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MPE 707 AS S I G N M E N T

Deakin University

- TRIMESTER 1, 2014

Assignment
SPECULATION IN THE FOREIGN EXCHANGE MARKET

Due date:
Represents:
Format:
Grading:
Nature:
Word length:
Submission:

Thursday 15 May 2014.


40% of assessment.
(A) Internet trading game and (B) report (with a 1-page executive summary)
Numerical grade out of 40, divided up as 15 for the internet trading game and 25
for the report.
Individual assignment.
For the report: not more than 2500 words (electronic count) excluding executive
summary, footnotes and appendices to the report.
This assignment must be submitted electronically on CloudDeakin by on-campus
and off-campus students by 11:59pm on the due date (please refer to the Unit
Guide for further details).

In this assignment, students are required to:


(A) Speculate with virtual money on a real internet trading website.
(B) Write a report (maximum of 2500 words) on their trading experience.

(A) Internet trading game (15 points)


Each student will receive a free demo account with Easy Forex, an online foreign exchange trading
website. The url for Easy Forex is http://www.easy-forex.com.au. 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). Please note that the website works best with Internet Explorer. You can download
Internet Explorer from the Deakin Software Library: http://www.deakin.edu.au/software/internet.php.
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. Easy Forex provides access to foreign
exchange spot markets and forward markets in order for you to perform your speculative activities.
The website has a Learn 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 be allocated a username and password for an account on Easy Forex by 4 April
2014. On receiving this, please do not change the settings (email and password on the account). The
url for direct access to the login area on Easy Forex is https://secure.easyforex.com/utp/au/en/Login.aspx.
I would highly recommend that you do not start trading straight away; rather, it would be very useful
to spend some time reviewing the features on Easy Forex. Even before you receive the username
and password for your account, you can practise trading (and familiarise yourself with the platform)
by using the Simulator that is available in the Learn section of Easy Forex (you will need to login as
a guest). A formal lecture on trading with Easy Forex will be provided in the week commencing 7
April 2014. All tradings will close on 15 May 2014, the day on which the assignment is due. The
foreign exchange market reacts very rapidly to news, so please 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.

MPE 707 AS S I G N M E N T

Deakin University

- TRIMESTER 1, 2014

Disclaimer: Deakin University is not responsible for the content that appears on Easy Forex. The
use of Easy Forex in this unit is for educational purposes only. Easy Forex is one of many firms
providing services for transacting in the foreign exchange market, and students who wish to invest in
the foreign exchange market are advised to research the market thoroughly to find a suitable firm for
their purpose. Successful speculation in this assignment does not guarantee success in actual
speculative trading.
Please note: The demo accounts function in exactly the same way as a normal account, so if your
funds run low you may receive a default email from Easy Forex reminding you that your account
needs to be replenished using funds on a credit card. This may be a default setting on normal Easy
Forex accounts, but as demo account holders you do not have to, and should not, provide any
information of a personal nature to Easy Forex. So if you do receive any such email, please ignore it.
Before completing your assignment and turning it in, please ensure that all open positions are
closed.
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) 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 15 transactions (or deals) by the due date of the assignment (i.e. 15 May 2014) using the demo
account provided. 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 buy
USD 100,000 on 15 April 2014 and close this position on 18 April 2014, you would have completed 1
transaction. Any student who undertakes between 1 and 14 transactions during the trimester will
receive a score of 4.5 out of 15. A student who does not conduct any transaction 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 (15 transactions or higher) is shown in the table
below:

Ranking of student

Score

Top three students

15.0

Next 5%

13.5

Next 15%

12.0

Next 15%

11.0

Next 15%

10.0

Next 15%

9.5

Next 15%

9.0

Next 10%

8.5

Remainder

8.0

Deakin University

MPE 707 AS S I G N M E N T

- TRIMESTER 1, 2014

You will realize 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 (25 points)
The report must start with a cover sheet (using the template posted on CloudDeakin). On the cover
sheet of your report, please provide the information as requested (your last name, first name, and
student ID; username and password for your trading account; the account balance and the number of
transactions undertaken; and the word count). Your assignment will only be graded when all
information required in the assignment cover sheet are provided.
The 1-page executive summary of the report should provide a brief account of your overall strategy,
the financial instruments you used, and justify the number of transactions and the total balance
(denominated in AUD) in your account.
In an Appendix to the report, please include the information below. First, click on the My Account tab
located on the top right of the trading platform when you log-in, and then:
(1) Click on My Summary and print the screen.
(2) Click on My Closed Positions, set the date from when you commenced trading to when
you stopped, and print the position data (you can use the print icon on the webpage). Please
note that there are different tabs for Day Trading, Limit Orders, and Forwards.
(3) Click on My Statement, set the date from when you commenced trading to when you
stopped, and print your statement (you can use the print icon on the webpage).
Your report should provide a detailed description of the trading strategy you employed. You do not
need to explain every transaction; this would be virtually impossible given the word limit. Rather,
your report should attempt to highlight how you used the theoretical tools developed in this unit, any
research you conducted on the foreign exchange market, and the manner in which you approached
your trading activity, using specific transactions as examples. Any news item or report that helped
you make your decisions should be carefully referenced, and if possible, included in the Appendix.
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.
Assessment criteria (see the attached rubrics):

