trading on the iowa electronic markets

Trading on the Iowa Electronic Trading on the Iowa Electronic MarketsMarkets

Introduction

Introduction Introduction

The IEM is an on-line futures market Payoffs are based on real-world events such

as:– political outcomes

– companies' earnings per share (EPS)

– stock price returns Operated by University of Iowa Henry B.

Tippie College of Business faculty as an educational and research project

AgendaAgenda

Signing up for an IEM account Connecting to the IEM Navigating in the IEM Trading with the IEM Getting Account Information Getting Market Information

Signing Up for an IEM AccountSigning Up for an IEM Account

Start at

http://iemweb.biz.uiowa.edu/signup Follow instructions provided in class

– Warning: use only forms that you were instructed to use.

– Using the wrong forms may result in additional fees

Connecting to the IEMConnecting to the IEM

Connect using a web browser– Internet browsers are Microsoft Internet

Explorer, Netscape, AOL, etc. Web address:

– http://iemweb.biz.uiowa.edu/

Logging Into the IEMLogging Into the IEM Address:

– http://iemweb.biz.uiowa.edu– Select the “login and trade” link.

Logging into the Practice Markets– Trader ID: aaa, bbb, ccc, …– Password: aaa, bbb, ccc, …

Logging into your own account:– Use Trader ID and password received from the IEM– For security, CHANGE YOUR PASSWORD the first time you login!

Logging out– REMEMBER to log out for security reasons!

Using the IEMUsing the IEM

Trading screen divided into three sections– Market Window

shows current market status

– Trading Console where you enter your orders

– Navigation Bar to move around between markets or generate

reports

The IEM ScreenThe IEM Screen

The WebEx Market WindowThe WebEx Market Window

The Market WindowThe Market Window

Top panel of your screen Shows

– current market information– your holdings in cash and assets– your outstanding orders

The WebEx Navigation BarThe WebEx Navigation Bar

The WebEx Navigation BarThe WebEx Navigation Bar

Bottom panel of your screen 5 buttons:

– "Go To Market" Button– "Market Info" Button– "My Account" Button– "Help" Button– "Logout" Button

Trading in the IEMTrading in the IEM

Trading Rights– All traders can trade in political markets– Only academic traders can trade other markets

Markets and the Objects Traded– IEM contains many markets

Each market is related to some future event

– Assets are the objects traded in the market The future event determines how assets in the

market will payoff

Trading in the IEMTrading in the IEM

Three ways to buy and sell assets

– Market Orders

– Limit Orders

– Bundle transactions

Market Order: DefinitionMarket Order: Definition Request to buy or sell an asset at the

current ask and bid price

Consists of:– Instruction to buy or sell– Asset ticker symbol– Quantity you wish to trade

Placing a Market OrderPlacing a Market Order

Use the market order menu

Choose the asset you wish to buy or sell from the Action/Asset select list

Specify the quantity

Click on the Market Order button

Market Orders in WebExchangeMarket Orders in WebExchange

Limit Order: DefinitionLimit Order: Definition A request to buy or sell an asset at a specified

price for a specified period of time Consists of:

– an instruction to buy or sell– an asset ticker symbol– the quantity you wish to trade– a price at which you are willing to trade– an expiration date and time after which the order

will not be traded

Placing a Limit OrderPlacing a Limit Order

Use the limit order menu Choose the asset you wish to buy or sell

from the Action/Asset List Specify

– price– quantity– expiration date and time

Click on the Limit Order button

Limit Orders in WebExchangeLimit Orders in WebExchange

Buying and Selling BundlesBuying and Selling Bundles

A bundle– is a set of assets which can be purchased from

or sold to the exchange at a fixed price– This fixed price is the guaranteed aggregate

liquidation value of the assets– Processed as market orders in IEM

Withdrawing OrdersWithdrawing Orders

You can withdraw any of your bid and ask orders as long as they have not traded or expired.

To withdraw an order– Access the market in which the order was placed.

– Click on the bid or ask hypertext to the right of the appropriate asset

– Find the order you wish to withdraw and click on the word delete to the right of the order

– Once an order is deleted it cannot be retrieved

Order QueuesOrder Queues

Limit Orders are maintained in queues Orders are listed in these queues in priority order.

– Bid orders with higher prices have higher priority than orders with lower prices.

– Ask orders with lower prices have higher priority than orders with higher prices.

– Within a particular price, older orders (orders that were placed sooner) have higher priority than newer orders.

Other Aspects of TradingOther Aspects of Trading

Short Sales and Margins– You cannot sell short or buy on margin– Feasibility Checks

Self Trades– You cannot trade with yourself

Spinoffs and Splits– The IEM governors can declare asset spinoffs and splits

Asset Liquidations by the Exchange– The liquidation formula describes how and when assets

will payoff– Once assets are liquidated, they can no longer be traded

Other Aspects of TradingOther Aspects of Trading

Short Sales and Margins– You cannot sell short or buy on margin– Feasibility Checks

Self Trades– You cannot trade with yourself

Spinoffs and Splits– The IEM governors can declare asset spinoffs and splits

Asset Liquidations by the Exchange– The liquidation formula describes how and when assets

will payoff– Once assets are liquidated, they can no longer be traded

Other Aspects of TradingOther Aspects of Trading

Short Sales and Margins– You cannot sell short or buy on margin– Feasibility Checks

Self Trades– You cannot trade with yourself

Spinoffs and Splits– The IEM governors can declare asset spinoffs and splits

Asset Liquidations by the Exchange– The liquidation formula describes how and when assets

will payoff– Once assets are liquidated, they can no longer be traded

Reports About Your AccountReports About Your Account

Trades Report Outstanding Asks Report Outstanding Bids Report Orders and Order Resolution Report Portfolio Report Liquidation Report

Reports About Your AccountReports About Your Account

Trades Report Outstanding Asks Report Outstanding Bids Report Orders and Order Resolution Report Portfolio Report Liquidation Report

Reports About Your AccountReports About Your Account

Trades Report Outstanding Asks Report Outstanding Bids Report Orders and Order Resolution Report Portfolio Report Liquidation Report

Reports About Your AccountReports About Your Account

Trades Report Outstanding Asks Report Outstanding Bids Report Orders and Order Resolution Report Portfolio Report Liquidation Report

Reports About the MarketReports About the Market

Price History– Daily contract volumes, dollar volumes, high

prices, low prices, average prices and closing prices

Current Quotes– Best bids, best asks and last trade prices

Prospectus– READ IT BEFORE TRADING!

Reports About the MarketReports About the Market

Price History– Daily contract volumes, dollar volumes, high

prices, low prices, average prices and closing prices

Current Quotes– Best bids, best asks and last trade prices

Prospectus– READ IT BEFORE TRADING!