Trading strategies on Fakeonomy

Published on March 26, 2020

Each of the 6 companies on Fakeonomy has different levels of risk. Your strategy depends on the amount of risk you are willing to take on. You can either go with a few safe companies, who are returned will be fairly predictable, or you could go all-in with the riskiest company. The higher the risk, the higher the potential rewards. Most traders will find one of the following strategies suitable for their investment style.

Safe and sound trading

Water Works, Bow & Ring Accounting, and Bank of Fakeonomy are the least volatile companies. Therefore, the safest trading strategy is to diversify into these three companies. Normally, the fluctuations in prices of these companies will be minimal. Be aware that they can still be affected by news events, ranging from minor price variations to medium volatility.

These blue-chip companies will probably not make you a billionaire, but they are very likely to go up in value by the end of the trading session. If you want your net worth to finish at the end of the game above your starting balance, the safe and sound strategy is the one you should choose. However, if you want more excitement, you will need to take on more risk

High risk, high reward

If you have nerves of steel, the highest return potential is with Fakeonomy's most volatile and riskiest investment choices. New World Pharma and Ultra Technology Ventures are by far the riskiest; their prices vary the most drastically. Dirtpile Resources Corp is also fairly risky, albeit a little bit less.

The stock prices can go to the moon, but they can also go all the way down to bankruptcy. To achieve the highest possible returns, you must time your entries and exits (buys and sales) of the riskiest companies to ride the price wave. You can choose to go all in one company or take your profits from one company to reinvest into another. It's as easy as buying low and selling High. Easier said than done, mind you.

News event catalyst

News events have the potential to instantly catapult the valuation of a company into the stratosphere. These can be one of the best opportunities to increase the value of your stake in a company. There is a lot of luck involved to be in the right stock at the right time. After the news breaks, it's already too late to buy, you need to already own the stock to participate. Investors react instantly to the news events, and the stock price will reflect the perceived effect of the news headline. After playing a few rounds of the game, you can get a feel for what companies are most likely to have news events that increase the stock price drastically. These are the stocks you would want to trade during the next trading sessions. A company in the tech industry like Ultra technological ventures trades at a very high price-earnings ratio, and estimates of its future profits can change rapidly. News like the acquisition of a rival company, the release of a new product, or the raising of capital tend to have pronounced effect on the value of the company, and thus the price per share,

Buy stocks that are “on-sale”

If you've read The Intelligent Investor by Benjamin Graham, you know about value investing. The principle is that you invest in the company when its stock price is at a discount. This strategy is not unlike waiting for the pair of sneakers you want to come down in price. Keep an eye on the stock price graphs: when you see a company that's trading much lower than it usually does, that’s your cue to pounce. When the company's stock price is way out of range above its usual average, signaling it is overvalued, dump the shares and take the profit.