This is answered by reading your rules. There is usually a rule marked competition eligibility. We stress that everyone needs to be aware of these rules. It would not do to post a competition eligibility rule and then not enforce it. No one?s account will be turned off unless they are found cheating or if we are asked to remove it by the Council. If a team does not meet the competition eligibility rules then they will not be able to claim a prize but they will still be allowed to use the SMS.
This information is provided to you upon registration in most cases. However if you do not have your team numbers and passwords, please contact the SMS Help Desk so that you may obtain this information.
Registering for the SMS is different for each state. Registration can be made from the web page in most states. Team numbers and passwords can be issued directly by the web page or later by direct mail from the council. If the SMS Coordinator is responsible for issuing the team numbers for the teachers based on email registrations then teachers should receive their information via regular mail.
This depends on the type of registration. Most states will mail the teacher an invoice for the number of teams they register. If your registration page lets you know that it is okay to send a check to the council then payment may be made in this fashion.
If a teacher requested too many teams while filling out the registration form then she needs to let the SMS Coordinator in the state know immediately. Extra team numbers are not a problem to deal with and can be easily corrected, but communication between the teacher, the SMS coordinator, and the SMS is imperative. If the SMS coordinator is responsible for issuing the team numbers via web page and an error occurs then a correction may be made by contacting the SMS Help Desk and reporting the error.
The problem with your team numbers if they are not working is probably that they have not been activated. Calling the SMS coordinator will alert her/him to the problem but then they will need to call the SMS help desk to have the team numbers activated. This question should be asked directly to the SMS help desk. Prior to the beginning of the trading period, the team numbers and passwords will not work. Usually the teams will begin working on the web the weekend before trading begins.
Registrations are usually opened and updated on the web page every 24 hours. During the beginning of the simulation, teams are opened and updated to the page several times a day. If you are having trouble with your teams not working, please contact the SMS Help Desk and alert them to the problem.
Of course! We have many different lesson plans broken down into grade levels on our Lesson Plans page which can be accessed by a link on the left hand navigation bar. The lessons plans given to teachers are provided by the National Council on Economic Education.
There could be several reasons why trades will not go through. We have changed the web page to recognize most of these and they will alert the student right away that the trade will not be placed. However, there are still sometimes when a trade will not go through. Before contacting the Help Desk, ask yourself these questions regarding your trade:
If your trade is reduced in the number of shares, there could be 3 different reasons for the reduction. These reasons are:
Accounts are updated daily at 7 p.m. but only for trades that are placed before 4 p.m. The only time when it would take 3 days is if the trade was placed on a Friday after 4 p.m. This trade will not be processed and show up in the account detail until 7 p.m. on Monday. Trades placed after the market closes must be placed at the next market day?s open price.
Each simulation has a set position limit that teams must remain within throughout the simulation. This means that you can't invest more than the set position limit in any one stock at one time. For example, if you have a position limit of $25,000, this means that you can't invest any more than $25,000 in any one stock at one time. If you purchase $10,000 worth of stock ABC for example, then you can only invest another $15,000 because of your position limit. If you original investment of $10,000 goes up in value to $11,000, then you will only be able to invest another $14,000 in that stock. However, if you invest your full $25,000 in a stock and the value goes up, we will not sell off your shares to keep within the position limit. You originally invested within the position limit and the value went up, which makes it ok but you can't invest any more into that stock.
If your web page allows you to trade mutual funds, then you must invest in them in lots of $500. Mutual funds are not traded using shares, they are invested in dollar amounts. To trade a mutual fund all you need to do is go to the Trade Funds tab on the web page and fill in the information. You will need to have the 5 letter ticker symbol which will usually end in X.
If a stock that you are holding in your account splits you will see the increase in shares that evening when your account is updated.
Dividends are recorded to your account on the ex-date given when the company decides on the dividend. A list of ex-dates for dividend payments can be found at yahoo.com.
Interest is earned at a rate of 3% annually with daily compounding. Interest is charged to any loan you have at a rate of 8% annually.
This is a question of opinion. In the opinion of the SMS, buying on margin is a good thing. We encourage all teams to take advantage of the margin for their account.
This is also a question of opinion. Short selling is just another type of transaction you can make with your SMS account. Short selling is done when you feel the price of the stock is going to drop. If you are comfortable with this idea then short selling is just as important as buying.
Shorting against the box is a term given by the SEC to a trader trying to buy and short the same stock. This is not allowed in the SMS.
As of now, no SMS state is allowed to day trade. This is looked on by some as gambling and we feel that it encourages too much speculation and not enough research.
If you trade at 15-20 minute delayed prices, then you will receive the price of the stock from 15-20 minutes ago. If you trade at the end-of-day prices then you will always get the price that the stock closes at. You should always print your confirmation sheet when prompted to keep track of prices received and the number of transactions made for the day.
This is answered by looking at the start and end date for the trading period which can be found on the SMS Home Page. The trading period will usually start on a Monday and end on a Friday. The trading period end date is also found on each team?s Account Summary page on the web.
Ticker symbols can be found for a specific company by going to the SMS Home Page and clicking on Ticker Symbol Lookup. This will prompt you to enter the company name of the ticker symbol needed. If no ticker symbol is found for this company then you should then try to find out if that company has a parent company. The Wall-Street Journal is also another good place to find ticker symbols. You can look those up alphabetically in the paper.
If you have lost this information you should see your teacher. If you are participating as and adult and are working alone, then contact the SMS Help Desk to obtain this information. Team Numbers and Passwords will not be given to students unless a teacher calls and verifies this with us.
The prizes for winning the SMS are different for each state. Some states give gift certificates, some trophies, some give cash, and others give a plaque. The prizes for your state can usually be found on the web page. If the prizes are not listed on the web page then the SMS coordinator for the state needs to be able to answer this question.
