The Alliance Stock Wizard Challenge closed on December 17 with first place winner Anthony Murray increasing his portfolio value by 30.8 per cent, or US$7,700 more than the 25,000 he started out with.

Murray won the competition — which ran for one month — from a group of 80 initial entrants. He will receive a US$1,000 online trading account courtesy of Alliance Investment Management Limited, promoters of the competition that encourages participants to try their hand at equities trading.

President of Alliance Peter Chin noted at the start of the competition, now in its eighth year, that it represents a good opportunity for those who are interested in exploring different ways of investing.

“There has been a significant move to US trading because of the low rates that are offered locally. Therefore traders are now looking outside and that is the opportunity that we are trying to give them through the Stock Wizard Challenge,” Chin said.

Murray said his trading strategy was to start slow and build momentum.

“For this competition based on the short duration, I decided to start out with a momentum-based strategy,” Murray told Sunday Finance.

“I started with a stock screener looking for companies that have matched or exceeded analyst forecasts over the past four quarters. These stocks should also have rising earnings per share (EPS) estimates from Wall Street and good one-month relative price strength,” Murray disclosed, adding that he also selected 10 stocks to form his “fund” based on stock type, stock sector and stock prices.

According to Murray, “stock types should be mostly cyclical given the greater relevance to this time of the year and (have) some aggressive growth potential… the stocks came from diverse sectors, manufacturing, services and Information and stock prices should be trading at analysts’ fair value estimates.”

Second place winner Howard Pearce, who had a 27.8 per cent increase in his portfolio value at the end of the competition, employed a similar strategy. “I employed a momentum strategy based on the overall direction movement of the stock market. Hence I chose stocks that were showing very strong price growth and that had a low price to sales ratio and low PEG (price/earnings to growth) ratio,” Pearce said.

Pearce, along with third and fourth place winners who had a 19.4 per cent and 15.6 per cent increase in their portfolio values respectively, will receive a US$500 trading account with Alliance.

The Alliance Stock Wizard Challenge is open to everyone over 18 years, amateurs or professionals. The next competition runs from February 1, 2011 to February 28, 2011. Registration is free and is done online at the company’s website. Upon registration, each person is given US$25,000 in virtual funds to trade with, but traders have a margin that is up to four times the funds in their accounts. Over the course of the month, each competitor’s daily balance will reflect the profit or loss position from the previous day’s trades. At the end of the competition, the person with the highest portfolio balance is declared the winner.