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130 lines
6.0 KiB
ReStructuredText
.. _gameplay_stock_market:
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Stock Market
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============
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The Stock Market refers to the World Stock Exchange (WSE), through which you can
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buy and sell stocks in order to make money.
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The WSE can be found in the 'City' tab, and is accessible in every city.
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Fundamentals
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------------
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The Stock Market is not as simple as "buy at price X and sell at price Y". The following
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are several fundamental concepts you need to understand about the stock market.
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.. note:: For those that have experience with finance/trading/investing, please be aware
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that the game's stock market does not function exactly like it does in the real
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world. So these concepts below should seem similar, but won't be exactly the same.
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Positions: Long vs Short
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^^^^^^^^^^^^^^^^^^^^^^^^
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When making a transaction on the stock market, there are two types of positions:
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Long and Short. A Long position is the typical scenario where you buy a stock and
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earn a profit if the price of that stock increases. Meanwhile, a Short position
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is the exact opposite. In a Short position you purchase shares of a stock and
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earn a profit if the price of that stock decreases. This is also called 'shorting'
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a stock.
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.. note:: Shorting stocks is not available immediately, and must be unlocked later in the
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game.
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.. _gameplay_stock_market_spread:
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Spread (Bid Price & Ask Price)
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^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
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The **bid price** is the maximum price at which someone will buy a stock on the
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stock market.
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The **ask price** is the minimum price that a seller is willing to receive for a stock
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on the stock market
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The ask price will always be higher than the bid price (This is because if a seller
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is willing to receive less than the bid price, that transaction is guaranteed to
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happen). The difference between the bid and ask price is known as the **spread**.
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A stock's "price" will be the average of the bid and ask price.
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The bid and ask price are important because these are the prices at which a
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transaction actually occurs. If you purchase a stock in the long position, the cost
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of your purchase depends on that stock's ask price. If you then try to sell that
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stock (still in the long position), the price at which you sell is the stock's
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bid price. Note that this is reversed for a short position. Purchasing a stock
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in the short position will occur at the stock's bid price, and selling a stock
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in the short position will occur at the stock's ask price.
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.. _gameplay_stock_market_spread_price_movement:
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Transactions Influencing Stock Price
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^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
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Buying or selling a large number of shares of a stock will influence that stock's price.
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Buying a stock in the long position will cause that stock's price to
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increase. Selling a stock in the long position will cause the stock's price to decrease.
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The reverse occurs for the short position. The effect of this depends on how many shares
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are being transacted. More shares will have a bigger effect on the stock price. If
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only a small number of shares are being transacted, the stock price may not be affected.
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Note that this "influencing" of the stock price **can happen in the middle of a transaction**.
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For example, assume you are selling 1m shares of a stock. That stock's bid price
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is currently $100. However, selling 100k shares of the stock causes its price to drop
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by 1%. This means that for your transaction of 1m shares, the first 100k shares will be
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sold at $100. Then the next 100k shares will be sold at $99. Then the next 100k shares will
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be sold at $98.01, and so on.
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This is an important concept to keep in mind if you are trying to purchase/sell a
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large number of shares, as **it can negatively affect your profits**.
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.. _gameplay_stock_market_order_types:
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Order Types
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^^^^^^^^^^^
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There are three different types of orders you can make to buy or sell stocks on the exchange:
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Market Order, Limit Order, and Stop Order.
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.. note:: Limit Orders and Stop Orders are not available immediately, and must be unlocked
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later in the game.
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When you place a Market Order to buy or sell a stock, the order executes immediately at
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whatever the current price of the stock is. For example if you choose to short a stock
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with 5000 shares using a Market Order, you immediately purchase those 5000 shares in a
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Short position at whatever the current market price is for that stock.
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A Limit Order is an order that only executes under certain conditions. A Limit Order is
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used to buy or sell a stock at a specified price or better. For example, lets say you
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purchased a Long position of 100 shares of some stock at a price of $10 per share. You
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can place a Limit Order to sell those 100 shares at $50 or better. The Limit Order will
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execute when the price of the stock reaches a value of $50 or higher.
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A Stop Order is the opposite of a Limit Order. It is used to buy or sell a stock at a
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specified price (before the price gets 'worse'). For example, lets say you purchased a
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Short position of 100 shares of some stock at a price of $100 per share. The current
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price of the stock is $80 (a profit of $20 per share). You can place a Stop Order to
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sell the Short position if the stock's price reaches $90 or higher. This can be used
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to lock in your profits and limit any losses.
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Here is a summary of how each order works and when they execute:
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**In a LONG Position:**
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A Limit Order to buy will execute if the stock's price <= order's price
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A Limit Order to sell will execute if the stock's price >= order's price
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A Stop Order to buy will execute if the stock's price >= order's price
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A Stop Order to sell will execute if the stock's price <= order's price
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**In a SHORT Position:**
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A Limit Order to buy will execute if the stock's price >= order's price
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A Limit Order to sell will execute if the stock's price <= order's price
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A Stop Order to buy will execute if the stock's price <= order's price
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A Stop Order to sell will execute if the stock's price >= order's price.
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Automating the Stock Market
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---------------------------
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You can write scripts to perform automatic and algorithmic trading on the Stock Market.
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See :ref:`netscript_tixapi` for more details.
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