Sophistication and management of the trading strategy. [6 points]


(GLO6 assessed: Self-management)
Use of the theoretical tools developed in this unit to support the trading strategy. [5 points]
(GLO1 assessed: Discipline-specific knowledge and capabilities)
Use of research and external sources (i.e. news) to support the trading strategy. [5 points]
(GLO5 assessed: Problem solving)
Use of trading and risk management tools available on Easy Forex. [5 points]
(GLO3 assessed: Digital literacy)
Overall presentation, clarity of expression, communication of ideas, and referencing. [4 points]
(GLO4 assessed: Critical thinking)

Your report should follow the Guide to assignment writing and referencing, available at this link:
http://www.deakin.edu.au/students/study-support/referencing
(the Harvard style is preferred).
Notes: GLO stands for Deakin Graduate Learning Outcomes (see the Unit Guide).

MPE707/MPE907 T1.2014 Assignment Marking Criteria (Rubrics)


Criteria

Yet to achive minimum standard


(fail)

Meets standard
(pass)

Exceeds standard
(credit)

(high distinction)

Sophistication and management


[6 points]
of the trading strategy

0 to 2.5 point
Poor/lack of management of trading
volumes/funds.
Poor/lack of time planning on trading
activities.
Poor/too risky strategy overall.
Only spot transactions conducted.

3 points
Limited management of trading
volumes/funds.
Limited time planning on trading activities.
Limited strategy overall.
Only spot transactions conducted.

Use of the theoretical tools


developed in this unit to support [5 points]
the trading strategy

0 to 2 point
Lack of use of theory in real world context.
Lack of justification of how theory has been
used for trading activities.

3 points
2.5 points
Adequate use of theory in real world
Limited use of theory in real world context.
context.
Limited justification of how theory has been
Adequate justification of how theory has
used for trading activities.
been used for trading activities.

3.5 points
Good use of theory in real world context.
Good justification of how theory has been
used for trading activities.

Use of research and external


sources (i.e. news) to support the [5 points]
trading strategy

0 to 2 point
Lack of evidence on keeping track of policy
announcements.
Lack of evidence on keeping track of news.
Lack of justification of trading activities
based on policy announcments/news.

2.5 points
3 points
Limited evidence on keeping track of policy Some evidence on keeping track of policy
announcements.
announcements.
Limited evidence on keeping track of news. Some evidence on keeping track of news.
Limited justification of trading activities based Adequate justification of trading activities
on policy announcments/news.
based on policy announcments/news.

3.5 points
4 to 5 points
Good keeping track of policy
Excellent keeping track of policy
announcements.
announcements.
Good keeping track of news.
Excellent keeping track of news.
Good justification of trading activities based Excellent justification of trading activities
on policy announcments/news.
based on policy announcments/news.

Use of trading and risk


management tools available on [5 points]
Easy Forex

0 to 2 point
Lack of use of rick management tools.
Lack of justtification of how risk
management tools have been used in
trading activities.

3 points
2.5 points
Adequate use of rick management tools.
Limited use of rick management tools.
Adequate justtification of how risk
Limited justtification of how risk management
management tools have been used in
tools have been used in trading activities.
trading activities.

4 to 5 points
3.5 points
Excellent use of rick management tools.
Good use of rick management tools.
Excellent justtification of how risk
Good justtification of how risk management
management tools have been used in trading
tools have been used in trading activities.
activities.

Overall presentation, clarity of


expression, communication of
ideas, and referencing

0 to 1.5 point
Poor/lack of executive summary and/or
appendix.
Poor report structure.
Poor statements/terminologies and
descriptions of the trading strategy.
Citations/references are missing and/or
contain too many errors.

2.5 points
2 points
Adequate executive summary and appendix.
Limited attempt on executive summary and
Adequate report structure.
appendix.
Statements/terminologies and descriptions
Weak report structure.
of the trading strategy contain some minor
Statements/terminologies and descriptions of
problems.
the trading strategy contain some problems.
Citations/references contain some minor
Citations/references contain some errors.
errors.

3 points
Good executive summary and appendix.
Good report structure.
Good statements/terminologies and
descriptions of the trading strategy.
Citations/references contain few minor
errors.

Overall score

[4 points]

(fail)
0 to 12 points

(pass)
12.5 to 14.5 points

3.5 points
Adequate management of trading
volumes/funds.
Adequate time planning on trading
activities.
Adequate strategy overall.
Only spot transactions conducted.

(distinction)

(credit)
15 to 17 points

4 points
Good management of trading
volumes/funds.
Good time planning on trading activities.
Good strategy overall.
Evidence on use of instruments.

(distinction)
17.5 to 19.5 points

5 to 6 points
Excellent management of trading
volumes/funds.
Excellent time planning on trading activities.
Excellent strategy overall.
Excellent use of instruments.
4 to 5 points
Excellent use of theory in real world context.
Excellent justification of how theory has been
used for trading activities.

3.5 to 4 points
Excellent executive summary and appendix.
Excellent report structure.
Excellent statements/terminologies and
descriptions of the trading strategy.
Correct citations/references.
(high distinction)
20 to 25 points