Q: What is a simulation?
A: Simulation is the process of imitating a real phenomenon in a virtual world. This helps users to gain insight of the functioning of the process and systems without risking anything as would be the case in the real world.
Q: What is a financial trading simulation?
A: A financial trading simulation integrates information technology and finance to create a trading floor where financial instruments like equities (including futures and options), commodities and mutual funds can be traded in a virtual world without risking real money and learning the working of the real market.
Q: How is Tradecracker different from portfolio trackers and other gaming simulation?
A: Portfolio trackers only track existing investments and do not provide any analysis which would aid the user in developing a greater understanding of the markets. Secondly, they do not generate any reports which would allow the user to test investment strategies. Gaming portals are mostly for fun and to win cash prizes. Additionally, they do not provide any form of analysis or allow multiple portfolio management, and are restricted to stocks. Also, one can only pass mock trades during market hours.
Tradecracker allows members to manage multiple portfolios by passing mock trades based on real time feeds for equities (including futures and options), commodities and mutual funds. Also, reports like transaction history, net gain/loss statement, daily gain/loss statement and financial statement aid members in understanding their decision making and trading skills and the simulated portfolios generated thereof can also be used for employment purposes.
Q: Who should use www.tradecracker.com?
• New /Potential Investors with no knowledge of the financial markets can familiarize themselves without taking any risk.
• Management students (Finance/Non Finance) should ask their colleges to make simulation as part of their curriculum as is the norm in western countries.
• Retired people who want to become more active in handling their retirement money and participating in financial markets can do so.
• House-wives can gain financial knowledge about investments; hence, increasing their chances of investing in the real world.
• Brokerage Houses/Financial institutions can use the simulation to test the investment skills of new employees and help them with the training process; thus, reducing training and attrition costs. Also, they can test new and Hybrid investment strategies without risking money.
• NRI/PIO/Foreign Investors can use the simulation to understand the various features of the different financial instruments offered and access administrative information on eligibility requirement, depository participants etc.
• Active Investors who wants to diversify their portfolios, experiment with new financial instruments and test investment strategies should use the simulation as it will impart a greater understanding of their requirements without risking real money.
Q: What calculations must one track or keep into account?
A: Cash (Rs.): Balance in the trading account at that point of time. It is affected by brokerage, investments, interest, marked to market and other functions.
Margin: Amount blocked for investment in Futures. It is calculated as a percentage of the traded value of the futures transaction.
Reserved Funds: Amount blocked for investment in Mutual Funds and Market Orders passed after market timings.
Value of Investments: Sum of the current value of all investments except futures.
Buying Power: Amount that can be used to further invest. It equals cash – margin – reserved funds
Portfolio Value: Value of portfolio at that point of time. It equals cash – margin – reserved funds + Value of Investments.
Q: What are the differences between real-life trading and www.tradecracker.com?
- No Quantity Matching as this is a simulation.
- Real-live trading floors look different from the trading pit of the simulation.
- For stocks and commodities there is no delivery as this is a simulation.
- For commodities, members do not have to give intention of delivery few days before expiry of contract because this is a simulation; thus, no penalty is also charged on default.
- For commodities, the simulation allows members to take fresh positions after date of delivery intention which does not happen in real life.
- Brokerage charges are average for the industry and can vary from broker to broker.
- No exercising of options as this is a simulation.