1. Login to your account.
   
2. From the "my funds" menu, select "create a new fund"
   
3. Enter your fund's name, symbol, and description. If you want to make the fund a "short only" fund, check the appropriate radio button.
4. Enter the initial trades for the fund.
   

1. Go to http://www.marketocracy.com
   
2. In the lower right hand corner of the page, there's a blue box labelled "run a fund". Click the link labelled "FREE - join us"
3. Follow the instructions.
   

1. From the "my funds" menu, select the "make a trade" menu item.
   
2. Under the "make a single trade" header, change the default lookup from "Symbol" to "Name".
3. Enter the first word in the stock name, then click "Quote".
   

1. when you create a club
   
2. by accepting an invitation to join a club
   
3. by applying to a club and having your membership approved
   

If you've been invited to join a club, you will see a notice in the club invitations table on the "my funds" --> "summary" page. You can also see your current invitations by selecting "my funds" --> "clubs" --> "invitations". To accept an invitation, you will need to select which fund(s) you would like to display to other club members, then click "accept".

To apply to join a club, go to the "club listing" page.

1. If the club's new member policy is "open", you will see a link labelled "Open". Click the link, then select the fund that you will display to other club members. Click "Apply". You will automatically become a member of the club.
2. If the new member policy is "protected", you will see a link labelled "Apply First". Click the link, and select the fund you wish to display.

If the moderators accept your application, you will then be a member of the club.

From the top menu, select "my funds" > "make a trade".

1. Enter the symbol of the stock you wish to purchase/sell. Click "Quote".
2. The "your holdings" table shows you how much AAPL stock you already own, and how much you would need to own in order for the stock to make up 5% and 25% of your holdings.
3. The "trade this stock" form allows you to enter the number of shares you wish to buy/sell in each of your funds. So in this example, you would enter 100 into the row for your XYZ fund.
4. If want to make it a limit order, check the limit radio button, and enter a limit price.
5. If you want to make it a "good until cancelled" (GTC) order, check the GTC radio button.
6. Click Buy (or Sell).
   

There are additional tools for making trades -- you can learn how to use them by reading the "TRADING" FAQ's.

There are a variety of online screening sources for stock screening. Some Marketocracy members have found the following screening tools useful:

1. Yahoo! Finance
   
2. Morningstar
3. Bigcharts
   

You may also wish to check out this article on stock screening.

1. Login to your account.
   
2. Select "my funds" > "make a trade" > "open orders" from the top menu.

1. Login to your account.
   
2. Select "my funds" > "make a trade" > "recent orders" from the top menu.

You can satisfy the compliance requirements if you purchase 17-20 stocks, each of which has a position size of 4%.

To correct the problem, the erroneous trade is undone, and the stock you sold is returned to your account (minus the short amount) and the cash the fund received from the sale is deducted from the fund's holdings.

We use the real-time feed to price your fund during the day (in the various stratification reports, among other places) and to fill tickets. We receive this feed continuously throughout the day.

We use the historical closing price file to price the stocks in your ledger. We receive this file after market close, generally around 9:00 or 10:00 p.m.

Sometimes one or both feeds stop sending prices for a stock, or send incorrect stock prices. Most of the time, this happens with stocks that have undergone some sort of corporate action, such as a bankruptcy, merger, delist, etc.

This can cause discrepancies in your fund's NAV and percentage gains. For example, we calculate your fund's daily percentage return by comparing your fund's current value (calculated using the realtime feed) with the previous day's value (as recorded in your ledger using the historical closing price file).

If we stop getting historical closing prices for a stock, but continue to receive prices via the realtime feed, our system "thinks" that your fund's value has increased in value equivalent to the value of the missing stock. So our system reports an erroneous increase in your fund's daily return. The erroneous return will disappear once we start getting historical pricing information for the stock.

If you notice such an unusual return, please let us know at help@marketocracy.com

The trading fees charged by retail brokerages often appear lower than the fees charged by Marketocracy. However, the fee you pay to make your trade is not all of the cost to you as a retail brokerage customer. Retail brokerages makes money on every trade you make over and above whatever fee you're paying depending on the spread between the bid and ask .

So while the Marketocracy trading system charges you $0.05/share, we don't charge you any additional profit based on the spread.

