed a positive return to the trading simulation. However, I didn’t expect IGHG to have a positive return. My initial position was to invest in safe ETF that has low volatility, so purchasing IGHG that has a high yield interest rate was for the purpose of diversification on the portfolio. The trend of IGHG was unexpected based on my initial position.
Among underperformed ETFs, I expected LEMB to have a positive return because according to the Trading Economics, South Korea and Brazil had positive GDP growth rate and possibility of currency appreciation. However, I may have overlooked the designated period for the trading game. I focused more on the long-term forecast rather than focusing making a positive return before the game ends. Also, the price at November 11th when I purchased the LEMB was the lowest of $44.88 based on its 3 months’ chart index. I didn’t expect the price to fall below $44.88. In terms of forecasting the price, I should have widened the view on the chart index to more than 3 …show more content…
Understanding and forecasting the market correctly was a lot harder than I thought. First, there were so many variances to consider and almost everything was related to the market changes. It was not just about knowing the economy and analyzing data; the market was affected by politics, currency, growth potentials, demographics, national relationship, and even by the weather.
Secondly, after actually making trades and building portfolio of my own, I learned that having the insight to pick up the right information to forecast future market is an important factor to be successful in trades. But I think it is easier said than done. I was surprised that only one student in the class has made a positive return. Even with the research on characteristics of ETF and analyzing the market, it was difficult to make a positive return from the trade. According to the trend line regression graph, only IGHG, CWB, JNK and BKLN outperformed among all the provided