Diversification is the only free lunch

Many players on the simExchange are new to stock trading and as a result are unfamiliar with the need to diversify. The basic idea is that you don’t want all your eggs in the same basket. The deeper financial theory is that your risk-return ratio is better the more you diversify away the risk of individual stocks.

Many players have been experiencing problems as they are locked up in very large positions of just a few stocks. Other players are impacted by these problems when those undiversified players decide to dump their very large position to jump to a new very large position when the stocks they picked are not going their way.

The simExchange is experimenting with a new rule where players cannot have positions that exceed a certain portion of their net worth. Individual positions for new players (accounts less than three days old) are limited to 15% of the player's net worth. Individual positions for regular players (accounts older than three days) are limited to 25% of the player's net worth. Individual positions for veteran players (accounts older than two months) are limited to 35% of the player's net worth.

Please report any irregular behavior (such as bugs) from the system you may experience as a result of these new changes.