1. Do I have more than one account? If you have more than one account, your funds will be disqualified. If you think you may have more than one account, please let us know which one you would like to keep, and which one(s) you would like us to delete.
2. Is my fund old enough? Remember that your fund must exist for the entire ranking period in question, as of the time the ranking is done.
3. Am I comparing my fund's performance at the time the ranking was done, rather than it's performance now? For example, suppose your fund had a 10% return when the ranking was done on March 31. And suppose that the 100th ranked fund had a percentage return of 12%. Now suppose that by June 20, your fund has a return of 17%. The appropriate comparison is not between your fund now, and the 100th fund on March 31, but between your fund and the other compliant funds on June 20. Remember that the returns listed on your overview page and your compliance report are for your fund currently, not at the time of the last ranking.
4. Is my fund sufficiently compliant? If your fund is less than 50% compliant for each quarter for the time period in question, and for the time period overall, it will not be eligible for ranking.
5. Is my email address working? If several emails to your address bounce, a "bad email" notice will appear in your account. You must re-submit your email address in order to correct it. This may happen if a member has a Hotmail or Yahoo account, and the Inbox gets too full. Since we have to be able to communicate with the top ranked members, accounts with bad e-mail addresses are disqualified.
6. Do I have any mirror funds? For example, Fund A is said to mirror Fund B if the value of the stocks Fund A has in common with fund B exceed 50% or more of the value of the fund. If you have two or more mirror funds which qualify for ranking, only the highest ranked fund will be ranked.

1. ...a single stock exceeds 25% of your assets.

   Sell off enough of the stock to bring it's position size below 25%. If you bought into a position that represented >25% of your assets (as opposed to growing into that size due to stock value appreciation), your effective start date will be reset to the date that you bring your fund into compliance with _all_ of the Marketocracy rules.

2. ...less than half of your portfolio is made of stocks of 5% (or less) of your portfolio assets.

   Purchase more stocks that make up less than 5% of your portfolio assets, or sell off some of your stocks with positions over 5% of your funds value.

3. ...your cash position exceeds 35% of your portfolio's assets

   Buy more stocks.

4. ...you carry a negative cash balance more than 7 days/quarter.

   Sell off some of your stocks to generate cash.
   

1. Login to your account.
   
2. Select "my funds" > "my account" > "review subscription"
   
3. Click "Cancel subscription"
   

1. Login to your account.
   
2. Click on the name of the fund you wish to check.
   
3. Select "my fund" > [fundname] > "compliance" from the drop down menu.
4. On the compliance page, there's a table that lists each Marketocracy rule, and indicates whether your fund passes or fails the rule.

Note that the compliance page is intended to help members comply with the most complicated rules, but not all rules are listed on that page. You can find a list of the complete rules here.

A fund may also be disqualified for the following reasons:

1. Email to the member is bouncing.
   
2. One or more fund's mirror each other. When the holdings of one fund overlap the holdings of another fund by more than 50%, then the funds are said to mirror one another. If two or more funds mirror one another, then only the highest scoring fund is ranked.
3. The member has more than one account.
   
4. A corporate action problem is skewing the fund's returns.
   

"Yield" is simply the percentage gain or loss due to dividends and other income generated from the holding separate of stock price appreciation. "Selection return" is the return you got from picking that stock when you did. "Activity" calculates the positive or negative return generated from trading within a position (so it directly adds to, or subtracts from, "selection return" depending on how any trading after establishing a position in a stock affected the returns. The "inception return" adds these three factors together to give you the actual return of your investment in a given stock over the period.

The "Attribution Detail" page shows you similar statistics, broken out by sector. You can see your total return for a sector in the second column, the market return for the sector in the third column, and then the three components of skill in the next 3 columns. "Fund %" and "Market %", the titles of the last two columns, simply tell you how much of the fund or of the market is allocated to the sector in question.

In all, you would like to see your circle appear near the top half of the POD, or even above it. This shows you that your stock selection is high- or more simply, it says that you are performing even better than could have been expected, given the returns available in each sector. Also, you would want to see that you are allocated most heavily to the sectors where your performance is the strongest.

This calculation is therefore very easy - we look at how much each sector in your portfolio returned, and based on how your portfolio is weighted in each sector, we can easily determine how much return you might have been expected to achieve by simply being allocated to certain sectors.

