What is Wharton OTIS?
How can you learn the art and science of large-scale portfolio management without risking your own money or someone else’s? The securities market isn’t exactly a safe environment for “learning by doing.”
Wharton’s Online Trading and Investment Simulator (OTIS) is a tool for developing and reinforcing a set of financial management skills through direct experience. As a student, you can gain insight by applying these skills to a dynamic, real-world portfolio that you build and manage over the duration of your course simulation.
Key concept reinforcement
Using OTIS, you can learn and apply several key concepts covered in both basic investment courses and portfolio management courses. These include:
· Portfolio balance and diversification - understanding how portfolios are constructed and how to keep them balanced given the vagaries of the market.
· Sector analysis - creating industry sectors and assessing the relative returns of securities within and across sectors.
· Short selling - how to use various types of trading orders, including short selling and stop limits, to benefit from market declines as well as increases.
· Margin trading - understanding the mechanics, risks and requirements of margin trading.
· Liquidity - the mechanics of constructing the desired type of portfolio, as well as strategies for entering and exiting the market and managing a cash account.
State-of-the-art interface and ease of use
OTIS mirrors the sophisticated interface of many commercial trading applications used in the market today, but is designed for ease of use by instructors and students. It is completely Web-based; there is no software to load. OTIS includes screens for executing trades, viewing current positions and trading history, creating and managing sector assignments, and assessing your portfolio’s performance.
Real-world market data
The real-world market data used in OTIS comes from FT Interactive Data, which provides delayed prices and volume for all tradable securities as well as announcements for splits and dividends. Market data is tracked constantly throughout the market day so that equity and ETF orders are processed according to what actually happens in the market. All other orders are processed according to end-of-day data. In addition, OTIS recalibrates its data three times a day outside of market hours - in the morning, afternoon, and early evening - to reflect normal changes in prices and shares that are outstanding due to timing discrepancies, dividends, splits, and interest payments.
Analytic tools
One of the real advantages offered by OTIS is its robust set of analytic tools, which you use to evaluate the performance of your portfolio and compare it to the performance of your fellow students. You can also assign securities to sectors and evaluate the returns and performance of each sector.
Learning support
OTIS is designed to be user-friendly and self-guided. In addition to on-screen instructions, OTIS offers a variety of support features that enable users with varying degrees of familiarity with online trading and portfolio concepts to get the support they need.
Context-sensitive help and an online glossary of market terms provide the information you need when you need it. Sample templates provide starting points for spreadsheet files that you can use to place orders and perform other functions. An instructor email option lets you send inquiries to your instructor while you are using the application.
What OTIS is not
OTIS is not an online “course” on portfolio management. It is a simulation tool designed to supplement an instructor-led course, whether that course is based in a traditional classroom or online. Support tools help define and clarify many terms and concepts, but OTIS does not include portfolio management theory, assignments, or tests - other than the valuable “test” of seeing the results of your own portfolio decisions! The value of OTIS is in its power to provide what books and instructors can’t offer: a chance to practice building and managing a portfolio in an environment that closely matches the real thing.
How can OTIS be used in a class?
Every instructor will find different ways to incorporate OTIS into his or her class, and every student will find different ways to learn from it.
If you have prior experience in investments and portfolio management, OTIS provides the chance to hone your skills and to work independently on in-depth analysis. Almost all the data in your OTIS portfolio can be downloaded in Microsoft® Excel or CSV (comma-separated values) format.
If you are less familiar with investment trading and portfolio management, you will find plenty of support built into the simulation. You’ll also have the chance to practice on your own and gain hands-on familiarity with the concepts and principles involved.
Getting Started
Login to your Knowledge@Wharton High School account. Click on the OTIS link and an account will be created for you. You’ll start with $100,000 in your account.
Portfolio Sections and Functionality
Each section in OTIS has a distinct set of functions that you will use to create, manage and evaluate your portfolio.
· Trade - allows you to enter individual trades or, for North American Equities only, upload batches of trades from a spreadsheet.
· Positions - shows you your holdings and gives current book and market values for each of your securities.
· History - gives the history of every transaction made in the portfolio. You can also drill down to get detailed data on each transaction.
· Sectors - allows you to create and manage sector groupings. You can group companies into any number of sectors and change the assignments throughout the semester.
· Analytics - helps you to analyze the performance of your portfolio. The analytics section has a drop-down menu that lists a wide variety of data sets and analysis reports on portfolio performance.
· Performance - provides a set of metrics by which you can assess your performance throughout the semester and compare your own portfolio with those of your peers, and if your instructor has selected one, with a benchmark portfolio.
Trade
The Trade section is where you execute your trades. You can place a single trade, or in the case of North American Equities, enter and upload multiple trades at one time. You can also view the status of any open orders and void either individual or batched orders.
Note: If your instructor has asked you to access the simulation before the start date for actual trading, you will be able to explore the simulation, but the trading forms will not be activated.
OTIS makes eleven types of securities available for trade. Your instructor will decide which of these eleven to make available to you in your simulation.
