Reference no: EM132631184

MPE707 International Banking and Finance - Deakin University

Learning Outcome 1: Students will be able to explain the key features of the global financial market

Learning Outcome 2: Students will be able to analyse the behaviour of the foreign exchange market movements

Learning Outcome 3: Students will be able to use the functions available on the trading platform to perform the currency transactions

Learning Outcome 4: Students will be able to understand and manage risk in the foreign exchange market

Learning Outcome 5: Students will be able to address complex issues in the foreign exchange market

In this assignment, students are required to:

(A) Speculate with virtual money on a real internet trading website.

(B) Write a report (maximum of 2,000 words) on their trading experience.

(A) Internet trading game
The Unit Team will provide each student with a free demo account with easyMarkets, an online foreign exchange trading firm.

You will have access to many of the features on the website that actual traders receive, including real- time quotes, news and a variety of charts (though some features that are licensed from third parties are not available on demo accounts).

Each student will be given an account on this website with AUD 50,000 virtual money. The goal of the exercise is simple: to make as much money as possible. easyMarkets provides access to foreign exchange spot markets and forward markets in order for you to perform your speculative activities. The website has a ‘Learn Centre' tab, which contains information on the basics of forex trading. Please take the time to understand how the trading platform works before commencing your trading activities.

All students will receive an email (from the Unit Team) that contains a username and password for an account on easyMarkets before the end of Week 4, 9 August 2020. On receiving this, please do not change the settings (i.e. please do not change the email and password on the account). Please do not provide or add any information of personal nature to the account.

It is highly recommended that you do not start trading straight away; rather, it would be very useful to spend some time reviewing the features on easyMarkets. The foreign exchange market reacts very rapidly to news, so it is important that you do make it a point to spend a few minutes every day keeping track of how economic variables impact the forex market.

Please note that your account will not be replenished if your funds run out; this is to ensure that you manage risk while trading.

Assessment:

The speculative component of this assignment is marked out of 15. Grades are based on performance in trading, that is, the amount of money (denominated in AUD, which is automatically calculated by the platform) in the account when the assignment is submitted.

There is a hurdle requirement to pass this component of the assignment: you must undertake at least 12 transactions (or trades) by the due date of the assignment (15 September 2020) using the demo account provided to you by the Unit Team. For the purpose of this assignment, a transaction is defined as entering into an open position and eventually closing it before submitting the assignment. So, for example, if you bought AUD 100,000 (against USD) on 15 August 2020 and closed this position on 18 August 2020, you would have completed one transaction. Any student who undertakes between 1 and 11 transactions by the assignment due date using the demo account provided by the unit team will receive a score of 4.5 out of 15. Any student who does not conduct any transaction by the assignment due date will receive 0 out of 15. In order to calculate the scores, accounts will be ranked on performance. The distribution of scores for those who satisfy the hurdle requirement (having completed 12 or more transactions) is shown in the table below:

You will realise as you commence trading that the foreign exchange market is extremely volatile. Trading in this market is, therefore, a very risky proposition. The purpose of this trading game is not to make you a forex trader (though some of you may find that you have a talent for it). Rather, it is meant to provide you with insights into the functioning of the foreign exchange market, which is best achieved by participating in it.

(B) Report

The report must start with a cover sheet (using the template posted on CloudDeakin). On the cover sheet, please provide the information as requested (your last name, first name, and student ID; username and password for your trading account; the final account balance and the number of transactions undertaken for each instrument; the currencies traded; and the word count). Your assignment will only be graded when all information required in the cover sheet are provided.

Immediately after the cover sheet, please provide a 1-page executive summary. The executive summary should show a brief account of your overall strategy, the financial instruments you have used, the number of transactions and currencies you have traded, and justify the total losses/profits on your account and whether or not you have undertaken any risk management activities.

In the body of the report, please describe the sophistication and management of the trading strategies. Please start by providing an overview of the trading environment (i.e., macroeconomic conditions) in the weeks/months immediately prior to the start of the trading period (August 2020) relevant to the currencies you have chosen for the transactions, the reasons why you have chosen those currencies, and your plan/expectation for/from the trading activities. As an example, if you have traded the Australian dollar (AUD) you should have mentioned the impacts of the Covid-19 on the economy, and policies including the cash rates enacted in response to the Covid-19 pandemic, the performance of the Australian economy (GDP growth, unemployment, inflation etc.), and the status of the commodity markets that Australia exports as these are all critical to the value of the AUD. Then, give an in-depth analysis of your transactions/trading performance.

You do not need to explain every transaction; this would be virtually impossible given the word limit. Rather, your report should attempt to show how you have employed the understanding of the trading environment and theoretical tools studied in the unit in practical currency trading contexts. It should also highlight any research you have conducted on the foreign exchange market and the manner in which you have approached your trading activity, using specific transactions as examples. Finally, please discuss the use of risk management tools available on the easyMarkets platform during the trading period. Please note that any news items or documents (both printed and online) that helped you make your decisions should be carefully referenced and cited in the report.
Please make sure you have carefully considered the marking rubrics during the trading game as well as report writing; marks for the report will be linked closely to these marking criteria.

In an Appendix to the report, please include the information below. First, click on the menu button on the top right corner of the easyMarkets platform after you have logged in, and then:

(1) Click on ‘Account Statement'.

(2) Within ‘My Statement' area, set the date from when you commenced trading to when you stopped and download the position data to Excel or PDF.
(3) Add the above to the end of your report. Note, if you download position data to Excel you have an opportunity to sort your positions by date or by description for your convenience.

Please note Appendix instructions might be updated during the trimester, in which case you will be communicated by the Unit Team via the Unit website.

Please note that even if you lose money while speculating, it is quite possible for you to do well in this component of the assignment if you are able to provide a clear and logical account of your strategy, and possibly some insight into why it led to losses. Similarly, students that make money must also substantiate their strategy in the report in order to do well in the assignment.

Attachment:- International Banking and Finance.rar