In the end, we calculate the percentage that your returns deviate from the scenario where you simply bought and held the stocks in your portfolio - the difference is your return due to activity.

What we should hope to find is that the portfolio manager's stock selection contributed positively to the portfolio's performance. That means that within that manager's chosen sector and style, he/she was able to pick the right stocks to deliver returns above and beyond those expected by the style and sector allocations. The higher the return due to stock selection, the higher the degree of skill that the portfolio manager is exhibiting to find the right stocks in the market, regardless of sector and style.

Club members are ranked according to their performance as of the last site-wide ranking. The time period used is selected by the club administrator. For example, suppose the last site-wide ranking was done on Mar 11, 2005. And suppose the club administrator set the ranking period to 30 days. The club members will then be ranked from highest to lowest based on their fund's performance for the 30 days ending Mar 11, 2005.

The ranking period and rank date will be displayed in the header of the ranking table, like so:
"Club Members ranked by performance over 30 Days on Mar 11, 2005."

The ranking table also displays the fund returns for the last 3 months and the last 6 months as of the last date in the fund ledger. For example, if the date in the "As Of" column is Mar 23, 2005, the percentage returns displayed in the columns labeled "Last 3 Months" and "Last 6 Months" will be "As Of" Mar 23, 2005.

This can happen because the stocks in your fund are priced using data from two different sources: 1) a real-time feed and 2) a historical closing price file.

We use the real-time feed to calculate compliance during the day.

At the end of the day, we use the historical closing price file to calculate whether your fund is in compliance for the day, and email you if it isn't compliant.

Sometimes one of our price data sources will be missing prices for one or more stocks. For example, if the historical price file is missing prices for a stock, the stock will be valued at zero, which may put your fund out of compliance. However, since the compliance page uses the real-time feed, your fund will appear to be in compliance when you login during the day.

You can see if something like this has happened to your fund, by going to the ledger detail page on the date that your fund went out of compliance. Are any of the stocks priced at zero? If so, check your stratification report. Are the stocks priced there? If you notice a discrepancy, please let us know the fund and symbol for the stock, and we will investigate the problem.

If the problem is caused because of missing prices, it will go away when we start getting prices for the missing stock. However,it often takes a while to get appropriate prices. Since your long term compliance numbers are based on the prices in your ledger, if you notice a stock is incorrectly priced at zero in your ledger, we recommend that you sell it, and replace it with another stock that is getting priced.

1. ...a single stock exceeds 25% of your assets.

   Sell off enough of the stock to bring it's position size below 25%. If you bought into a position that represented >25% of your assets (as opposed to growing into that size due to stock value appreciation), your effective start date will be reset to the date that you bring your fund into compliance with _all_ of the Marketocracy rules.

2. ...less than half of your portfolio is made of stocks of 5% (or less) of your portfolio assets.

   Purchase more stocks that make up less than 5% of your portfolio assets, or sell off some of your stocks with positions over 5% of your funds value.

3. ...your cash position exceeds 35% of your portfolio's assets

   Buy more stocks.

4. ...you carry a negative cash balance more than 7 days/quarter.

   Sell off some of your stocks to generate cash.
   

Your fund will only be immediately disqualified and the inception date reset if you buy enough stock to bring your position over 25%.

For example, if your fund was more than 50% compliant for the one-year ranking period, yet had a single quarter in which it was compliant less than 50% of the time, it would still be considered non-compliant for the entire year.

Keep in mind the primary purpose of the Marketocracy competition--to find the best investors capable of managing a real money mutual fund.  We therefore try to mimic as closely as possible the conditions under which a real money mutual fund manager must operate.  A real money mutual fund manager must follow the guidelines of the fund prospectus.  Cash may have indeed be the best place to invest. But if a mutual fund advertises itself as an "equity mutual fund", SEC rules require the mutual fund manager to invest at 65% of the fund as best he or she can in stocks--not bonds, cash, or other financial instruments. 

It is expected that potential investors in a mutual fund will make the decision of how much of their assets to allocate to different asset classes (stocks, bonds, mutual funds, cash) before they ever put money into a fund.  If an investor in a stock mutual fund decides that they want to re-allocate their assets to a 100% cash position, then it is the individual investor's responsibility to redeem their shares in the fund and move them into a cash position, not that of the fund manager. 

