Integrating the top‐down approach in a simulated trading program

Abstract

Purpose

The purpose of this paper is to illustrate the effectiveness of integrating a portfolio simulation‐based trading program with the top‐down approach to fundamental analysis in a security analysis course. The simulation allows for the application of class material using a combination of group and individual projects.

Design/methodology/approach

Students enrolled in the class completed a survey about the integrated approach and the required simulated trading.

Findings

Over 87 per cent of students agreed that the economic analysis provided more educational value as a group project than as an individual project, while over two‐thirds of the students disagreed that the trading simulation had more education value as a group project.

Research limitations/implications

Although the authors focus on the top‐down approach, the concepts of technical analysis, hedging, and income generation could be more formally incorporated into the trading simulation.

Practical implications

The outline of how to integrate a trading simulation into the top‐down approach, using a combination of group projects and a cumulating project completed by each student, can be used as a guide for how to make the top‐down approach a more meaningful task.

Social implications

The integration of the portfolio simulated trading program with the top‐down approach makes the course more applied and more enjoyable for both the students and the faculty.

Originality/value

The paper outlines how to integrate a trading simulation and the top‐down approach and reports the finding that students preferred the group approach to economic analysis and individual projects for the simulation and the company analysis.

Citation

Huffman, S.P., Beyer, S.B. and Schellenger, M.H. (2012), "Integrating the top‐down approach in a simulated trading program", Managerial Finance, Vol. 38 No. 9, pp. 860-872. https://doi.org/10.1108/03074351211248199