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SIMULATIONS

Market orders

Market orders

How to send market orders

Simulation Market orders   SC_BPZ1_US_V5

Scenario of the simulation

At the start of the simulation, you own an account worth €10,000 in cash and 1,000 BestPizza shares.

As a SimTrader, your goal in this simulation is to hold at least 2,000 BestPizza shares at the end of the simulation.

The simulation Market orders will be the opportunity to discover market orders ("MKT" orders) to trade in financial markets. In this simulation, you will be allowed to send only market orders.

The duration of the simulation is initially set to five minute, which corresponds to a 24-hour trading day. Using the timeline, you can increase or decrease the simulation speed at any time.

Grading

Your grade for this simulation (100 points) takes into account the following elements:

  • Your trading performance (60 points): your relative performance, that is to say the difference between your gain/loss on your position with your intervention during the simulation and the gain/loss without your intervention (as if you haven't send any order)

  • Your trading activity (25 points): the launching of the simulation (5 points), your determination to go to the end of the simulation (10 points) and the sending of at least one order to the market (10 points)

  • Your grade in the MCQ test at the end of simulaton (15 points): 3 questions about the simulation (5 points by question).

The BestPizza company

BestPizza is a restaurant chain in France, which has been doing business since the 1960s. Building on its strong reputation, the chain has more than 100 restaurants spread in the Paris area and other regions.

The development of the company took place gradually even though the recurrence of economic crises had a negative impact on the number of customers. BestPizza was initially founded by two Italian partners and was introduced on the stock market in the early 2000s.

Evolution of the stock price

The ticker symbol for BestPizza shares traded on the market is BPZ.

The BPZ stock price has stayed around the same level as its introductory price of €10 in 2000. If the stock price hasn't increased, it is worth noting that the BestPizza company has continuously distributed dividends to its shareholders.

Over the recent period, the stock price has fluctuated around €10 depending on the bad news and the good news about the company, the food service sector and the economy.

What will happen today...

The stock price of BestPizza shares should evolve according to the news flow, and the supply and demand for BPZ shares.

The publication of the household confidence indicator at 12:00 will be followed with great interest by all market participants. This statistic is highly correlated with restaurant attendance and has a strong impact on the valuation of catering companies.

The market will also pay attention to the recommendations of the financial analysts following BestPizza stocks.

What you will learn...

The simulation Market orders focuses on a particular type of exchange orders: market orders (MKT order).

Teaching goals: the simulation Market orders will be the opportunity to understand deeper how a market with a limit order book works. How do buyers and sellers meet to trade with each other? What is the supply and demand in such a market? How does the limit order book interact with market orders? How does the limit order book evolve over time? How does a transaction happen? How are prices determined in such a market? How does the market react to your market orders?

Learning objectives: this simulation will help you to learn the following elements of trading:

  • Evaluate the impact of a market order on the market: transactions and price evolution

  • Evaluate the impact of a market order on limit order book

  • Understand better the dynamics of the limit order book.

Before or after launching this simulation, you can learn more on the market orders by taking related courses to the simulation.

Download the case note to help you during the simulation.

About the author of the simulation

Professor Franois Longin
ESSEC Business School

« The main interest of a market order (MKT order) is to control the quantity of shares that you want buy or sell. On the other hand, sending a market order to the market can have a significant impact on the execution price. »