Decision Making in Equity Trading

Abstract

Trading is very different from investing. Trading is all about converting an investment decision (either your decision or your portfolio manager's) into a desired portfolio position. You want to do this at the least possible cost and in the most timely fashion. Trading is also about finding pricing discrepancies in the market, responding to them, and realizing a profit. An understanding of the myriad forces that impact on and permeate the markets requires organized discussion, illustration and experience that do not result in your losing money. Your experience should be simplified, precise, and focused. To this end, a trading simulation can help. We introduce a computer simulation in this paper that will enable you to experience tangibly the dynamics of a marketplace.