Stocktrak is a virtual stock market stimulation. Many students set up an account and receive virtual money that can be used for investing in stock, bonds, and mutual funds. After purchasing these investments, you can monitor and trade them as you wish. The site is used by many teachers to get their students familiar with the stock market and its many advantages. In my simulation, I had an individual account and a group account. I was given $100,000 and had a limited number of ten trades. In the group portion, my group was given $100,000 and had a limited number of one hundred trades. The object of the project was to become familiar with and learn the differences of frequent versus long term trading. Another goal of the project was to use the analytical techniques for the selection of companies that should be invested in.
One of the differences in my individual and group accounts is the cost of trading. When trading more frequently, the commission cost appeared to decrease. As for the long term investing exercised in my individual account, the cost stayed constant at $25.00. I assume the decrease in cost served as an incentive for trading more often. Along with the costs of trading, there are many other advantages and disadvantages to both frequent and long term investing.
Frequent trading is known to generate quick profits if the investment is done at the right time. Many companies make big moves within a short period of time. If you invest exactly or approximately around that time, you can earn large returns. The biggest complication is knowing when to invest. Frequent trading is also known to be more risky
than long term investing because the stock prices fluctuate quickly. Many of the stocks traded in my group portion of the project earned a little or negative return because they were not invested at the “right” time when the company grows very rapidly.
Long term investing also is noted for generating large returns if held for...