While most share trading games determine the winner/leader as the person with the most valuable portfolio, we believe there is a lot more to learning good trading practices. This is where the StockWatch Share Points System comes into play.
What is the StockWatch Share Points System?
While the exact formula is complex, the SW Points System takes into account what we believe are good share trading practices. We find that with a total portfolio value based system, many players are ranked highly simply by either not playing, i.e. holding their money (which is a good strategy in the current market 1/10/08) or getting a few lucky breaks by buying a concentrated amount of high risk shares.
The SW Points System favours those who are consistent with the market (The All Ordinaries) and is therefore a better indicator of player performance.
How does the Points System work?
Every day at the close of trading, the system will allocate every player a specific amount of 'points' for that day. The system will then total your points from the past 130 days.
For example if you had played 132 days, ONLY the last 130 days are taken into account for points purposes. Points from the 131st and 132nd days will be dropped and will NOT count towards your total points.
These points are the basis of you rankings. The points you receive for the day depends on a few variables.
The StockWatch Share Points System takes into account the following:
130 day rolling period:
The Points System calculates your points on a rolling 130 day period. This was decided on for 2 main reasons:
- This avoids new players from entering straight into the top rankings
- As the points are calculated on the last 130 days only, this requires you to continuously monitor the current performance of your stocks
The All Ordinaries (represented as a percentage) is used as a benchmark. One of the key ways to getting a high rank is by consistently outperforming the All Ordinaries. One of the most effective ways of doing this is by diversifying your share portfolio.
Diversification is one of the most important lessons you can learn when investing in shares, especially for those new to share investing. Not only should you be buying into different shares but it is also important to choose shares from different sectors. Click here to learn more about share diversification.
Because we feel that diversification is such an important part of share investing, the Points System will punish players whose percentage falls well below the All Ordinaries.
Using More of Your Cash:
As mentioned above, with other share games, many users ranked highly by staying out of the game. With the current market conditions (10/11/08) you may say this is a good strategy, however, we feel that since StockWatch is a place to learn, those who use more of their cash will be rewarded for doing so.
This is the perfect time to learn more about defensive trading strategies. Learn more about it here.
The Value of the Portfolio:
This is simply the value of your portfolio. The larger the portfolio, the more the points you are able to attain.
What does the StockWatch Points System represent?
Here is a guide as to how the points system represents you as a trader/investor.