Stock Market Trading
Project Number: DZT0517
Stock Market Trading
An Interactive Qualifying Project Report Submitted to the faculty of the
Worcester Polytechnic Institute in partial fulfillment of the requirements for
the Degree of Bachelor of Science by
___________________________________________ Meng-Yu Ni
Date: August 2006
Approved by: __________________________ Professor Dalin Tang Project Advisor
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Abstract
Using the information from the internet and published books, a general understanding about stock market and trading strategies was obtained. The knowledge and trading strategies were applied in the market in a stock market simulation to get real-time trading experience. Experiences learned from using trading methods in this simulation will help me to become a better investor in the future.
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Acknowledgement
First, I want to thank my parents who gave me the opportunity to study at Worcester Polytechnic Institute in USA. Second, I would like to thank my advisor, Dalin Tang, who gave me advices, and help me during this whole project time. Thirdly, I want to thank Worcester Polytechnic Institute for giving me opportunity to do this project, which made me to learn more things from outside of classes by myself. Finally, I would like to thank all the people who gave me some help when I needed it.
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Table of contents
Abstract ........................................................................................................................... 2 Acknowledgement........................................................................................................ 3
Chapter I Introduction ........................................................................................... 8
1.1 The objective of this project............................................................................... 8 1.2 Basics of the stock market.................................................................................. 9 1.3 Three main exchanges in USA ......................................................................... 10
Chapter II Trading Methods in the Stock Market ......................................11
2.1 Stock market trading method ...........................................................................11 2.2 Short-term trading method.............................................................................. 12 2.3 Intermediate-term trading method ................................................................. 13 2.4 Long-term trading method............................................................................... 14 2.5 Doubling the Dow.............................................................................................. 14 2.6 Recognizing the Risks ....................................................................................... 18
Chapter III Selecting Companies ..................................................................... 19
3.1 Way to invest ..................................................................................................... 19 3.2 Investing............................................................................................................. 20
3.2.1 Growth Investing ................................................................................... 20 3.2.2 Value Investing ....................................................................................... 21 3.2.3 Combining growth investing and value investing ............................... 22 3.3 Finding companies ............................................................................................ 23 3.3.1 Fundamental analysis ............................................................................ 23 3.3.2 Technical analysis................................................................................... 24 3.4 Selected companies............................................................................................ 24 3.4.1 EI DuPont de Nemours & Co. (DD) ..................................................... 25 3.4.2 General Motors Corporation (GM) ..................................................... 26 3.4.3 Pfizer Inc. (PFE)..................................................................................... 27 3.4.4 Verizon Communications Inc. (VZ) ..................................................... 28
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Chapter IV Simulations ....................................................................................... 29
4.1 Simulation Methods .......................................................................................... 29 4.2 Trading Record ................................................................................................. 30
4.2.1 Simulation week #1 ................................................................................ 30 4.2.2 Simulation week #2 ................................................................................ 32 4.2.3 Simulation week #3 ................................................................................ 33 4.2.4 Simulation week #4 ................................................................................ 34 4.3 Simulation Result .............................................................................................. 35
Chapter V Analysis ................................................................................................ 37
5.1 Why investor lose money.................................................................................. 38 5.2 Analysis of earning............................................................................................ 39 5.3 Analysis of losing ............................................................................................... 39
Chapter VI Conclusions ....................................................................................... 41
6.1 how close to the project goals........................................................................... 41 6.2 Summary of the project.................................................................................... 42
References..................................................................................................................... 44
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