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Single Name Position Limit To Be Turned On This Wednesday

Starting on May 20, 2015, we’ll turn on single name position limits for games with this rule enabled. The exact limits differ by game and can be viewed in the Rules section of each game. For example, Stockfuse Continuum imposes a single name position limit of 100%, which means that at most 100% of your total equity can be invested in each stock at the time you place the order.

We hope this new rule will encourage more diversified portfolios and even more great trades on Stockfuse!

Turbo-Charging Your Stockfuse Experience

We are thrilled to announce that starting today, price quotes on Stockfuse and, more importantly, your portfolio values will be updated every minute instead of every 15 minutes. This was the top-requested feature in our surveys, and we could not be more excited to fulfill this request.

We want to make it clear that execution prices, i.e., the prices you get when placing an order, will continue to be real-time, just as they have been.

Stockfuse is undergoing a number of major transformations. We look forward to sharing more updates with you in the coming weeks!

Announcing Stockfuse Champions for May 2015

We’re excited to welcome yet another group of star traders into the Stockfuse Champions Program:

  • @whoispj almost doubled his equity by delivering a whopping 96% return last month. This stunning performance is driven by two very successful earnings-related bets, netting him $58k from $NFLX and $44k from $GPRO.
  • @LeviAC was up an enviable 83%, driven by bets in small cap names such as $AMCN and $CYTX.
  • @arthurschmuck48 returned 70%, capitalizing on the recovery of oil and generating a $90k profit from trading $PBR.
  • @donnieboth was up 61% after making an admirable $53k from $NFLX’s blockbuster earnings.
  • @ELVIS74 returned 57%, reaping $24k from $PBR and $19k from $SDRL.

Other traders in the top ten list include @themightyrk, @robertcoronel, @davism65, @manodesi524, and @Kophea.

Please join us in congratulating these amazing stockfusers! If you’re interested in the Champions Program, please refer to stockfuse.com/champions .

Stockfuse & Apple Watch – Virtual Trading Games on Your Wrist

We’re proud to introduce Stockfuse for Apple Watch, bringing our virtual trading simulator to your wrist.

This simple app allows you to monitor all your portfolios throughout the day, now from the convenience of your wrist! Tap a game, and you can see all your holdings and key statistics, including intraday P&L for each position.

Stockfuse on Apple Watch

We’re just getting started and plan to bring the full Stockfuse experience to your wrist in the future. In the interim, enjoy the app and let us know how you’d like the app to evolve!

What are Bid/Ask Spread & Market Impact?

TL;DR: Prices on Google/Yahoo Finance are not tradable prices.

One of the most common bug reports we receive is that trades didn’t get executed at the same price as Google/Yahoo Finance. Ironically, the discrepancy results from several of our most distinguishing features. This post details the reasons behind the differences and demystifies our trade pricing methodologies.

Bid/Ask Spread

Traders coming from other virtual trading simulators have been trained to believe that the “last quote” – the price on Yahoo or Google Finance – represents the most up-to-date, tradable price. This is unfortunately not true in real life.

Financial transactions involve a bid/ask spread:

  • The bid price is the highest price that a dealer is willing to pay for a security (equivalently, it is the most an investor can sell a security at);
  • The ask or offer price is the lowest price that a dealer is willing to sell the security at (equivalently, this is the least that an investor can buy a security at).

The ask price is always higher than the bid. This way, a dealer can buy the security at bid, then sell it to another investor at the higher ask price, and make a profit by facilitating these trades.

The picture below shows the real time quotes for BOX. As you can see, the last price that it traded at is 17.5. This is the price that is quoted on Yahoo/Google Finance, and this is the price that many traders expect to be able to get when they trade BOX. However, if you look at the bid/ask, you can see that the price at which you can buy BOX (ask) is 17.99, while the price at which you can sell BOX (bid) is only 17.3. The lesson here is that the last price plays no role in the next transaction.

