The Basics : Scottrade Intern Challenge
You may begin registering on February 22nd, 2010. You can register at any point throughout the simulation as well.
The start date for the Scottrade Intern Challenge contest is March 1st, 2010 and the end date is November April 9th, 2010.
Please note this challenge is only limited to Scottrade Intern Challenge interns. In order to register a Scottrade e-mail address is mandatory and you will only be able to register once.
Kindly note that passwords are sensitive information, you will need to click on "forget my password" link. An e-mail with your username and password will be sent to the e-mail address which you registered with. Please also remember that the username and password are case sensitive.
Log into your account and click on the link to Change Password. Enter your old password, enter your new password, confirm the new password and click on the submit button and your password is now changed.
You are allowed to make 100 total trades. You can view the number of trades made from the Account Balance page.
Stock Market Basics
Companies initially raise money by selling their stock. A share of stock represents fractional ownership of a business. When you buy shares of stock in a company, you are buying a small fraction of the business and all the profits that go along with it. For example, if ABC Company needed to raise $1,000,000 they could sell 100,000 shares at $10. Each share that you owned would represent 1/100,000th ownership of the company.
Keep in mind that some companies are “public” and some companies are “private”. Private companies are smaller companies that have raised money to a small number of investors and their stock does not have an active market where it can be bought and sold. Public companies have sold their stock to many investors (shareholders) and have registered their shares with the Securities and Exchange Commission and with an exchange (NYSE, AMEX, or NASDAQ) and hence their shares can be bought and sold with ease on an exchange.
The two main types of shares are common and preferred stocks. Common stock gives the owner the right to vote at shareholders meetings and receive dividends if any are declared. While preferred shares typically don't confer voting rights, they have priority over common shares for earnings and assets. This means when a company declares dividends, preferred shareholders are paid before common ones and have a higher claim to assets if the company goes bankrupt and is liquidated.
When you buy stocks on the Scottrade Intern Challenge, they are almost always shares of common stock.
A wise investor will always conduct some type of analysis before making an investment-- acting on hot tips or blindly following the crowd rarely pays off. Students can start off by asking their parents and find out what stocks they might be invested in and why. They should start watching the spending habits of their families, friends and even themselves—what are they buying? Are they buying more than they use to buy? What products do you always use and trust, and which ones don’t you use anymore.
Students should start watching the business channels on TV, and start reading a few of the popular stock market websites like finance.yahoo.com, forbes.com, investors.com, fool.com.
There is also a Research link on the Scottrade Intern Challenge website that will contain many valuable links.
Everyone has heard the old adage “Buy low and sell high.” When a trader buys a stock, he is said to have a “long” position. He is “long” because he believes the stock price is going higher. This is also known as being “Bullish” or a ‘Bull” on the market.
Conversely, a trader can also make money when he thinks a stock is going to decrease in price. Instead of buying low and selling high, a trader can “Sell high and buy low.” In this instance, a broker will actually loan the trader shares of stock that the trader then sells. At this point, the trader has “sold short” the stock and believes the price is going to be lower. This is also known as being “Bearish” or a ‘Bear” on the market. When the price has fallen, the trader buys the stock at a lower price and “covers” his “short” position. The trader then takes the shares that he just bought and returns them to the broker from whom he borrowed the shares.
The stock exchanges provide the valuable service of bringing together all of the buyers and the sellers of stocks each day and matching the buyers and sellers that agree on a price. The exchanges keep track of all of the open orders and show the highest buy order price as the “bid price” and show the lowest sell order price as the “ask price.” The “ask” is the price the person who owns the stock is asking to sell his shares.
On the Scottrade Intern Challenge your buy orders will get filled with the ask price and your sell orders will get filled at the bid price.
An investment portfolio is a collection of investment assets, such as stocks,
bonds, ETF's, mutual funds, derivatives, real estate and commodities.
