or, getting ahead in a ten-week contest such as The Stock Market Game® or SMS® Stock Market Simulation
First, understand that the only sure way to “win” a stock market game is to win educationally, by learning about economics, markets, and personal financial skills that will help you manage your money better!
But let’s say you’re focused on getting a higher portfolio value in a stock market game. That’s a lot of the fun of the competition, after all. Here’s what you do:
- Understand that stock market games are different from investing in real life. In real life, you’re investing real money, usually for long-term goals such as paying for education. In the game, you’re investing play money for a 10-week payoff. The importance of this: You have to take a lot of risk to win.
- Make sure you invest all, or almost all, of your computer money. Cash can’t match the return available in the market, so don’t leave your money in cash balances.
- Look for stocks that are likely to go up and down a lot. Older, more established companies are not usually as good for this as are newer companies. High-priced stocks usually move around less than low-priced (below $10/share) stocks. When a company is mentioned as a takeover target, it may see major swings in its price. Buying that stock is risky, but you have to take risk to win in a 10-week game.
- Don’t be too late. Stocks move very quickly in response to news, so don’t count on making any money on something that happened last week.
- Check carefully for errors before submitting your trades.
- Don’t buy too many different stocks. The more different stocks you own, the more likely it is that you’ll earn just about the “market” rate of return. But to win the game, you want to beat the market, not match the market.
- Hold the winners! If you have a stock that has made large gains and the end of the game is approaching, do not sell the stock. You will be charged a commission on the sale. But if you just leave the stock alone, its full value will be counted in your portfolio at the end of the game.
- Read the first principle again! The game is not like real life, so remember to buy and hold sound investments when you’re investing your real money.
Teachers: If you want to read a longer article that goes into more detail on this, look up “The Stock Market Game: Classroom Use and Strategy,” by William C. Wood, Sharon L. O’Hare and Robert L. Andrews in The Journal of Economic Education, Vol. 23, No. 3 (Summer 1992): pp. 236-246.