Bid/ask spread of BOX

The bid/ask spread (i.e., difference between bid and ask) is usually very tight (just 1 cent), but can be very large for some securities and in certain market environments. If we had ignored bid/ask, we would’ve enabled some very profitable and yet completely unrealistic strategies to occur on Stockfuse. Take a look at the stock chart for AMD below. In the last 45 minutes of trading, the “last price” of AMD appeared to be jumping between 2.66 and 2.67. In reality, however, the price didn’t change at all – buyers were buying at 2.67 and sellers were selling at 2.66. When a buy order is executed, Google/Yahoo shows 2.67; and when a sell order is executed, Google/Yahoo displays 2.66. Ignoring this bid/ask spread, investors could buy at 2.66 and sell at 2.67 on a virtual simulator, doing it numerous times to capture a potentially sizable profit. Stockfuse does not allow such unrealistic arbitrage opportunities to take place.

Bid/ask bounce of AMD

Market Impact

Going back to the BOX example, we now know that investors must purchase the stock at the ask price of 17.99, but the ask size at the time was only 100 shares. If you purchase more than 100 shares, the execution price can potentially rise even more. This is known as market impact.

When you execute a large buy order, you incur market impact cost for several reasons:

  • The price must be raised in order to attract sellers to the market to sell to you;
  • You are signaling to the market that you believe the fair value of the stock is higher than its current price, and other market participants will account for this in their pricing and increase the equilibrium price.

Other virtual trading platforms ignore market impact, which allows investors to trade in and out of millions of shares of a penny stock at a time, capturing unrealistic profits. These orders, in real life, could 1) take days to execute if not longer, and 2) raise the market price substantially along the way.

Stockfuse uses a proprietary transaction cost model to compute the market impact for each trade. In some cases, this can move the final execution price further away from the last quoted price.

So how large is the overall transaction cost? It depends on the order size (quantity), liquidity (e.g., volume), trading environment (e.g., volatility), etc. We studied every trade executed on Stockfuse over the last week and here’s the breakdown:

  • 57% of the trades incurred cost between 0 and 0.5 cents per share.
  • 26% of the trades incurred cost of 0.5–1 cent.

So over 83% of the trades incurred less than 1 cent of transaction cost. The remaining orders were generally large trades in illiquid penny stocks.

We hope this post demystifies the pricing methodology on Stockfuse. At Stockfuse, we take the integrity of trading performance very seriously. Our goal is to provide realistic simulated trading performance that’s actually obtainable in the real market. At times, this creates the perception that we’re providing unfavorable pricing, but this is what trading is like in real life and we want our users to be mindful of these “hidden costs” when they begin trading in the real world.

Striving for Realism

Here at Stockfuse, we’re working hard to strike a balance between accessibility and realism. We want less experienced traders to feel that our platform is easy to understand, and we want more experienced traders to feel that our platform provides a realistic trading experience. We learned a lot from a recent survey we conducted, and we’d like to announce several changes we’re making to enhance your Stockfuse experience:

  • Transaction Costs: Some users commented that Stockfuse does not accurately reflect the transaction costs associated with trading and actually encourages unrealistic behavior that would be risky (or impossible) to replicate in the real market. After much internal deliberation, we’ve decided to deploy our proprietary Transaction Cost Model to Stockfuse Continuum to ensure that the trading experience on Stockfuse mirrors real-life trading as closely as possible. This is the same model we’ve been using in our most advanced games and rivals similar models used by the world’s largest financial companies. Here is a blog post detailing how the transaction cost model works and why it’s necessary: New @ Stockfuse – Transaction Cost Model.
  • Dividends: Many users wondered whether we could support dividends. The good news is that we’ve been adding dividends to your account since the very beginning! We’ve also added a “Dividend” section to your portfolio Dashboard on the web and we’ll bring this page to mobile shortly.
  • Real Time Portfolio Update: This was the second most requested feature and we can certainly understand why. We are already in discussion with our data provider and we look forward to rolling out this feature as soon as possible.

As always, we’re trying to make Stockfuse the best it can be. Feel free to comment below or email us at info [at] stockfuse.com if you have any questions!

