Trading Simulation Assignment Essay Example | Topics and Well Written Essays - 4750 words

Trading Simulation Assignment - Essay Example From the research it is clear that foreign exchange trading has gained a lot of popularity in the twenty first century, where it has grown to the worth of over USD 3.5 trillion. This has attracted many investors, who are interested in earning returns on their investment. In order to offer delineation to factors that affect the forex market outlined below is a report on trading in futures market, with currency pair, the Sterling pound (GPB) ant United States dollars (USD) GPB/USD. Having specified the spot loss point together with the take profit, this acted as the bench mark in trading so to manage my portfolio effective and avoid cases where I incur excessive losses. This implied that, in order to ensure the value of the portfolio does not follow below the pre-specified rate, constant evaluation of information and other factors that would affect the value of the portfolio were critically analyzed as delineated in the by the daily monitoring of the market below. In addition, it was n ecessary to evaluate the growth of the various portfolios by calculating the percentage return obtained from holding such stock, as outlined in table below. This would ensure us to validate our previous trading strategy in an effort to revise the accordingly to ensure that they are not viable but also valid. As shown in the research the second trade has the highest figure showing that at this period implying this portfolio can increase returns than any other portfolio. In the first trade, the information ration was observed to be – 0.0006, when compared with initial benchmark shows that, the economics news which was the basis of the strategies taken were invalid. In the second trade the information was the highest and even higher that the benchmark, due to expectation on effect of economics news to the direction of the market. Compared to the other trade, third performed fairly as compared to other trades due inadequacy of economics news that would strongly influence the dire ction of the market. In addition to these, what if analysis was conducted so as to ascertain the effect of economic information to the prices prevailing in the market. What if analysis (scenario analysis) involved development of scenarios that is Best scenario, worst scenario and base scenario. Another aspect that was employed in order to effective manage the asset portfolio was the decision, not to invest all the capital at hand. If I all the capital I had then, in the event of loss I would be forced to borrow more resources so as reinstate the maintenance margin account. So as to ascertain the value of portfolio each time the market value of the portfolio was ascertained and deviations from the base price of future which was