Investment portfolios should be constructed after carefully assessing the investor's goals,
objectives and portfolio, such as age, growth and income requirements, risk tolerance and
liquidity needs. On the Scottrade Intern Challenge, your investment portfolio is comprised entirely of stocks in
companies that are publicly traded in the U.S. markets, as well as U.S. mutual funds.
A market order is an order to buy or sell a specified number of shares (or bonds, etc. ) at the best available price when the order is submitted. All orders that don't bear a specific price are considered market orders.
Market orders placed while the markets are closed or before the market opens will be executed at an appropriate bid/ask price shortly after the market opens and contingent to trading volume on that particular stock. If the stock requested does not have sufficient volume to execute, then that order will stay pending until filled or canceled.
A limit order is an order in which a specific price is set to buy or sell a security. If the price point is hit and there is sufficient volume at that price point or better, your order will be filled. Limit orders may be placed as "Day" orders which are good for the day only, or as "GTC" orders, which are good until canceled.
A stop order is an order to buy or sell a stock when the stock price reaches a specified price, which is known as a stop price. When the specified price is reached, the stop order becomes a market order.
- (a) A Sell Stop Order is used by investors and traders long a stock to protect an existing profit or avoid further losses if the stock price drops. A stop order to sell must be placed below the current market price.
- (b) A Buy Stop Order is used by investors and traders short a stock to protect a profit or limit a loss if the stock price increases. A stop order to buy must be entered at a price above the current market price.
Stop orders may be placed as "Day" orders which are good for the day only, or as "GTC" orders, which are good until canceled.
For example, if you own 100 shares of IBM at a $100/share and you want to sell it if the stocks goes up to $110, that would be a limit sell order; but, if you wanted to sell if the stock price drops to $95 so as to limit your losses, that would be a stop sell order.
A market order that was placed when the market was closed and has not filled yet, or a limit/stop order that has been placed but the price has not been met yet and therefore has not executed yet is called an open order. At the Scottrade Intern Challenge, all orders are either market orders or GTC orders.
All Scottrade Intern Challenge accounts are margin accounts, which mean that we will loan you a certain amount of funds. The buying power calculation is the amount of stock purchases that you can make if you want to become fully invested and take the full amount of loan that the Scottrade Intern Challenge is willing to lend you.
The North-American stock market opens at 9:30AM ET and closes at 4:00PM ET. Any trade made when markets are closed will be processed the next business day.
Markets are CLOSED for these Federal Holidays in the U.S.: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day (observed). On the day following Thanksgiving and frequently the day before Christmas, the market will close at 1:00 pm ET.
Yes! You can make a trade after the market has closed. Your trade will be filled at the open price of the stock at the next market open.
Trading on the Scottrade Intern Challenge
You can trade any stocks listed on the NASDAQ, NYSE or AMEX stock exchanges. You can also trade ETF's and market indexes. As long as the stock price is $0.25 per share or higher you can buy it. Short selling is allowed for stocks $3.00 or higher. Buying stocks on margin (loan) priced less than $5.00 is not permitted.
Yes. Along with buying stocks from the above mentioned exchanges, you can trade Options on the CBOE.
Your initial balance is $150,000 US.
To make a trade go to the “Make a Trade” tab, you must then enter a ticker symbol and give the quantity of stock you would like. You then choose to buy, sell, cover, or short. Once you have reviewed the trade, you press the confirmation button to complete the trade.
You can see the number of trades you have left from the Account Balances Page.
Market, limit, and stop orders will be accepted. All orders are executed at the real-time bid/ask prices when placed during market hours. Due to NASDAQ, NYSE and AMEX regulations, the Scottrade Intern Challenge will display a delayed price estimate for 15-20 minutes. Each transaction made by a User will automatically appear in the Users portfolio and transaction history.
When making trades, you must know the ticker symbol of the securities to be traded. Go to the ‘Symbol Lookup’ page under the "trade" tab and enter the full or partial company name and click "Search".
