Want to participate in the ASX Schools Sharemarket Game? Here are Some Top Strategies for Success!

The ASX Schools Sharemarket Game is on again! And it is a great way for school students to be introduced to the strategic functioning of the share markets. But just because you’re not using actual money, it doesn’t mean you should take it seriously. This blog will identify the best practices to assist you in developing and applying your tactics and comprehending stock trading in the ASX Schools Sharemarket Game.

 

Understanding the ASX Schools Sharemarket Game

 

Overview of the Game and Its Objectives

The ASX Schools Sharemarket Game provides the exact view of actual trading on the Australian Stock Exchange abbreviated as ASX. Each participant is provided with a virtual trading account initially credited with $50,000 to purchase eligible ASX-listed shares, ETFs, and other securities. The aim of the game then is to garner the best return on investment at the end of the game. In doing so, the participants learn the steps of research, decision-making, and financial management skills in real-life situations.

 

The Key Rules and Features of the ASX Schools Sharemarket Game

The real-life stock exchange simulation makes the ASX Sharemarket Game real and functional for the students where they get actual live price and actual trading cost. Some essential rules include:

• Virtual Cash: Every participant is given $50,000 for the main purpose of trading in different stocks and exchange-traded funds.
• Brokerage Fees: Every trade has a commission, which is a simulation of actual brokerage charges.
• Market Hours: Purchases or sales must be made during ASX trading time, and the market prices depend on real-time.
• Trading Restrictions: Some restrictions apply, for example, one cannot sell shares short or in other words, use margin trading.

 

Beginner-Friendly Strategies for Sharemarket Success

How to Start with Basic Stock Selections

It is easiest (and quite simple) for starters to invest in so-called blue chip stocks. These are shares of large and stable organisations that provide less risk than the companies that are new or developing. Think the banks, major miners and consumer staple sellers (i.e. non-discretionary goods). When selecting stocks, consider looking at companies that rule their industry and are market leaders. Companies that have been established and/or have been operating for a certain period, more specifically – Dividend-paying stocks.

You can opt to go with smaller cap stocks with more risk. No company will tell you they are not a good investment, but of course, not all succeed. Go with companies that are market leaders in their industry, but in an industry that is substantially growing. One example is Intelligent Monitoring (ASX:IMB) which is already Australasia’s largest security company, but has a big growth opportunity ahead of it in the gradual adoption of DIY solutions – Australia is behind the UK and USA but is bound to catch up, and IMB will be a beneficiary given its existing foothold in the market and gradual addition of DIY solutions to its portfolio. With biotechs, you may consider companies about to report Phase 3 or at an early stage of commercialisation like Neuren (ASX:NEU) or Opthea (ASX:OPT). For commodities stocks, look for companies in resources that will be in hot demand in the years ahead and aren’t volatile (think gold and copper). Look particularly for companies with projects about enter production or just in production like De Grey (ASX:DEG) or Capricorn Metals (ASX:CMM). For the tech sector, look for companies with a loyal customer base and recurring revenue like Xero (ASX:XRO) and ReadyTech (ASX:RDY).

 

Diversifying Your Portfolio

Risk cannot be avoided entirely, but the best way to mitigate it is to have well-diversified portfolio. Don’t invest in one particular sector or stock; instead, invest in a diverse portfolio of industries such as technology, finance, and health. With this strategy, one can be able to cut losses in the event one particular sector is not performing well. For example, if the tech sector has been volatile, your bets on consumable goods or financial sectors would act as your hedge against losses. When analysing historical data, it can be concluded that portfolios that contain shares in a large number of companies are more effective in operation than highly specialised portfolios.

 

Advanced Strategies for Maximizing Gains

Monitoring Market Trends and Data

Of course, achieving the highest result in the ASX Schools Sharemarket Game is impossible to do without the knowledge of current tendencies in the stock market. Interest rates and GDP reports provided a macroeconomic outlook for the types of stocks, similar to a microeconomic outlook given by the quarterly and annual reports by firms. Participants should ensure that they keep abreast with the company information flow, industrial changes, and the global market and changes that affect share values. Don’t just read the AFR every day (although of course do it), but be aware of what could go wrong and the likelihood of it. For instance, you should know how you stock will be impacted by movements in inflation and have a well-informed view of where interest rates are headed.

 

Using Technical Analysis to Inform Trades

However, for more advanced players, technical analysis can indeed work well. This strategy entails deciding to produce or invest based on the previous price trend and from the look of charts. Among technical pieces, the moving averages of some sort or Relative Strength Index (RSI) and Bollinger Bands are typical. Knowing how all these indicators work will enable you to have better control or when to enter or exit a given trade.

For instance, if the price of a stock starts trading above the 50-DMA (moving average), it means that the stock is entering an upward trend and is the appropriate time to invest. If a stock has an RSI below 30, it is a sign it could be oversold, but if it is above 70, it is overbought. Still, stocks are oversold or overbought for a reason so it is important to consider why, whether the reason the stock is oversold of overbought is legitimate and will things turn around, when, why and how confident can you be.

Managing Risk in the Sharemarket Game

Setting Stop Losses and Limits

Implementing a stop-loss order is one of the most efficient ways of controlling risk in the market. This tool helps you to cut your losses because it can sell a stock automatically when it reaches some predetermined price. We recommend setting stop losses of 15% below your purchase price. For instance, when one is purchasing a stock at $20, the stop loss level could be at $17 to minimise the loss.

Likewise, taking profit targets can help you reap your profits when your stock gets to a specific price. Therefore it is important when placing these orders to manage your upside risks as well as downside risks if you are to achieve long-run success in the game.

 

The Importance of Cash Reserves

Never invest all of your digital funds; it is wise always to have some digital cash in your pocket. Although it’s always attractive to put all of the funds to work it is important to have cash on hand to take advantage of emerging opportunities. In this market, a volatile market, there are usually buying opportunities and when you have cash, you can quickly open new trades when the prices are low.

There can be a strong opinion that it is wise always to have from 10 to 20 percent of your stock portfolio in cash so that you can be ready for either some late opportunities or a downturn in the market.

 

Common Mistakes to Avoid in the ASX Sharemarket Game

Overtrading and Impulse Buying

Day trading can easily see you lose your virtual portfolio by having to pay brokerage fees and trading at the wrong time. It’s useful not to combine these strategies with trading based on market noise or short-term price movements as such actions are profitable.

However, most of the time, they should shift their attention to long-run goals to achieve long-term objectives cum growth with sound decision-making. As an investment strategy, patience pays in great measure; it is the holder who holds their stocks for longer durations that reap the best returns than the serial traders.

 

Ignoring Long-Term Growth Potential

Every so often a player falls to the mistake of attempting to only have short-term gains with no regard to the long-term capital gains of stocks. Although people always love making fast money, the best investors will always invest in companies with much potential to post good performances in the future. Some of the key areas of focus would include the earnings growth of a business, a quality management team, and a visible growth plan.

 

Conclusion: Building Winning Habits for Long-Term Sharemarket Success

You shouldn’t participate without a strategy as well as an aim to develop your investing skills so you’ll have a better chance of success when you are using real money.

By learning and applying the right strategies, you can manage your virtual dollars into a profit and gain valuable experience that will help you invest in the future.

 

What are the Best ASX Stocks to invest in right now?

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