User feedback on tutorials, short selling, and IPOs

This blog post was written because Just_Ben's post addresses some important points. Thanks for your feedback. Remember, we generally read the General and Help forums, but to ensure we do read your feedback/questions, sending us an email is best. We simply can't read every post on the site.

Educating new players on how to play the game has been a big issue for us. The tutorials are very straightforward to me (but I'm a life long trader). We can always use your help on what is confusing for you and what concepts we assume too much. Feedback on how to improve the tutorials or the learning process in general are always highly appreciated.

The short selling and margin system on the simExchange is modeled after practices in the real world. In the real world, when you short sell stock, you get cash for selling the stock you borrowed. However, this cash is not locked up. You can in fact buy more stock (or short sell more stock) with this cash. This is called "leveraging" your position and will decrease your % equity. However, this is only allowed if you have a margin account (with some brokers you must apply for this status, other brokers give you a margin account by default). This is often called "buying on margin."

The main reason you will see a bias towards buying vs shorting is a natural effect of human nature. As many traders here know, there is a psychological preference for people to BUY rather than SHORT SELL. In fact, there has been an ongoing stigma against short sellers for the past hundred years. Many people consider short selling (going bearish) as being "Un-american." Our government has established regulation that is biased against short-selling, such as disallowing short selling on downticks (when the last trade decreased the market price). In general, people will rather choose to be part of something positive rather than something negative. Another reason is that many people don't know what short selling is--they simply don't know that you can sell shares you don't own!

As for the IPO system, this is something we have been developing over the last few months. We had in fact planned to make a system where people submitted sealed bids which would resolve in some form of auction system and an IPO price would later be revealed, but decided that it may be another process for people to learn. If you check out the discussion on IPO systems at the time, many people were confused when we were establishing any kind of IPO system (previously, we just relied on the game's submitter to suggest an IPO price and we started the stock from there).

Instead, we settled with a simpler system where people just place limit orders like in regular trading, but without the automated market maker. Playes who use Advanced Trading mode didn't have anything new to learn, while players who use Basic Trading mode would just have to learn how to place a limit order, which we encourage regardless.

The fact that everyone can see what is going on in this IPO system is actually intended so that the market can consolidate the IPO price to a tighter price range faster. We may revisit the idea of a sealed bid auction for an IPO system in the future, but the biggest obstacle is keeping things simple for the userbase and keeping the learning curve down.

Thanks again for your thoughts. We always encourage our users to post their thoughts and suggestions on how to improve the site.