Reference no: EM133853528 , Length: word count:2500

International Finance

Assessment Task: Trading Game Report

Overall Objective

The objective of this exercise is to give you a practical insight into the mechanics and operation of the foreign exchange market. Each week they are required to consider the effects that political, economic and financial events and expectations will have on the foreign exchange market; and use that information in deciding on the position you hold in the FX market. On completion of this assignment you should be able to analyse and evaluate the FX market and situations, apply the theory and technical skills to the real work situations for decision and problems solving. The trading report you need to prepare and submit in the end will require your reflections on the trading processes and assumptions while addressing several steps detailed in the section on Structure of the Trading Report.

A Brief Introduction

This assignment focuses on reflections and applications of critical thinking and technical skills to authentic business problems in the foreign exchange market.

Students are asked to register and use the StockTrak trading platform to trade four currency pairs, i.e., AUD/USD; AUD/EUR, USD/JPY and USD/CNH, and analyse and evaluate their business strategy based on the theory.
The trading game exercise is individual (i.e., not in groups), and each trade decision must be justified based on the theory you have learnt from this unit.

You are required to register at the StockTrak trading platform It is your responsibility to complete the registration during this time window. See below for detailed information on registration, conditions, and trading windows. Please carefully follow the guidelines below:

You must select your "Last name" followed by your "Student ID number". For example, if your last name is "Doan" and your Student ID is "14728902" then you will select your StockTrak username as "doan14728902". Please do not select your username any other way because it will be difficult for us to locate your trading activities. Book assignment help service now!
After you register with StockTrak, you can use your username and password to log in to the trading simulation.

Students are allowed to trade the following:
Foreign exchange currency pairs: - AUD/USD; AUD/EUR, USD/JPY and USD/CNH.

You are required to trade the above four currency pairs. You need to make a minimum of four trades for each of the currency pairs in the foreign exchange market. Please make a maximum of one decision each day, however, this is not mandatory.

Note: One trade refers to either one buy transaction or one sell transaction or one short transaction or one cover transaction.
Reduced Marks For Not Participating In The Game

You are expected to have entered a trade in each of the currency pairs (a minimum of one currency pair) from Week 4 onwards (Week starting 17th March 2025). A zero position is not allowed.
During the trading game and by the end of the trading game 23rd May 2025, if you have a zero position, then your assignment marks will be reduced as follows:
A zero trade for two consecutive weeks will result in a 20% reduction on your assignment mark;
A zero trade for three consecutive weeks will result in a 50% reduction on your assignment mark; and
A zero trade for four consecutive weeks will result in a 90% reduction in marks.
After logging in, you will be in the "My Portfolio" area.
To start trading foreign exchange pairs, you need to place the mouse on the "Trading" button on top of the menu bar and click on "Spots" on the drop-down menu. You will now be able to trade these foreign exchange pairs.
Trading Begin Date: 10th March 2025 (actual trading starts from 17th March 2025)

Week 3 starting 10th March involves trial decisions. The actual trading starts in Week 4 from 17th March 2025. All the trades from 17th March 2025 shall be counted towards your grades for the assignment.

Trading End Date: 23rd May 2025
You are allowed to do day trading i.e. you are allowed to sell the currency pairs bought on the same day.

You are allowed to do short-selling i.e. you are allowed to initiate sell orders on currency pairs without owning those instruments.

Annual interest charged on loan usage is 8%, and annual interest earned on unused cash is 3%

The position limit on any trade is 25%. This means you can only allocate 25% of 1million on any trade.

The brokerage commission is $10 for each trade

STRUCTURE OF THE TRADING REPORT

Your trading report should comprise 3 main steps (or parts), detailed as follows:

REPORT STEP 1: (Maximum word limit: 600 Words)

Report the journal of your trading activities which should contain the following:
The journal should cover the minimum trades you are required to make during the trading window. You may include screen snip of the decisions obtained from StockTrak trading platform. (PGCLO2.1)
An introductory section that reviews the major developments over the trading period. (PGCLO2.1)
A commentary on how you made each of the decisions, such as if based on the fundamental analysis or using technical analysis with the relevant charts. (PGCLO2.2)
References to the sources that you have used to make your decisions. (PGCLO2.1/ PGCLO2.2)

REPORT STEP 2: Maximum word limit: 600 Words (PGCLO2.3)

Select two representative trades, identify and discuss the main factors that had significant impacts on your trades in the FX market. Refer to the theories learnt in this unit, explain which theory is most helpful in your decision-making process and why.

REPORT STEP 3: Maximum word limit: 800 Words (PGCLO2.3)

Evaluate the performance of these four currency pairs during the trading game period. Which currency pair is the best performing FX pair and which one is the worst performer during the period in the context of current global market conditions and future economic prospects? Explain why.

Based on your above analysis and what you have learnt from this unit, construct and justify a capital investment plan including a hedging strategy for Australian multinational corporations (MNCs) operating into these countries, i.e. China, the eurozone, Japan and the United States.