How do I prevent my students from taking very risky positions?

Give the students a disincentive for losing money or under performing the S&P 500. For example, some professors tell their class that the top 3 performing students will get 5 extra credit points on their final exam grade, and the 3 worst students will get 5 points taken off their final exam grade (the professors then give the bonus points but do NOT take off points from the poor performers–just the threat is enough to make the students stay more conservative).

Also, remember that you have a good deal of flexibility when it comes to specifying the simulation you want for your class. You can limit the number of transactions, minimum prices, or type of security. We will work with you to make sure that your students get the most out of Stock-Trak. To force students to diversify their portfolios, and to make the students trade as if it was real money, students will not be able to put “all their eggs in one basket.” Stock, option, and future positions will be limited to 25% of their initial cash balance (note this variable may be adjusted). Accounts that begin with $100,000 will only be allowed to spend $25,000 on any given stock. (Without this position limit, we have seen some students buying on margin and spending $200,000 on one stock; now they can only spend 1/4 of that on any one stock, option, or future.)