The overlap is calculated as a % of total fund value.  For instance, if fund A owns $100,000 of XYZ and fund B owns $200,000 of XYZ  the amount counted as "overlap” is $100,000 for fund A and $200,000 for fund B.  In other words, fund A  would have an overlap of 10%, and fund B would have an overlap of 20%.

Nothing happens unless the overlap in both funds exceed 50% (i.e., fund A  has 50%+ overlap AND fund B has 50%+ overlap).

A fund may also be disqualified for the following reasons:

1. Email to the member is bouncing.
   
2. One or more fund's mirror each other. When the holdings of one fund overlap the holdings of another fund by more than 50%, then the funds are said to mirror one another. If two or more funds mirror one another, then only the highest scoring fund is ranked.
3. The member has more than one account.
   
4. A corporate action problem is skewing the fund's returns.
   

1. Login to your account.
   
2. Click on the name of the fund you wish to check.
   
3. Select "my fund" > [fundname] > "compliance" from the drop down menu.
4. On the compliance page, there's a table that lists each Marketocracy rule, and indicates whether your fund passes or fails the rule.

Note that the compliance page is intended to help members comply with the most complicated rules, but not all rules are listed on that page. You can find a list of the complete rules here.

A fund may also be disqualified for the following reasons:

1. Email to the member is bouncing.
   
2. One or more fund's mirror each other. When the holdings of one fund overlap the holdings of another fund by more than 50%, then the funds are said to mirror one another. If two or more funds mirror one another, then only the highest scoring fund is ranked.
3. The member has more than one account.
   
4. A corporate action problem is skewing the fund's returns.
   

To contact another member:

1. Login to your account.
   
2. Find a page (forum posting, club overview page etc.) that has the loginname of the member you wish to contact. Click on the member's loginname.
3. At the top of the page in the upper left corner, you'll see a link labeled "Contact Member".
4. Click the link.
   
5. Enter your message and click submit.
   
6. Our system will send your message to the member with your email address as the Reply-To:

To contact the owner of a club:

1. Login to your account.
   
2. Go to the Club Listing page
   
3. Click on the club name.
   
4. Click on the "Contact Club Owner" link in the upper left hand corner.
5. Enter your message and click submit.
   
6. Our system will send your message to the club owner with your email address as the Reply-To:

ETFs and closed end mutual funds may not make up more than 25% of your fund's value if you wish to be eligible for ranking.

The SEC fee is calculated by multiplying the total gross sale proceeds by the current fee rate. The fee rate is determined according to this table:

< 2001-12-28 - 0.00003
2001-12-28 - 0.000015
2002-04-01 - 0.0000301
2003-03-22 - 0.0000252
2003-04-01 - 0.0000468
2004-02-22 - 0.0000390
2004-04-01 - 0.0000234
2005-01-07 - 0.0000329
2005-04-01 - 0.0000418
2005-12-22 - 0.0000307

For example, suppose you sold 1002 shares of AAPL on 11/28/2005. And suppose the gross sale proceeds were $69,825.38. Since the trade was made after 2005-04-01, but before 2005-12-22, the fee rate is 0.0000418. Plugging in the numbers you get:

$69,825.38 * 0.0000418 = $2.92

AR = (TR^(1/YR)) - 1

AR = compound annualized return
TR = present value/initial value
YR = years
"^" = exponentiation

inception = 09/23/2001
initial value (09/23/2001) = $1,000,000.00
present value (10/02/2001) = $1,155,617.69
TR = $1,155,617.69 / $1,000,000.00
TR = 1.1556
YR = (10/02/2003 - 09/23/2001)/365 = 739/365 = 2.02 years

AR = (1.1556)^1/2.02 - 1= 1.0742 - 1 = 0.0742
AR = 0.0742 * 100 = 7.42%

(buys+sells)
---------------- * 100
assets*2

So selling 10% of your fund and buying a new stock is 10% turnover.

Just selling 10% would be 5% turnover.

