FIN 471, Fall 2014

Final Project
The final project comprises 150 points of your final grade: 50 points for trading (individual members
points might be different depending on your peer evaluation results); 70 points for the write-up;
and 30 points for the presentation in the last week of classes.
I. The Trading Game (50 points)
Each team needs to open a practice account from www.fxcm.com and is assumed to have a hypothetical
initial capital of US$ 50,000. No interest payments for any cash holding. The trading will start from
10/30/14 to 11/20/14 (3 weeks of trading period). All open positions should be cleared and profits and
losses are calculated in terms of US$ on 11/20/2014. Unrealized (floating) P&Ls should be realized
before 11/20/2014.
Each team may trade on daily basis, but each member should have at least three round-trip trades (or six
buy/sell trades) during the 3-week trading period. The member who has less than three round-trip trades
or six buy/sell trades will be penalized for his/her trading points (5 points deduction for each missing
trade, please see peer evaluation forms for details).
The team should maintain a trading spreadsheet of your teams trading activities. Each member should
record his/her trades with names and brief reason of justification after each trade. The following is an
example:
Ticket
#

Sym
bol

1080
6511
7

USD/
CNH

Volu
me
10,0
00

Date

10/29/20
14 10:56
10/29/20
14 12:07

Note:

Sold

Boug
ht

Gross
P/L

Com
m

Rollo
ver

Net
P/L

Adj

6.1
130
2
6.11
305

-0.05

-1.2

-1.25

Cond
ition

Trader
Infor
matio
n

Mkt

Jessic
a
Zhao

testing

Mkt

Jessic
a
Zhao

testing

Brief reason
to justify

You can download your trading activities from the trading platform: After log in, click on
Report tab, choose Since open, and then click on Run report. If you have a lot of trades
during the periods, you can export your trades to an Excel file (choose Excel 2003 in the
format). Copy and paste the information of your trades to the spreadsheet of your team and add
trader information and brief reason to justify.
It is each members responsibility to fill out the trader information and brief reason to justify.
Failure to do so may result in penalty of his/her trading points.

Trading tips:
Symbol reading: EUR/USD, the first symbol is the currency you are buying or selling, the second
symbol is the currency that you use to buy or sell.
For inexperienced traders, it might not be a bad idea to do random trading.
Because you are trading on margin, please expect to experience large profits/loss.
You can enter stop/limit order to prevent further losses or realize your profits.

On class time of 11/20/2014, each team should submit a trading summary. The trading summary should
include the following the teams trading balance and holding period return.
Note: HPR = (ending balance - $50,000)/$50,000
Note: floating P/L in the report is NOT considered as realized P&L and should NOT be used in
the calculation of HPR. You need to enter the opposite trades in order to close the position and
realize the P/L at the end of the trading period.
The team performance of the trading will be evaluated at the end of the trading period (11/20/2014). The
winning team will receive additional 5 points as an award.
II. The Final Project Report (70 points)
Each team will submit a write-up that summarizes their trading experience and provides background
information about the teams designated currency. The deadline is 12/9/14, class time. Ten (10) points
will be deducted for each day delayed. The contents of this write-up must include (but not limit to) the
following:

Executive summary (that summarized your major findings) on the cover page. Please include
team name and team members names on the cover page.

Background information about the currency (e.g., historical exchange rate, trend, volatility, etc.).

Macroeconomic factors (e.g., interest rates, inflation rates, imports, and exports) that affect the
exchange rate of that currency against the US$.

News events that have big impacts on the exchange rates (e.g., intervention by central bank,
political events, etc.)

Your forecast for the future (short- and long-term) performance of the currency. Justify your
forecast with supporting evidence and state clearly your underlying assumptions.

Evaluate your performance during the trading game (average team returns, best performer of your
team, interesting experience, etc.). Summarize the following:
o
o
o
o
o
o

Trading performance
Interesting experience
What have you done right?
What have you done wrong?
What would you have done differently?
What have you learned?

The format of the final project should be as follow:

On the cover page, you should include your team information, a short executive summary that
highlights the findings of your report.

Make sure that you include a description of the historical exchange rates as well as the exchange
rate movements during your trading period.

Limit to five pages of text (typed, double-spaced, 11 or 12-font size and 1 inch margins on all
sides.

Supporting tables, spreadsheets and graphs (herein called tables) are limited to five pages.

The tables should be referred in the text of your analysis. Reference to tables should be as explicit
as possible.

Tables and graphs should be clearly labeled and self-explanatory. The assumptions being
maintained and formulas being used should be obvious to the reader. A rule of thumb is that the
tables should be able to stand alone.

Each member will submit a peer evaluation form to the peer evaluation dropbox before 12/9/14, class
time.
III. Presentations (30 points)
Each team will make a short presentation (no more than 10 minutes) regarding the trading game and their
report on 12/9/14 or 12/11/14. Any team that misses the presentation receives 0 for the presentation
part of the project.
IV. Evaluations and Peer Evaluation
The grade on your project depends on: (1) the content of the report; (2) effectiveness and clarity of
presentation; (3) cooperation among group members; (4) The way to handle and answer questions.