Stock Market Simulation 2411

Ymeri, Bernard; Tran, Steven

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Stock Market Simulation 2411

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This project is a six-week stock market simulation that compared 3 different trading strategies. The goal of this project is to become better stock market traders by learning how the market works, what indicators can be used to guide trading, and how to use trends and patterns to make a profit. This project used 3 different trading strategies: Buy and Hold, Swing Trading, and Day Trading. Each trading strategy started with an initial investment of $100,000. The same 10 companies were used for all three trading strategies. At the end of the simulation, the Buy and Hold strategy had a profit of 3.193%. The Swing Trading strategy had a profit of 3.776%. The Day Trading strategy had a loss of 0.905%. The total increase in the value of the S&P 500 over the course of the simulation was 6.283%. For the Dow Jones Industrial Average, it was an increase of 3.707%. For the Nasdaq Composite, it was an increase of 9.328%. For the Russell 2000, it was an increase of 4.301%. The results of the simulation indicated that the Swing Trading strategy was more profitable than the Buy and Hold strategy, and both were more profitable than the Day Trading strategy. In fact, the Day Trading strategy was the only strategy to lead to an overall loss. None of the strategies truly beat the market, although the Swing Trading strategy did slightly better than the Dow Jones Industrial Average. This project provided valuable information and experience that will aid the participants in any future trading endeavors.

This report represents the work of one or more WPI undergraduate students submitted to the faculty as evidence of completion of a degree requirement. WPI routinely publishes these reports on its website without editorial or peer review.

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