Stock Market Simulation

Project Number: DZT 1504

Stock Market Simulation

An Interactive Qualifying Project Report: submitted to the Faculty of WORCESTER POLYTECHNIC INSTITUTE in partial fulfillment of the requirements for the Degree of Bachelor of Science By

Travis Clark _____________________________ Jake Arnold _____________________________ Dylan Duprez _____________________________ Blaine Bursey _____________________________

Submitted: December 15, 2015

Approved by Professor Dalin Tang, Project Advisor

___________________________________________

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Abstract

Using the tools and resources available from the internet, books and magazines, a seven week stock market simulation was made to investigate the effects of different trading strategies on investments. The knowledge gained throughout this project will be helpful for potential investors to become more skillful in their investments.

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Table of Contents

Abstract ............................................................................................................................... 2 Table of Figures .................................................................................................................. 7 Table of Tables ................................................................................................................. 11 Chapter 1 Introduction ...................................................................................................... 13

1.1 Brief History ........................................................................................................... 13 Chapter 2 Research ........................................................................................................... 16

2.1. Pivot Points ............................................................................................................ 16 2.2 Swing Trading......................................................................................................... 19 2.3 Trend Trading ......................................................................................................... 21 2.4 Position Trading...................................................................................................... 22 Chapter 3 Company Selections ......................................................................................... 26 3.1 Daily Pivot Points ................................................................................................... 26 3.2 Swing Trading......................................................................................................... 31 3.3 Trend Trading ......................................................................................................... 37 3.4 Position Trading...................................................................................................... 42 Chapter 4 Daily Pivot Point Simulation............................................................................ 48 4.1 Progression of Trading............................................................................................ 48

4.1.1 Week One......................................................................................................... 48 4.1.2 Week Two ........................................................................................................ 49

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4.1.3 Week Three ...................................................................................................... 53 4.1.4 Week Four........................................................................................................ 57 4.1.5 Week Five ........................................................................................................ 60 4.1.6 Week Six .......................................................................................................... 62 4.1.7 Week Seven ..................................................................................................... 65 4.2 Results..................................................................................................................... 69 Chapter 5 Swing Simulation ............................................................................................. 71 5.1 Progression of Trading............................................................................................ 71 5.1.1 Week One......................................................................................................... 71 5.1.2 Week Two ........................................................................................................ 72 5.1.3 Week Three ...................................................................................................... 74 5.1.4 Week Four........................................................................................................ 76 5.1.5 Week Five ........................................................................................................ 78 5.1.6 Week Six .......................................................................................................... 80 5.1.7 Week Seven ..................................................................................................... 82 5.2 Results..................................................................................................................... 85 Chapter 6 Trend Trading................................................................................................... 87 6.1 Progression of Trading............................................................................................ 87 6.1.1 Week One......................................................................................................... 87 6.1.2 Week Two ........................................................................................................ 87

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6.1.3 Week Three ...................................................................................................... 88 6.1.4 Week Four........................................................................................................ 89 6.1.5 Week Five ........................................................................................................ 91 6.1.6 Week Six .......................................................................................................... 92 6.1.7 Week Seven ..................................................................................................... 93 6.2 Results..................................................................................................................... 94 Chapter 7 Position Simulation .......................................................................................... 96 7.1 Progression of Trading............................................................................................ 96 7.1.1 Week One......................................................................................................... 96 7.1.2 Week Two ........................................................................................................ 97 7.1.3 Week Three ...................................................................................................... 97 7.1.4 Week Four........................................................................................................ 98 7.1.5 Week Five ........................................................................................................ 99 7.1.6 Week Six ........................................................................................................ 100 7.1.7 Week Seven ................................................................................................... 101 7.2 Results................................................................................................................... 102 Chapter 8 Comparison & Analysis ................................................................................. 104 8.1 Sector Profit Analysis ........................................................................................... 104 8.1.1 Daily Pivot Point Trading Results ................................................................. 104 8.1.2 Swing Trading Results ................................................................................... 107

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8.1.3 Trend Trading Results.................................................................................... 110 8.1.4 Position Trading Results ................................................................................ 112 Active vs. Passive Trading Strategies ......................................................................... 113 Chapter 9 Conclusion & References............................................................................... 117 References....................................................................................................................... 120