For example, suppose you had a $1 million fund. And suppose that 10% of your fund was in MSFT stock. If you sold your MSFT stock and bought an equal dollar value of AAPL stock, your turnover would be:

($100,000 + $100,000)
-------------------- * 100 = turnover
($1,000,000 * 2)

turnover = 10%

Alternatively, if you sold your MSFT stock, but didn't buy any AAPL stock, your turnover would be:

($100,000 + $0.00)
-------------------- * 100 = turnover
($1,000,000 * 2)

turnover = 5%

1. Login to your account.
2. Select "my funds" > "my account" > "review subscription"
3. Click "Cancel subscription"

If you don't have a basic membership:

1. Go to http://www.marketocracy.com
2. Click the box labeled "FREE - join us" in the blue box in the lower right hand corner.
3. Enter your name and email, and pick a login name and password. By default, you will be signed up for a free membership. If you would like a Premium Membership, check the time period for which you would like to subscribe. Then click "Next Page".
4. Enter your Zip code. By default, you will also be signed up for site news and premium membership announcements. If you don't wish to receive these emails, check "No".
5. Click "Join Marketocracy".
6. You will be asked for your credit card information. However, you will not be billed for 30 days. If you cancel at any time during the first 30 days, you will not be billed. Otherwise, you will be billed for the subscription length you selected.
7. Click "Purchase".

1. Login to your account.
2. Select "my funds" > "my account" > "subscribe now" from the top menu.
3. Enter your credit card information and select the duration of the subscription.

However, Marketocracy does provide qualitative trading data for the top members in aggregate. For example, for each stock that you own, the m100 trading stratification report will show you whether the m100 has a small, medium, or large position in the stock. It will also show you if the stock's position in the m100 index has changed by more than 10% in the last 30 days. To see the table, select "my funds" > [fund name] > "stratification" > "m100 trading" from the top menu.

Here's how to interpret the table:

• An up arrow means that the holding increased by more than 10% (by dollar amount) over the last 30 days.
• A down arrow means that holdings declined by more than 10% (by dollar amount) over the last 30 days.
• A yellow dot with a minus sign inside means no change.

• The "weekly insight" provides commentary from the m100 members on the past week's market activity, and insight into their trading strategy. Select "research" > "weekly insight" > "overview" to see a sample report.

• Qualitative trading data for the top members in aggregate for each stock that you own. For example, the m100 trading stratification report will show you whether the m100 has a small, medium, or large position in the stock. It will also show you if the stock's position in the m100 index has changed by more than 10% in the last 30 days. To see the table, select "my funds" > [fund name] > "stratification" > "m100 trading" from the top menu.

• If you have a premium membership, you can see the top holdings and trades of the m100 members in aggregate. For example, selecting "research" > "weekly insight " > "trades" will show you the top 10 buys and sells of the m100 (in aggregate) for the past week. Selecting "research" > "weekly insight" > "positions" will show you to the top 10 holdings during the past week.

• Stock alerts. Strong buys are stocks that the best investors are buying when the rest (lower ranked funds) are selling. Stock alerts are sent out twice a month.

• Better tools to analyze your fund's performance, such as the attribution analysis pages.

• More information, such as fundamental data for the stocks that you own in your fund(s).

First, we rank the top 100 funds for different time periods (1 month, 3 months, 1 quarter, 6 months, 1 year, 2 years, 3 years, and 4 years) based strictly on the percentage return during that time period. Official percentage rankings are calculated every quarter, with a few unofficial interim rankings interspersed throughout the quarter.

Second, in the middle of every month, Marketocracy also ranks funds according to its own proprietary ranking algorithms. These 'mRankings' (m10 and m100) take into account a variety of different factors, including long-term and short term return and volatility. Currently, in order to be eligible for mRankings, your fund must also be compliant for at least four complete quarters.

Thus, a fund can be in the top 100 for the percentage rankings for a given time period, but may not necessarily be selected for the m100 rankings. Currently, only m10 and m100 funds are eligible for payment. However, those funds that do well in the percentage rankings over the long term are also often selected for the m100 rankings.

1. They look in their local accounts and give you those shares if available.

2. If not, they try to borrow the shares from other brokerages.

Institutional funds and hedge funds typically have access only to the shares that brokerages are willing to lend to external accounts. Shares traded internally within the brokerage are not available to external funds, such as Marketocracy. As a result, members can sometimes short stocks in their real life accounts that are not available in the Marketocracy system.

The number of shares that brokerages are willing to lend to external accounts is listed in a file (called the "StockBorrow" file) that Marketocracy receives at 8:00 p.m. each trading day. Marketocracy fills tickets up to 20% of the total available short volume as listed in the StockBorrow file.