- 1. Go to the ‘Symbol Lookup’ page under the "trade" tab and enter the full or partial company name and click "Search"
- 2. On the ‘Make a Trade’ page, you may also enter the full or partial company name in the "Symbol" field – then choose a company from the drop-down list.
Under the "My Portfolio" tab select the “Open Positions” submenu – click on it to see all your open positions.
You may only cancel Open Orders. To see your Open Orders and to cancel any of them, go to “Make a Trade” tab and select the “Order History” submenu. Open Orders that can be canceled are in yellow.
Yes. Short selling is permitted and short orders do not need an uptick to be filled. You can short sell stocks that are priced greater than $3.00. Proceeds from a short sell are restricted and cannot be used to buy additional stocks. You can view the proceeds from shorts as ‘Short Balance’ on your account balance page.
Buying on margin is allowed for all securities with a price of $3.00 or higher. This means that the participant can borrow additional funds from the Scottrade Intern Challenge based on an initial margin requirement of 50%.
This is done automatically. As you sell stocks, you will begin to pay off your loan automatically using your profits.
Once you have used up your 100 trades you cannot obtain more trades.
Every transaction you make (buy, sell, short or cover) is considered a transaction/trade. Dividends and stock splits do not count as trades.
Yes day trading is allowed. Day trading is when you are able to buy and sell the same stock on the same day. Keep in mind that such frequent trading will generate lots of commission charges and that you are limited to a certain number of trades for the Challenge.
There are several rules which may prevent your order from filling:
- 1. Your Challenge hasn’t started yet. Please check with your Administrator for the exact trading dates of your Challenge.
- 2. Minimum Stock Price. The minimum stock price must be $0.25 or higher.
- 3. Transaction Limits. You may not buy/sell stocks that would be greater than 25% of your portfolio value.
- 4. Insufficient Volume. If the stock requested to trade does not have sufficient volume to execute, then the order will stay pending until filled or canceled. The volume in real life must be double what you are attempting to trade.
- 5. No Shorting Penny Stocks. You may not short sell any stock whose value is less than $3.00.
- 6. No Penny Stocks on Margin. Buying stocks on margin (loan) priced less than $5.00 is not permitted.
- 7. Insufficient Buying Power. You are out of money.
To see the status of any order, check your ‘Order History’ page.
There are several reasons why you can’t see your order in 'Open Positions':
- 1. If your order requested volume greater than 50% of available volume, then your order will remain pending until sufficient volume is available.
- 2. If you placed the order outside market hours, you order will stay open until next market open.
- 3. Limit and Stop orders remain open until your requested price has been hit.
You must have the order confirmation number when disputing a trade. The order confirmation number can be obtained from the ‘My Order History' page and is listed on the Trade Confirmation page after placing a trade.
If you believe an error has been made on your account, you must report it within 10 days to the Simulation Support Services team. The management of Stock-Trak has the ultimate authority to settle disputes.
Not yet. You can however trade Options on the CBOE.
No, you cannot trade halted, restricted and blocked stocks. Any trade that is confirmed after trading has been halted will be reversed.
A brokerage commission is applied to all transactions. The commission for trades is a flat $10. (Contest Rule)
You can monitor your account's overall ranking and open positions from My Open Positions page.
Advanced Topics
Sometimes, due to a quick gap up or down, the stock may only trade at your limit price for a few seconds and then quickly bounce off of your ‘limit price’. As a result, your order will not get filled. This is normal and occurs on any trading platform, including real stock brokerages.
Please check if you have a pending order against the security. If you do, cancel the pending order and try again.
Simulation Support Services makes these changes at the beginning of every trading day as part of routine audits to ensure a fair game for all. If your portfolio doesn’t reflect this change within 24 hours, please contact the Simulation Support Services team.
Simulation Support Services makes these changes at the beginning of every trading day as part of routine audits to ensure a fair game for all. If your portfolio doesn’t reflect this change within 24 hours, please contact the Simulation Support Services team.
