Global Paper Trading Challenge heated up! Who was the leader in Australia last week?

Hey mooers!

Congrats to these Top10 mooers who performed well last week in the Global Paper Trading Challenge!

The top three traders in terms of weekly returns last week demonstrated a strong preference for small-cap stocks and event-driven trading opportunities; indeed, high-volatility stocks can be a good choice for standing out among many investors. Let’s take a closer look at how the top three traders achieved their results:

Two of the investors took full advantage of the intraday high volatility by closely monitoring intraday price movements. They identified short-selling opportunities when the stock reached its daily high or approached resistance levels. Ideally, the price should start to retreat afterward. When the price fell as expected, the investors could close their short positions by buying back the shares at a predetermined profit target or exit upon signs of a reversal.

It is worth noting that although this method can bring quick profits, it also carries significant risks. The market might not move as anticipated, and the price could continue to rise rather than fall, leading to losses for the investor. Therefore, this strategy is not suitable for all investors, especially those who do not have sufficient time and resources to monitor the market.

The stock has also experienced substantial volatility recently, with an increase of over 540% from October 11th to October 24th following the announcement of a successful fundraising of $10.8 million. However, along with the significant gains came accumulating risk, and on the 25th, the stock plummeted without any clear fundamental news.

For such stocks, setting stop-loss points is crucial to prevent losses if the market does not move as expected. If the price exceeds the predetermined stop-loss point, the position should be closed immediately to limit potential losses.

We found that such small-cap stocks often have relatively weak fundamentals. Due to their smaller market capitalization, they also tend to have lower liquidity, making them more susceptible to market supply and demand dynamics.

Once there is a major event related to the company—such as earnings reports, merger news, management changes, or industry policy adjustments—the prices of these stocks can experience extreme volatility, leading to sharp rises or falls within a short period. Thus, while investing in small-cap stocks may offer higher return potential, it also comes with higher risks, particularly for those seeking stable returns rather than speculative gains. For such stocks, it is a good choice for investors to first engage in simulated trading for a period of time to train their intraday trading skills and ensure that they understand all the associated risks.