ECON5007 Group Assignment
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ECON5007 Group Assignment
Coordinator: Sinan Deng
Weight: 20%
Due time: week 13 (November 6 at 11:59 pm).
Length: 3000 words.
Format: Upload your assignment work in pdf format (.pdf) from the “Assignments” tag on Canvas.
Full Marks: 20 marks.
Bonus Marks: 2 bonus marks will be awarded to the top 10 groups (for each student in the group) according to the rank of your final account balance. MetaTrader 4, also known as MT4, is an electronic trading platform widely used by online retail foreign exchange speculative traders. Students from ECON5007 will investigate forex trading using the trading simulator provided by MT4. The simulator needs to be downloaded to your phone and can be accessed after registration (free) and login. Each team only requires registering once using the team leader’s Sydney student email address. After that, team members can log in to the same account with the account id and password. Initially, each trading team will have $100,000 and 2-month to trade, but you do not need to use all the amounts.
Part 1: 10 marks Students need to conduct independent research to form a view of current and future market conditions and report the findings explaining your market view. You are required to choose at least three currency pairs and analyse what will happen to these exchange rates during your trading periods. Based on the theories that you have learnt in Week 4 (Foreign Exchange Market), you are required to do a fundamental analysis of the respective countries. Useful predictors might include interest rates, inflation rates, market expectations, etc. Besides, you might also want to discuss other useful predictors such as the current COVID- 19 pandemic, the latest news and the geo-political climate, which might affect the exchange rates.
You are required to conduct both fundamental analysis (by examining various macroeconomic indicators) and technical analysis (by examining historical behaviours) for the chosen currencies. You must state clearly what you believe will happen to the currency pairs of your choice. If you have looked at a particular indicator, you must explain why you believe that this indicator can cause a currency to appreciate or depreciate against another. For news and market data, you may access some websites such as Bloomberg, Yahoo Finance and fx678. They are professional financial data platforms used by industry practitioners and experts.
Part 2: 10 marks
Based on your analysis in Part 1, devise speculation strategies that enable your group to take advantage of your predicted changes in exchange rates. You should specify which currencies you will buy or sell. As part of your strategy, you need to create a portfolio that will comprise the currency pairs analysed in Part 1. For one of your trades, you are expected to hold a currency pair for at least 5 trading days and conduct a thorough risk assessment of your speculative positions. For this trade only, you are required to provide the corresponding LIBOR interest rates. Since the beginning of 2022, LIBOR comes in max 5 maturities (from overnight to 12 months) and in 3 different currencies . Therefore, your choice of currency pairs for this trade is limited. Another friendly reminder, portfolio risk management is crucial. Beware of bankruptcy.
You need to report the final balance of your account in the first sentence of the report. 2 bonus marks will be awarded to the top 10 groups (for each student in the group) according to the rank of your final account balance. Note, the maximum a group can receive in total is 20 marks. Your trading summary needs to be included in the investigation report. The report can use charts, tables, calculations, screenshots, or references (cite sources) for explanation purposes. The report must be professionally presented using Times New Roman, size12 font, double-spaced for the main text, and single-spaced for tables, figures & appendices. Figures and graphs should be clearly labelled and numbered. Any information obtained from external sources should be referenced according to APA style. A word limit of a maximum of 3000 words applies with a tolerance of + 10%, excluding appendices and tables.
2022-11-05