Announcing Stockfuse Champions for April 2015

We’re excited to welcome the fourth group of stockfusers into the Stockfuse Champions Program:

  • @mattyflex delivered a whopping 86% return in March, aided by a series of successful bets in small cap names such as $MVIS and $CORT.
  • @Mark8 was up 79%, driven by his successful bets in $ACI and $CORT.
  • @nicholaston21 generated a 55% return and has proven himself an astute small cap trader.
  • @cmacmillan was up 51%, with a very well-timed and profitable $NTDOY trade.
  • @brlawson was up 48%, with a series of well-timed $ACI trades.

Meanwhile, the selection process for May 2015 is underway, and you’re automatically eligible. Keep up the great trades and the next champion could be you! For more information about the game, check out stockfuse.com/champions/.

Stockfuse joins Barclays Techstars

It is with great pride that we announce Stockfuse is joining the Barclays Accelerator powered by Techstars.

Stockfuse is amongst ten financial technology companies around the world to have been selected by this prestigious program. The entire Stockfuse team has relocated to London and will work closely with the amazing mentors from Techstars and our peers to advance our product.

We’d like to take the opportunity to thank all of our corporate clients and users. The feedback we’ve received from you made Stockfuse what it is today! We look forward to sharing more exciting developments with you in the near future.

Stockfuse Trader Report Card

Stockfuse is used by various financial institutions to evaluate and recruit trading talent. The foundation of our platform, of course, is our prized virtual market simulator that has been used for over 140 trading games. What truly differentiates us, however, is our core philosophy: trading is much more than just performance.

Traditional virtual trading platforms provide a one-dimensional assessment of a candidate’s trading, which is performance. Stockfuse, by contrast, heavily de-emphasizes performance in our evaluation process. Instead, we focus on “soft metrics” such as the thoughtfulness of the candidates, the quality of the investment rationales, behavioral biases with proven correlation to investment success, and overall engagement levels.

Over the past week, we have rolled out a brand new Report Card that embodies our core philosophy. This redesigned Report Card is available for every Premium game and is divided into the following sections:

  • Performance: This section includes the old school stuff, such as your cumulative returns, volatility, Sharpe ratio, and rolling equity beta.
  • Trading Style: Your average allocation and P&L by sector and by market cap, as well as leverage. For select games, we’ve also analyzed the entry or exit style of each trade (e.g., momentum, reversion, etc.), providing deep insights into your trading pattern and the effectiveness of different strategies.
  • Investment Rationale: Quality of your investment rationales and an overall assessment of your thoughtfulness in trading. Each and single one of your investment rationales has been rated either by Stockfuse researchers or by our automated AI.
  • Behavioral Bias: An in-depth analysis of your trading biases. For example, whether or not you tend to over extrapolate from past trends, how often you hold onto losers for too long, etc. The content of this section may differ depending on your access privilege.
  • Engagement: For select users, we provide a detailed analysis of your engagement level across market conditions.
  • Noteworthy Trades: A list of your best trades, as determined by community votes.

Stockfuse Trader Report Card

The new Report Card provides a multi-dimensional evaluation of your trading activities, allowing you to see what has worked and what areas may need improvement. For candidates seeking jobs in the financial services industry, it also provides an overview of how you are being evaluated.

We hope you enjoy this new design. If there’s any cool statistics you’d like to see, please do not hesitate to contact us at info [at] stockfuse.com

Stockfuse for iPhone v4.0

We are excited to announce that Stockfuse for iPhone v4.0 is now available in the App Store!

By popular request, we have added a Watchlist feature. In fact, you can create multiple watchlists so that you can organize securities of interest into different groups.

We have also completely redesigned the user interfaces of our most popular screens:

  • The Trade Ticket now guides you through the order submission process, providing helpful tips along the way. We hope these improvements will reduce the learning curve for beginners. For advanced users, the new information should also help reduce entry errors.

  • The Portfolio view got a major facelift, providing more details on your holdings. You can now view the daily P&L, market value, and total unrealized P&L on each position. There’s an even sparkline that provides the recent history of each security.

  • We’ve redrawn every chart on the Analytics screen and added explanatory notes for each section, helping you understand your performance better.

Per usual, this update also includes a slew of performance enhancements and you’ll find the app to be snappier than ever.

We hope these updates continue to refine your trading experience on Stockfuse. If you have any feedback, don’t hesitate to let us know!

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