For example, if the StockBorrow file says that there are 1000 shares of stock FOO available to short, only 200 of those shares will be available to fill tickets in the Marketocracy system.

Consequently, Marketocracy may not be able to fill a ticket as quickly as it is filled in real trading. Marketocracy imposes this throttle because if the trades were real, they would have a significant effect on the stock prices. Since we can't easily simulate the effect on prices, Marketocracy limits the allowed volume to a fraction of the real volume, with the expectation that the trades would not significantly affect prices.

(1) http://invest-faq.com/articles/regul-margin.html

For example, suppose your fund is short 100 shares of stock FOO, and FOO merges with stock BAR. And suppose under the terms of the merger agreement, FOO shareholders received $10.00 in cash for each share of FOO that they owned. Members who were short FOO would be forced to cover their position at $10.00/share, and $1000.00 would be deducted from their cash holdings.

If, on the other hand, FOO shareholders received 1 share of BAR for each share of FOO, then FOO shorters would then be short 100 shares of BAR.

Finally, if FOO shareholders received both $10.00 in cash and 1 share of BAR for each share of FOO, then FOO shorters would become short 100 shares of BAR, and $1000.00 would be deducted from their cash holdings.

The short volume for a stock is listed in the same box that the long volume is listed. Also, you can enter the short trade into the short wizard, and press recalculate. If there is no warning, there are sufficient shares available to short. If the short volume is lower than the number of shares you wish to short, then you will see an error message which will display the short volume.

1. Login to your acount.

2. Click on the name of the fund you wish to delete.

3. Select "my funds" > [fundname] > "admin" from the pulldown menu.

4. At the bottom of the page, check the box indicating that you understand that after deleting the fund you will no longer be able to access the fund.

5. Click on the "Delete" button to delete your fund.

You may delete up to 25 funds total.

The minimum margin requirements are set by SEC and NASD regulations. Regulation T imposes an initial margin requirement of 150%. To maintain a short position, rule 2520 requires margin of $5 per share or 30 percent of the current market value (whichever is greater).

For example, suppose you wanted to short 100 shares of stock FOO, at $10/share, for a total short of $1000.00 Your minimum margin requirements would then be $1500. The first 100% can be covered from the proceeds of the short sale, but the remaining 50% must be covered by additional cash. So your broker would require you to put up an additional $500.00 in collateral before he would lend you the shares to sell short.

What if the price of your shorted stock rises enough that your collateral is less than the 130% minimum maintenance value? If that happens, your broker will issue a margin call, and require you to either a) reduce your short position by buying back some of the short stock b) increase your margin by requiring you to deposit additional cash.

Marketocracy won't issue a margin call, but you will receive an emailed warning that your fund is out of compliance with the margin requirements. Your fund will be out of compliance for each day that your fund's collateral is below the margin requirement.

cash - (current shorts * 130%) = excess margin.

(Note that Marketocracy doesn't currently issue margin calls. However, your fund will be out of compliance until you cover the shortfall.)

For example, suppose you bought 100 shares of the stock FOO for $10 per share, for a total of $1000. And suppose the price of FOO rose to $15 per share, at which point, you sold your 100 shares for $1500. You would realize a $500 profit (ignoring trading commissions and taxes).

Buying a stock is also known as establishing a “long” position; selling those shares later is known as “closing” that long position.

When buying long, you make money when the price of the stock increases. However, what if you're confident that stock FOO is going to go down in price? Can you profit from that as well?

Yes. Instead of buying the shares of the stock, you borrow the shares of the stock from a broker. You then immediately sell the shares you've borrowed at their current (high) price. This is known as "going short".

If you're right, the price of the stock will fall. When you think that the price of the stock has fallen far enough, you buy back your shares at the new, lower price. This is known as "covering the short". You then return the shares you borrowed to your broker. Your profit is the difference between price at which you sold the shares, and the price at which you bought them back.

For example, suppose you borrowed 100 shares of stock FOO, and immediately sold them ("went short") for $10 per share, for a total of $1000. Then suppose the price of FOO dropped to $5 per share, at which point, you bought back your 100 shares for $500 and returned them to the broker from whom you borrowed them. You would then realize a $500 profit.