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Table of Figures

Figure 2.1: Standard Pivot Point Chart (Source StockCharts).......................................... 17 Figure 2.2 Swing Trading Chart Example (Source eSignal) ............................................ 20 Figure 2.3 Trend Trading Chart Example........................................................................ 22 Figure 3.1 One Month Frontier Stock Chart (Source Yahoo Finance)............................. 26 Figure 3.2 One Month Nike Stock Chart (Source Google Finance)................................. 27 Figure 3.3 One Month Dicks's Stock Chart (Source Google Finance) ............................. 27 Figure 3.4 One Month Twenty-First Stock Chart (Source Google Finance).................... 28 Figure 3.5 One Month EA Stock Chart (Source Yahoo Finance) .................................... 29 Figure 3.6 One Month Sony Stock Chart (Source Google Finance) ................................ 29 Figure 3.7 One Month Target Stock Chart (Source Google Finance) .............................. 30 Figure 3.8 One Month Bank of America Stock Chart (Source Google Finance) ............. 30 Figure 3.9 One Month Cisco Stock Chart (Source Google Finance) ............................... 31 Figure 3.10 One Month Oracle Stock Chart (Source Google Finance) ............................ 32 Figure 3.11 One Month MGM Stock Chart (Source Google Finance)............................. 32 Figure 3.12 One Month E*TRADE Stock Chart (Source Google Finance)..................... 33 Figure 3.13 One Month HIG Stock Chart (Source Google Finance) ............................... 34 Figure 3.14 One Month Joy Stock Chart (Source Google Finance) ................................. 35 Figure 3.15 One Month Walmart Stock Chart (Source Google Finance)......................... 36 Figure 3.16 One Month QUALCOMM Stock Chart (Source Google Finance)............... 36 Figure 3.17 One Month Apple Stock Chart (Source Investopedia).................................. 37 Figure 3.18 One Month Masimo Stock Chart (Source Investopedia) .............................. 38 Figure 3.19 One Month Tesla Stock Chart (Source Investopedia) ................................... 38

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Figure 3.20 One Month Verizon Stock Chart (Source Investopedia)............................... 39 Figure 3.21 One Month Amtech Stock Chart (Source Investopedia) ............................... 40 Figure 3.22 One Month Riverview Stock Chart (Source Investopedia) ........................... 40 Figure 3.23 One Month MFA Stock Chart (Source Investopedia) ................................... 41 Figure 3.24 One Month IHS Stock Chart (Source Investopedia) ..................................... 42 Figure 3.25 One Month Apple Stock Chart (Source Google Finance)............................. 43 Figure 3.26 One Month Netflix Stock Chart (Source Google Finance) ........................... 43 Figure 3.27 One Month Amazon Stock Chart (Source Google Finance) ......................... 44 Figure 3.28 One Month Microsoft Stock Chart (Source Google Finance)....................... 45 Figure 3.29 One Month Ford Stock Chart (Source Google Finance) ............................... 46 Figure 3.30 One Month IBM Stock Chart (Source Google Finance) ............................... 46 Figure 3.31 One Month Tesla Stock Chart (Source Google Finance) .............................. 47 Figure 4.1 Investopedia Portfolio Example Week One (Source Investopedia) ................ 49 Figure 4.2 Investopedia Portfolio Example Week Three (Source Investopedia) ............. 54 Figure 4.3 Investopedia Portfolio Example Week Four (Source Investopedia) ............... 58 Figure 4.4 EA 5-Day Stock Chart (Source Yahoo Finance)............................................. 58 Figure 4.5 Nike Two Week Stock Chart (Source Yahoo Finance)................................... 60 Figure 4.6 Dick's Sporting Goods Two Week Stock Chart (Source Yahoo Finance) ...... 61 Figure 4.7 Investopedia Portfolio Example Week Six (Source Investopedia) ................. 63 Figure 4.8 Target One Week Stock Chart (Source Yahoo Finance)................................. 64 Figure 4.9 Investopedia Portfolio Example Week Seven ................................................. 65 Figure 4.10 Twenty-First Century One Week Stock Chart (Source Yahoo Finance) ...... 66 Figure 4.11 Dick's Sporting Goods One Week Stock Chart (Source Yahoo Finance)..... 66

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