Financial Markets and Banking
Investment strategy Report
Word Count –
A stock market is a “particular market where stocks and bonds are traded” (Dictionary, 2012). Stock markets are home to extensive trades in shares and other company securities, and they have a crucial role to play in the success and the overall health of an economy. (Independent Investor, 2010). As there are millions of pounds invested and traded on the stock markets many investor think they can make profits from trading. Investor look to “beat the market” which is when individuals or fund managers try to outperform the market. They can outperform the market by producing a better return than the market average return (Peter Coy, 1999). Many Investors try to “beat the market” every year but Efficient Market Hypothesis (EMH) states that security prices reflect all available information, making it fruitless to pick stocks (Fama, 1991). This report will be about how I tried to “beat the market” by using different investment strategies, that I felt would be effective for the current condition of the financial markets. My trading was done on Virtual Trader which is a real time investment game. Additionally I will discuss in detail my investment strategy, how well I performed using this strategy and the stocks I traded. My performance and analysis will be based on my trading between: 02/10/2012 -17/11/2012.
Trading Strategies Overview
There are many different trading strategies that investors undertake in order to make a higher return than the market average. Although there are many strategies that can be used, a number of them have not shown positive results over the last few years (Robert Pardo, 2011). Most strategies are criticised as a result of using historical information and historical data to predict the future of stocks but in a market such as the...