Integrating the top‐down approach in a simulated trading program

Purpose – The purpose of this paper is to illustrate the effectiveness of integrating a portfolio simulation‐based trading program with the top‐down approach to fundamental analysis in a security analysis course. The simulation allows for the application of class material using a combination of group and individual projects. Design/methodology/approach – Students enrolled in the class completed a survey about the integrated approach and the required simulated trading. Findings – Over 87 per cent of students agreed that the economic analysis provided more educational value as a group project than as an individual project, while over two‐thirds of the students disagreed that the trading simulation had more education value as a group project. Research limitations/implications – Although the authors focus on the top‐down approach, the concepts of technical analysis, hedging, and income generation could be more formally incorporated into the trading simulation. Practical implications – The outline of how to integrate a trading simulation into the top‐down approach, using a combination of group projects and a cumulating project completed by each student, can be used as a guide for how to make the top‐down approach a more meaningful task. Social implications – The integration of the portfolio simulated trading program with the top‐down approach makes the course more applied and more enjoyable for both the students and the faculty. Originality/value – The paper outlines how to integrate a trading simulation and the top‐down approach and reports the finding that students preferred the group approach to economic analysis and individual projects for the simulation and the company analysis.