No, you do not need to sell off everything you own to win the simulation. In fact selling everything you own will only cause your account to loose $25 for every sell due to the commission. If you feel that the price will drop during the day and you are on the delay pricing system, then selling may lock in your profits. However, if you trade at the end-of-day prices then selling everything will not help you at all.
Once you have selected a stock to trade, you must know the ticker symbol of the company to trade it. The ticker symbol is a one to five digit code for a publicly traded company, which is used by investors to trade the securities of that company. There are a couple of locations where students can find ticker symbols:
Examples of tickers: "KO" for Coca Cola, "IBM" for IBM, "MSFT" for Microsoft
Seven common characterisitics of rising stocks are:
How important is your money to you? Spend a bit of time; you'll get a little bit of results. If you spend more time, your results should improve. You should spend a minimum of two or three hours a week.
You simply borrow stock that you do not own (from your brokerage) and sell it with the obligation to buy it back at some point in time, to cover your short sell. You sell a stock short anticipating that the stock will go down and you will buy it at a lower price than you sold, thus making a profit. When you enter a sell order for stock you do not own, your brokerage will automatically consider it a short sell.
Some traders never short because of the unlimited risk involved. The SMS believes that traders will benefit from learning to use both long and short positions. But with that said, we also urge beginners to become profitable with long positions before going short. If you are on the right side of the market, it makes no difference whether the market goes up or down. Downtrends in the market frequently take place sharper and faster than uptrends. This happens because more traders play the market from the long side than do traders who trade both long and short. Bull markets don't continue forever, so learn to short.
If you plan to borrow money to buy a stock, you also need to know the terms of the loan your broker gave you. This is called margin. In volatile markets, investors who put up an initial margin payment for a stock may find themselves required to provide additional cash if the price of the stock falls.*
There are a number of risks that all investors need to consider in deciding to trade securities on Margin. One of the biggest risks is the following:
Rule No. 1 is to always protect your account by selling a stock if the price falls 7 or 8% below your actual purchase price. If you don't cut every loss quickly, sooner or later you'll suffer some very large losses. Cutting losses at 8% will always allow investors to survive to invest another day. It is nothing but an insurance policy. You can be wrong on three out of four stocks and still make a fortune in the market if you cut losses when you're wrong and add to stocks that are working.
The number of shares that are currently owned by investors. This includes restricted shares (shares owned by the company's officers and insiders) and shares held by the public. Shares that the company has repurchased are not considered outstanding stock.
A stocks low price and high price for a particular trading period. Such as the close of a day's trading, the opening of a day's trading, or a day, month or year.
The first sale of stock by a private company to the public. IPOs are often smaller, younger companies seeking capital to expand their business. IPO's are usually available to trade on the SMS web page within 48 hours of becoming public.
The number of shares or contracts traded in a security or an entire market during a given period. Typically a large increase in volume means that some sort of news is coming out. Volume is a very important indicator in technical analysis.
Volume is a key way to measure supply and demand, and is often the primary indicator of a new price trend. When a stock moves up in price on unusually high volume it could indicate the stock is being accumulated by big institutional investors. When a stock moves down in price on unusually heavy volume, major selling could be occurring.
While most investment information services provide a stock's trading volume for the day, Investor's Business Daily gives you the "Volume % Change," which tells you how much a stock traded above or below its average volume over the past 50 days. This alerts you to unusual trading activity in a stock.
A cash payment, using profits, announced by a company's board of directors and distributed among stockholders. Dividends may be in the form of cash, stock, or property. All dividends must be declared by the board of directors. Most secure and stable companies offer dividends to their stockholders. Their share prices might not move all that much, but the dividend attempts to make up for this.
It is not important for stocks to pay dividends. Many of the best growth companies do not pay dividends; they reinvest their earnings back into the company. Investor's looking for growth companies should not be concerned with a stock's dividends because the greatest gains will come from price appreciation rather than dividend payouts. A stock down 30% that delivers a 4% dividend still represents a 26% loss overall.
The division of a company's existing stock into more shares. In a 2-for-1 split, each stockholder would receive an additional share for each share formerly held.
This is usually a good indicator that a company's share price is doing well. But you don't get any more value, just twice as many shares.
A reduction in the number of a corporation's shares outstanding that increases the par value of its stock or its earnings per share. The market value of the total number of shares (market capitalization) remains the same.
The first date on which a security is traded without entitling the buyer to receive dividend distributions previously declared. Sometimes referred to as the ex-dividend date.
A price-earnings (P/E) ratio measures the value of a stock by dividing the current price by its earnings per share over the last 12 months. When a stock's P-E ratio is high, the majority of investors consider it as pricey or overvalued. Stocks with low P-E's are typically considered a good value.
However, through Investor's Business Daily's ongoing study of the biggest stock market winners, the opposite was found to be true. The average P/E of the best winners over the last 15 years at the initial buy point prior to their huge price increases was 31 times earnings. These P/E's went on to expand more than 100% to over 70 times earnings as the stocks significantly increased in price.
If you picked stocks based solely on low P/E's, you would have missed purchasing America Online and Cisco Systems during the period of their greatest market performance.
A market in which prices of a certain group of securities are falling or are expected to fall. Although figures can vary, a downturn of 15%-20% or more in multiple indexes (Dow or S&P 500) is considered a bear market.
A market in which prices of a certain group of securities are rising or are expected to rise.
There is no established correlation between mutual fund cash flows and stock market activity. In fact, Federal Reserve researchers have found no evidence that equity fund flows cause stock market prices to change. Funds account for only a minority of U.S. corporate stock. Households, pension funds and insurance companies hold about 80 percent of equities in the domestic stock market, while mutual funds hold about 20 percent.