Playing the Markets

A new website puts you in the shoes of a big-time trader

It has been a rough couple of months on the EGX, a fact Mohammed Chaltout is all too familiar with. Ever since the benchmark index broke the 7500 mark in April, the exchange has been in a free fall driven by economic turmoil across the Mediterranean. After spreading LE 100,000 of liquidity over a diverse selection of stocks, the 35-year-old businessman has found himself in an increasingly common position. Like many, Chaltout has watched his portfolio depreciate as normally stable blue-chip players like Orascom Telecom and Oriental Weavers have sunk in response to investor anxiety. Even the smaller players in Chaltout’s portfolio, such as North Cairo Mills, have suffered as of late.

Many investors treat the stock market like a high stakes game — after all, market movement is far from certain and there is an inherent sense of risk involved in any exchange. But there is one reason that Chaltout is calm about his market losses compared to the masses of stressed investors. For him, the EGX doesn’t just resemble a game, that’s precisely what it is.

Chaltout is one of more than 10,000 players who test their market savvy on the free internet-based game Stock Riders. Created in partnership with the EGX in 2009, Stock Riders starts players with LE 100,000 in virtual capital and uses up-to-date data from the EGX to allow players to try their hand at investing risk-free.

And let’s face it, investing in capital markets can be daunting and mistakes can be costly. For the uninitiated, there’s an entirely different lexicon and an endless stream of data that can discourage people from entering the marketplace. It’s that initial disconnect that the creators of Stock Riders hope their game will bridge.

“Stock Riders aims to educate individuals and improve their ability to invest in the stock exchange,” says Hesham Turk, media relations general manager at the EGX. “It offers its subscribers a simulation of the real investment environment and to understand many aspects of investing in the stock exchange without any actual financial risk and with a high degree of entertainment.”

According to Turk, Egyptian investors tend to be risk averse, which is why Stock Riders could prove to be the perfect educational tool for a fluctuating market. “[The point] is to provide investors with more knowledge of the fundamentals of the capital market which in turn reduces the probability of making uninformed investment decisions.”

For the thousands that have caught on, the game seems to be achieving its goals.

“I had no idea whatsoever about the stock market or how the process works before starting to play,” says Chaltout, who took the first place prize in the summer 2009 round. “Now, I know all about the stocks, the schedule of the sessions, and all the important terms in the stock exchange.”

The game’s strength is that it directly utilizes the EGX, ensuring that players familiarize themselves not only with terminology of investment, but the movement of the market and listed companies.

Each round of the game spans three months, and trading hours mirror those of the EGX, albeit delayed by 15 minutes. And like actual trading, each transaction is subject to a 0.5% broker fee.

By incorporating even the minor details of trading, Stock Riders aims to provide the most realistic experience possible. That way, when players decide to make the switch from virtual to real capital, they have clear knowledge of how companies perform in the market and the experience to make sound investments.

But there are some lessons that cannot be learned in a consequence-free environment.

“It definitely does not give you the sense of risk you would feel in the real stock market,” says Loay Abdel Moneim, account officer at EFG-Hermes and former Stock Riders player. “But at least it gives you an idea that before actually engaging in something new, you should have some background first. Particularly when it comes to the stock market, because it is a very difficult game.” bt