Of course, you could be wrong, and the price could rise. For example, suppose FOO doubled in price to $20 per share. Those 100 shares would now be worth $2000. If your broker forced you to return them, you would have to buy back those shares for $2000, and you would realize a loss of $1000.

To protect him/herself from the possibility that you might not have sufficient cash to buy back the shares ("cover your short"), a broker will require you to put up collateral ("cash") before you're allowed to short a stock. The collateral or cash creates "margin" or the value you are allowed to borrow to fund your short trades.

The minimum margin requirements are set by SEC and NASD regulations. Regulation T imposes an initial margin requirement of 150%. To maintain a short position, rule 2520 requires margin of $5 per share or 30 percent of the current market value (whichever is greater).

For example, suppose you wanted to short 100 shares of stock FOO, at $10/share, for a total short of $1000.00 Your minimum margin requirements would be $1500. The first 100% can be covered from the proceeds of the short sale, but the remaining 50% must be covered by additional cash. So your broker would require you to put up an additional $500.00 in collateral before he would lend you the shares to sell short.

What if the price of your shorted stock rises enough that your collateral is less than the 130% minimum maintenance value? If that happens, your broker will issue a margin call, and require you to either a) reduce your short position by buying back some of the short stock b) increase your margin by requiring you to deposit additional cash.

(1) http://www.directaccesselite.com/shorting.asp

We use the real-time feed to price your fund during the day (in the various stratification reports, among other places) and to fill tickets. We receive this feed continuously throughout the day.

We use the historical closing price file to price the stocks in your ledger. We receive this file after market close, generally around 9:00 or 10:00 p.m.

Sometimes one or both feeds stop sending prices for a stock, or send incorrect stock prices. Most of the time, this happens with stocks that have undergone some sort of corporate action, such as a bankruptcy, merger, delist, etc.

This can cause discrepancies in your fund's NAV and percentage gains. For example, we calculate your fund's daily percentage return by comparing your fund's current value (calculated using the realtime feed) with the previous day's value (as recorded in your ledger using the historical closing price file).

If we stop getting historical closing prices for a stock, but continue to receive prices via the realtime feed, our system "thinks" that your fund's value has increased in value equivalent to the value of the missing stock. So our system reports an erroneous increase in your fund's daily return. The erroneous return will disappear once we start getting historical pricing information for the stock. Let the help desk know about the discrepancy so that they can take care of the problem.

1. The stock has been delisted (such as when a bankruptcy occurs), so there is no longer a price reported for it.
2. The price feed has stopped carrying prices for that stock.
3. The stock has undergone some corporate action (such as symbol change) that hasn't been applied yet.

You can calculate the inception return manually as follows:

R = cumulative return
B = value of shares when you bought
S = value of shares you've sold so far
C = value of shares you currently own

R = ((S + C) - B)/B * 100

For example, let's suppose that you bought 1500 shares of FOO at $1.00/share ($1500.00 total), Suppose that the stock dropped to $0.50/share, and you sold 500 of them. Now suppose that the remaining 1000 shares later rose in price to $2.00/share. Your return on your remaining shares would be 100%. However, cumulative return would be calculated as follows:

B = $1500.00
S = $250.00
C = $2000.00

R = ((2000 + 250) - 1500)/1500 * 100
R = 50%

The reason that we display cumulative return is that from the perspective of judging an individual's ability to select stock, we care about their performance over all of their stock selections, not just on the stock that they currently own.

Sometimes Marketocracy will get bad prices across the feed used to fill tickets. If you believe a ticket has filled erroneously, please contact help@marketocracy.com, and we will untrade the ticket.

Trades in stocks that persistently trade below $0.10/share are difficult to translate into profitable trades in the real funds that use Marketocracy's trading data. Therefore, Marketocracy will not carry stocks that trade persistently below $0.10/share.

In addition, pricing and corporate action data for some stocks is also often difficult to find. For example, ADR's and low-volume OTCBB stocks are often difficult to accurately price. If we can't get adequate pricing or corporate action data, we won't add the stock to the database.

If you think we should carry a stock that we currently don't, send an email to help@marketocracy.com, with the symbol of the stock you would like to add. It helps if you include the following info:

symbol
company name
exchange
company press release announcing the IPO/spinoff etc.

  In addition, if you place a limit on the order, then only 1/10th of those shares that meet your limit will be applied to the ticket.

