International Banking and Finance Assignment
Learning Outcome -
- Students will be able to explain the key features of the global financial market
- Students will be able to analyse the behaviour of the foreign exchange market movements
- Students will be able to use the functions available on the trading platform to perform the currency transactions
- Students will be able to understand and manage risk in the foreign exchange market
- Students will be able to address complex issues in the foreign exchange market
Description / Requirements - In this assignment, students are required to:
(A) Speculate with virtual money on a real internet trading website.
(B) Write a report (maximum of 2,000 words) on their trading experience.
(A) Internet trading game
The Unit Team will provide each student with a free demo account with easyMarkets, an online foreign exchange trading firm. You will have access to many of the features on the website that actual traders receive, including real- time quotes, news and a variety of charts (though some features that are licensed from third parties are not available on demo accounts).
Each student will be given an account on this website with AUD 50,000 virtual money. The goal of the exercise is simple: to make as much money as possible. easyMarkets provides access to foreign exchange spot markets and forward markets in order for you to perform your speculative activities. The website has a 'Learn Centre' tab, which contains information on the basics of forex trading.
Please take the time to understand how the trading platform works before commencing your trading activities.
All students will receive an email (from the Unit Team) that contains a username and password for an account on easyMarkets by the end of Week 4. On receiving this, please do not change the settings (i.e. please do not change the email and password on the account). Please do not provide or add any information of personal nature to the account.
It is highly recommended that you do not start trading straight away; rather, it would be very useful to spend some time reviewing the features on easyMarkets. The foreign exchange market reacts very rapidly to news, so it is important that you do make it a point to spend a few minutes every day keeping track of how economic variables impact the forex market.
Please note that your account will not be replenished if your funds run out; this is to ensure that you manage risk while trading.
Assessment:
The speculative component of this assignment is marked out of 15. Grades are based on performance in trading, that is, the amount of money (denominated in AUD) in the account when the assignment is submitted.
There is a hurdle requirement to pass this component of the assignment: you must undertake at least 12 transactions (or trades) by the due date of the assignment (15/9/2017) using the demo account provided to you by the Unit Team. For the purpose of this assignment, a transaction is defined as entering into an open position and eventually closing it before submitting the assignment. So, for example, if you buy USD 100,000 on 10/8/2017 and close this position on 15/8/2017, you would have completed one transaction. Any student who undertakes between 1 and 11 transactions during the trimester using the demo account provided by the unit team will receive a score of 4.5 out of 15. Any student who does not conduct any transaction will receive 0 out of 15. In order to calculate the scores, accounts will be ranked on performance. The distribution of scores for those who satisfy the hurdle requirement (at least 12 transactions) is shown in the table below:
|
Ranking of student (with at least 12 transactions)
|
Score
|
|
Top three students
|
15.0
|
|
Next 5%
|
13.5
|
|
Next 15%
|
12.0
|
|
Next 15%
|
11.0
|
|
Next 15%
|
10.0
|
|
Next 15%
|
9.5
|
|
Next 15%
|
9.0
|
|
Next 10%
|
8.5
|
|
Remainder
|
8.0
|
You will realise as you commence trading that the foreign exchange market is extremely volatile. Trading in this market is, therefore, a very risky proposition. The purpose of this trading game is not to make you a forex trader (though some of you may find that you have a talent for it). Rather, it is meant to provide you with insights into the functioning of the foreign exchange market, which is best achieved by participating in it.
(B) Report -
The report must start with a cover sheet (using the template posted on CloudDeakin). On the cover sheet of your report, please provide the information as requested (your last name, first name, and student ID; username and password for your trading account; the final account balance and the number of transactions undertaken for each instrument; the currencies traded; and the word count). Your assignment will only be graded when all information required in the cover sheet are provided.
Immediately after the cover sheet, please provide a 1-page executive summary. The executive summary should show a brief account of your overall strategy, the financial instruments you have used, the number of transactions and currencies you have traded, and justify the total losses/profits on your account and whether or not you have undertaken any risk management activities.
In the body of the report, please provide a detailed description of the trading strategy you have employed. You do not need to explain every transaction; this would be virtually impossible given the word limit. Rather, your report should attempt to show the sophistication and management of the trading strategies, highlight how you have used the theoretical tools developed in this unit, any research you have conducted on the foreign exchange market, and the manner in which you have approached your trading activity, using specific transactions as examples. You should also discuss the use of risk management tools available on the easyMarkets platform during the trading period. Please note that any news item or report that helped you make your decisions should be carefully referenced, and if possible, included in the Appendix.
Assignment Files -
https://www.dropbox.com/s/tkm84xvwwf6qhdh/International%20Banking%20and%20Finance%20Assignment.rar?dl=0