Quotes/research feature
Want to check the current price of a North American Equity, Mutual Fund, or ETF? Enter the security symbol in the QUOTES/RESEARCH box, and click on the appropriate arrow to get either a delayed quote from FT Interactive Data on the security or to be taken to an eSignal page with research data on that security.
Placing Single Trades: North American Equities
To place a single trade of any kind, just follow the simple on-screen instructions. Each of the eleven types of securities available in OTIS involves a slightly different trading process. We will walk you through a North American Equities trade in detail as an example.
1. Pick the Order Type you want to execute.
2. Enter the Symbol of the security you want to trade. This is the standard abbreviation symbol (sometimes called “Ticker”) by which the security is identified on the market.
Tip: Use the on-screen Symbol Lookup if you don’t know the symbol for the security you want to trade. When you enter the security (or company) name, OTIS will provide a list of corresponding securities. Click on the one you want, and the correct symbol will be automatically entered in your form. For a complete list of available securities and their symbols, go to the Analytics section and select “Security Listing” in the drop-down menu.
3. Enter the Number of Shares that you want to buy or sell. This quantity must always be in whole numbers.
4. Pick the Execution Type for your order.
5. Pick the Order Length (or Timing) in which you want the trade to be executed.
Note: In OTIS, all timing references are pegged to the open and close hours of the NYSE.
6. Click Preview Order.
A page will appear confirming the order that you are placing, including:
· Current market price of the security you are trading
· Transaction (e.g., Buy, Sell)
· Symbol and Security you are trading
· Quantity of shares to be bought or sold
· Price (either “Market” - meaning it will be executed at the current market price at the time of transaction - or a specific dollar amount if a Limit has been set)
· Term (order duration)
· Commission (based on commission rate and your order)
· Estimated Total Order (number of shares × price + commission)
In the example above, the order is to buy 500 shares of Walt Disney Co. at the market price (currently $21.40), to be executed by the end of the market day or else cancelled.
The estimated total order = estimated purchase price (500 × $21.40) + commission ($25.00) = $10,725.00.
This is an estimated total order, because the actual price at the time of execution may be different from the current price. If, for example, you place your order in OTIS when the market is closed, the price quoted to you would be the last price at which shares traded. Your trade will be executed soon after the market opens, but the price still might not be exactly the same.
Tip: During trading hours, individual market orders are executed as quickly as possible and cannot be voided. So make absolutely sure your individual market orders are correct before completing your order.
Cancel, Modify, or Place Order.
On the Preview Order page, you can cancel, modify, or place your order.
Cancel - to cancel an order, click Cancel and you will be returned to the main Trade page, with your previous order instructions cleared.
Modify - to modify an order (for example, to change the number of shares you want to trade), hit the Back button in your browser and you will return to the Trade page with your order still in place. You can then modify it and click Preview again.
Place Order - to submit your order, click the Place Order button. You will be taken to a new screen with a confirmation of your trade. Note, if this order is placed when the market was closed, the trade will execute as soon as possible once the next trading day begins.
Remember, the online Help will contain the most up-to-date information about this section.
Placing Single Trades: All Types
To trade any of the other types of securities available in OTIS, select what type of security you are interested in from the drop-down box on the Trade page and then follow the instructions on screen. Please read the instructions carefully, as each security type involves a different set of steps. For instance, to trade Municipal Bonds, you first need to choose a state from the list, and once that state’s options appear, select a municipal from the list to purchase. For Options on Futures, you first must select a futures contract from the list, then select from the open options.
You will notice that the basic trading process is similar for all securities. They all ask you to pick an Order Type, enter the Symbol or select the item to be traded from a list, input the Number of Shares (or Contracts or Bonds or a Dollar Amount), and pick the Execution Type and the Order Length. When you’re done, click “Preview Order” and follow the steps outlined in step 7 in the previous section.
Uploading Multiple North American Equities Trades
If you want to enter several North American Equities trades simultaneously, you can create a spreadsheet of trades and upload them all at once. Important Timing note: If you upload a batch of trades, they will all be executed as Market Day orders (not Good Til Cancelled). GTC orders can only be placed singly, and only using the form on the main page of the Trade page.
To begin, go to the Trade page, then select “Click here to upload a spreadsheet of multiple securities trades.”
Create a 3-column spreadsheet that specifies the trades you want to make.
A template for the multiple trade spreadsheet can be downloaded and saved by clicking the link provided in Step 1 on the screen. Whether you use the template or create your own spreadsheet from scratch, make sure you have the security symbols, order types, and trade amounts in three consecutive columns:
· First column - the Security Symbol for each trade.
· Second column - the Order Type you want to make for each security. Different actions can be preformed on different securities in the same batch. The valid order types are Buy, Sell, Short, and Cover.
· Third column - the Number of Shares you want to trade for each security.
a. Use whole numbers. Fractional shares cannot be processed.
b. You may order different quantities of securities in the same batch order. For example, you can order 100 shares of IBM and 500 shares of Merck at the same time.
Highlight, copy, and paste the three columns of information into the text box under Step 2.
Do not include any column headings, just the cells containing the actual symbols, order types, and number of shares.