Restricted Funds are created when you place Limit orders not filled. The funds are needed in the event that your limit price you specified is met and triggers the action you requested. When your limit order is filled, the Restricted funds go away.
Restricted funds are also created when you place Market order when the market is closed. Funds are needed to carry out your stock orders when the market next opens.
First remember that all prices are delayed 15 minutes, for example if your trade was made at 10:45 A.M., the price you would get is the price at 10:30 A.M., if you trade at 9:40 A.M., you would get the opening price at 9:30 A.M. and your open positions will show Next Market Open.
Send a ticket to the Simulation Support Services team and indicate the Symbol of the Stock or Option you’re having problem with, the date and time of the transaction, the wrong price and the price you think you should have gotten.
Yes, the reason you have a security with a price of $0 is because that company has undergone some type of Corporate Action. We track these Corporate Actions on a daily basis but it is good that you let us know.
If you do not have adequate cash and/or buying power, then the number of shares will be adjusted to allow the trade to be filled as best it can.
Options
A Call Option is an option that gives you the right to buy the underlying security at a specific price (Strike Price) before a specific date (Expiration Date).
A Put Option is an option that gives you the right to sell the underlying security at a specific price (Strike Price) before a specific date (Expiration Date).
Exercising your options means that you will be buying or selling stocks. If you were to exercise a Call Option, you will be buying stocks at the specified strike price. If you were to exercise a Put Option, you will be selling stocks at a specified strike price.
Unlike European options, American options can be exercised on or before the expiry date of option.
On the Scottrade Intern Challenge, options are treated as European style, which means options can only be exercised on expiry date.
Call option is in-the-money if current price of the underlying stock is higher than Strike Price of your option position. Here is calculation for the
InTheMonineness$Amount = (CurrentStockPrice - StrikePriceofOption) * 100 * Number of Contracts
Whereas, PUT option is in-the-money if current price of the underlying stock is lower than Strike Price of your option position. Here is calculation for the
InTheMonineness$Amount = (StrikePriceofOption - CurrentStockPrice) * 100 * Number of Contracts
No, there is no exercising of options before expiry. If your option is in-the-money, it will get exercised automatically on the expiry date.
All in-the-money options are cash settled on expiry and user holding LONG option positions will receive InTheMonineness$Amount. Whereas, writer of the option (SHORT open positions) will have a negative entry in their account equal to InTheMonineness$Amount.
Please note that Options expire the third Friday of every month. For example, March 2009 Options will expire on March 20, 2009. If the option is in-the-money, it will be exercised. If it is out-of-the-money, it will be expired at “0” price.
If it is not the third Friday and your Options are not in your portfolio, please contact the help-desk and describe your problem.
No, this is a common mistake by many traders. Options are sold in contracts. Each contract contains 100 Shares. To answer your question, you would need to buy 20 contracts. Each of these contracts has 100 shares, so your 20 contracts should give you the option to buy 2000 shares of Microsoft.
The Quotes Page quotes options prices per share. When you saw that MQF DD is $2, it means that the price per share, per contract is $2. Considering each contract contains 100 shares, this means the actual contract price is $200 ($2 x 100).
As it sounds, you purchase a protective put to protect your positions. If you wanted to purchase 1000 shares of Microsoft, along with it, you would purchase 10 Put Option Contracts. In this case, you have 1000 shares of Microsoft long and 10 Put Option contracts representing these 1000 shares. Should the price of Microsoft's share fall below your investment price, you are protected by the right to sell (Put Option Contracts), hence the name “Protective Put.”
The number you can write depends on your position limit, the margin requirement for the option contract, and your available buying power. If the position limit is $37,500 and the margin requirement is $3,750 per contract, then you can write 10 contracts, provided you have available buying power. Given that options are nonmarginable, you would have to have $ 75 ,000 in buying power in this example.