  Only trades that come across the feed after your order is placed are credited to your account. Day orders are also closed at the end of the day. So if you place a day order toward the end of the market day, your order may only fill partially before it is closed. To keep a ticket open across multiple trading days, use a good till cancelled (GTC) order.

The reason for the throttle is that it would be possible for a member to purchase the entire daily trading volume (or a large fraction thereof) of some stocks without affecting the price. Since it would be impossible to simulate the effect of buying the entire trading volume on the price, we limit the amount that can be purchased, with the expectation that if only a little bit can be purchased at time, the price would not have been affected that much.

1. Select "my funds" > "make a trade" > "open orders"
2. Find the order you wish to cancel
3. Click the "cancel" link.
4. Confirm the cancellation. It may take a few minutes for the trade to cancel. Any fills up to the point the ticket was cancelled will be credited to your account when the ticket closes.

Select "my funds" > "make a trade" > "open orders"

Select "my funds" > "make a trade" > "recent orders"

1. From the top menu, select "my funds" > "make a trade".
   
2. Enter the symbol of the stock you wish to purchase/sell. Click "Quote".
3. The "your holdings" table shows you how much AAPL stock you already own, and how much you would need to own in order for the stock to make up 5% and 25% of your holdings.
4. The "trade this stock" form allows you to enter the number of shares you wish to buy/sell in each of your funds. So in this example, you would enter 100 into the row for your XYZ fund.
5. If want to make it a limit order, check the limit radio button, and enter a limit price.
6. If you want to make it a "good until cancelled" (GTC) order, check the GTC radio button.
7. Click Buy (or Sell).
   

1. Select "my funds" > [fundname] > "buy wizard" from the top menu.
2. Enter the symbols you wish to buy in the "symbol" column.
3. For each stock, you can specify the amount of stock to buy as 1) number of shares 2) percentage of your total fund value you wish to the stock to be 3) dollar amount.
4. Enter a limit price, if any.
5. Check the "good until canceled" box, if you wish.
6. Check or enter a reason for the purchase ("good news", "earning announcement", etc.) (optional)
7. Click "buy"

1. Select "my funds" > [fundname] > "sell wizard" from the top menu.
2. Enter the symbols you wish to buy in the "symbol" column.
3. For each stock, you can specify the amount of stock to buy as 1) number of shares 2) percentage of your total fund value you wish to the stock to be 3) dollar amount.
4. Enter a limit price, if any.
5. Check the "good until canceled" box, if you wish.
6. Check or enter a reason for the purchase ("good news", "earning announcement", etc.) (optional)
7. Click "sell".

1. Select "my funds" > "make a trade" from the top menu.
2. Enter the symbols you wish to buy/sell into the text box under the header "make multiple trades".
3. Click "bulk trading".
4. Select whether you want to buy or sell the shares.
5. Select the fund for each order.
6. Enter the number of shares.
7. Enter the limit price, if any.
8. Select whether you want the order to be a "day order" or a "good until canceled" order.
9. Select a reason for buying/selling the shares. (optional)
10. Click "Execute"

For example, if you purchased $100 K worth of stock at $20.00/share, your trading costs would be:

$100,000/$20 = 5000 shares

5000 shares* 0.05/share = $250.

$250/$100,000 = 0.0025 = 0.25%

The transaction costs of trading penny stocks will be proportionately higher than the transaction costs for higher priced stocks.

$100,000/$1 = 100,000 shares

100,000 shares * 0.05/share = $5000.00

$5000/$100,000 = 5%

1. Mutual funds must allow investors easy redeemability of their shares.  In order to redeem shares, a fund needs an accurate price for the fund.  If a significant portion of a fund's assets are tied up in a small, illiquid stocks with erratic pricing, the fund manager can't accurately price the fund overall.
2. SEC regulations prevent mutual funds from owning more than 10% of the outstanding voting securities.  Although not so much of an issue for small funds, large funds can't buy a proportionate amount of small companies, because it would cause a large fund to own too much of the company's stock.
3. Funds may have difficulty purchasing thinly traded stocks in a timely manner, so that by the time the fund can get enough shares, the price of the stock may have changed quite a bit from the time that research indicators suggest the stock should be purchased.  Many funds follow a guideline that limits the number of trade days it would take to sell a position.