Rationale of the gameThe idea of Chartgame is to test if one can have any intuition as to whether a stock will go up or down next based primarily on a stock chart up to that point.
Predicting future performance strictly based on a stock chart is unlikely to work reliably, but it's conceivable that, if there are patterns, one could do slightly better than pure chance. Though even this concept is perhaps questionable, there is a considerable field of study known as "technical analysis" based on just that. However, even staunch believers in technical analysis will look at factors other than the stock chart when making a decision to buy or sell a stock.
Because Chartgame operates on historical data, it is not possible to give the user the benefit of additional research, as any more information would make it possible for the user to figure out which stock and which time period this was, which would defeat the game.
However, if the chart has any predictive value to it, the chart, even in isolation should help the user to do better than strictly random.
How to play the gameThe game is played on the main trading screen, which presents the user with a historical stock chart, the ability to buy and sell the stock, and move time forward.
The main part of the screen is the stock chart. The stock chart shows daily ranges (lines in black) and daily close (red tick mark) for each trading day. The vertical divisions are for months, although they are there primarily for scale, and may not actually delimit months.
Any stock splits, or stock dividends are shown at the bottom of the graph. Prices to the left of any stock split shown on the graph are scaled by the split to form a continuous graph with the prices to the right of the split.
The time scale of the graph can be altered using the tabs above the graph. Up to two years of data can be displayed. The scroll bar at the bottom of the graph allows scrolling through different parts of the graph.
At the top right of the graph, the day range is shown. Dates are shown as trading day numbers. The actual dates are not shown, as everyone knows that certain periods in general were good times to be in our out of the market, which would give the player an unrealistic advantage.
The game controls
The game is operated using the three buttons at the bottom of the screen.
Stock trading is simulated in a way where the user, at after trading has closed for the day decides what order to place for the next day. The only type of order possible is to buy or sell the entire position. This order is executed at the market opening price the next trading day. Whenever change in position is requested, time is automatically advanced by one trading day to allow this trade to execute.
The "Buy" and "Short" buttons allow you to enter a position of going long (buying the shares) or short (short selling - borrowing shares and selling them). Any change in position is executed the next trading day. Clicking on "buy" or "short" will advance time by one day to allow this trade to execute. The labels of the buttons will change to reflect the position you are in.
You can also advance time without changing your position by pressing the "time-lapse" button. If you hold down the time-lapse button, advancing of days will repeat automatically until the button is released.
For each trading day, the days open, high, low, and closing price are displayed below the chart. The status line also indicates the most recent trade that was executed.
Various technical analysis studies can be displayed on the graph. These are configured by selecting the "Technical" tab in the panel at right. Available are:
For the MACD, the parameters are, in order: Short averaging period, Long averaging period, and M
Any trades that executed can be shown by clicking on the "Trades" tab in the panel to the right of the graph. This brings up a list showing what price the shares were bought or sold at. If dividends are disbursed while the stock is held, the dividend amount is also credited. The dividend is credited as an equivalent value in shares.
While playing the game, days are only shown by number, so as not to give the player an idea which specific time period the chart came from. However, if one reviews the chart (from the track record), the actual dates are shown.
Your actual running total, and percent change for the particular stock is shown on the bottom right. Your position starts in cash, and changes to shares if you buy. If you short sell, the proceeds from the sale is added to your cash, but you will have a negative (owing) amount in shares.
Below the stats for your performance, the stats for the "buy and hold" strategy is displayed.
Buy and hold is equivalent to buying the shares on the first opportunity, and selling them at the
end of the period played. If you always buy on the first day, and hold for the duration, your results
will equal that of buy and hold.
Navigation controlsVarious options are available for during the game:
Reveal chart source reveals which security, and what time frame the stock chart is for. Clicking this link also causes play for that stock to be ended, as any subsequent playing with full knowledge of the stock would defeat the purpose of the game. Note that revealing the chart source will cause one extra trading day to be played in order to liquidate any holdings for the player and for "buy and hold".
Skip to next chart also ends play for that stock, and skips directly ahead to the next stock chart.
My track record ends play for the present stock, and takes you to the summary screen
showing overall performance.
Considerations for short sellingShort selling is always a trade on margin, which means that its possible for your position to go negative. Going negative really messes up the math, and chartgame avoids letting you go negative. As soon as a stock has appreciated by 1.5 times while you are in a short position, chartgame will make a "margin call" and close your short position the next day. You may re-short after this with your remaining cash, if you wish to.
Days that you are shorted also contribute to your "days invested". You are evaluated on how well you do per day invested. Seeing that stocks do have a slow upward tendency over time, unless you really know what you are doing, shorting is a sure way to underperform buy and hold.
Differences from realityPlaying Chartgame differs from trading the actual stock in various ways:
No trading commission
Market unaffected by your trades
Cost of capital