Whether you’re new to the Exchange and are trying to get that first H$2 million to grow, or have been playing for a while but can’t quite seem to make your portfolio move, this column is intended to offer you some expert advice on how to play this game well. None of the tips below require a whole lot of time on-line; in fact, you could follow this advice logging in only two or three times a week. You could probably make much more money day-trading your life away, but I’m going with the assumption that you have a life to attend to outside the realm of HSX.com. All of these are solid, proven strategies that will make the game more fun for you, the trader. You might not make the top of the Week-to-Date leaderboard using these tips, but you’ll enjoy consistent returns and will gain a greater understanding for the fundamentals of the game.

First, some things NOT to do:

1) Don’t buy the so-called “fan-boy” stocks – the popular movies like HPOTT, STAR2, and MTRX3 – which are more than a year away from release. Sure, a stock like STAR2 is far, far below the price it will be next year, but you can make more money by staying away and playing other stocks in the meanwhile. In general, don’t hold any movies that are more than 30 days away from release unless you have LOTS of spare cash.

2) Don’t buy bonds in your favorite actors, or the it-girl of the moment. In fact, don’t buy any bonds at all unless they’re due for an adjust. (See Bond Adjusts, below.)

3) Don’t short a stock more than 1 or 2 weeks away from release on the theory that it will eventually adjust much lower than its current price. Ever. Stock prices have a strong tendency to rise, and while you may be right in the long term, in the meanwhile, you’re only going to lose. Wait.

And now, a few things you should do:

Miscellaneous Stuff:

- First off, click those “Cold Cash” banners. Especially when you’re just starting out, an extra $50,000 in cash really comes in handy.

- Do your research! Check the HSBR release schedule for upcoming release dates, and keep those in mind. The movies that are coming up soonest are those that receive the most attention on the Exchange, and fluctuate the most in price. There are tons of sites on the Internet giving details about upcoming movies (UpcomingMovies at Yahoo! is a good one), so check those out. Once you have some basic facts, check out Ticker Talk for other trader’s opinions. But watch out for the trolls!

- Check the (other) fansites. Lots of them have Beginner’s Strategy Guides that go into much greater detail than this column, and give you a range of options on how to play. The fansites can also be a good source of information about particular stocks and bonds, though that can be quite time-consuming.

Playing the “Openers”

In my opinion (and that of several other top traders), playing the “openers” is the most important part of the game, not to mention consistently fun, win or lose. “Openers” are those movies that receive a major theatrical release (defined as 650 or more screens nation-wide) on any given weekend. Openers are halted at 9pm Eastern/ 6pm Pacific on their first day of release (usually Fridays), and are adjusted in price on Sundays based on what they earned at the North American box office that weekend (2.9 times Fri-Sun box office gross, except certain holidays). Between the halt on Friday and the adjust on Sunday, you cannot trade the stock, and its price remains frozen.

You should play every opener every weekend, whether you hold the stock long or short. Sell everything else in your portfolio if you have to, it’ll be worth it. If you can’t afford them all, decide which ones you think is the most under- or over-priced, and play those. Price adjustments can be extremely dramatic – for example, Star Wars: Episode One adjusted down by over 80 points! If you shorted that one over the weekend, you would have made over $4 million.

The hard part if figuring out how a movie will do in its opening frame. Box Office take is a function of many factors, including who’s starring, what else is playing, what’s the target audience, etc. etc. Sometimes you just have to go with your gut. But you can make an informed decision with just a little bit of digging. Some other factors you should consider:

History: The Hollywood Stock Journal maintains historical box office figures, so you can see how movies did in the past. Compare genres and release dates for some interesting insights into Box Office statistics.

Screen Counts: How many screens a movie is playing on will often be a major factor in determining its success. A movie with 1200 screens is not likely to beat out a movie with 3300 screens, although notable exceptions have been known to happen. More importantly, when screen counts are known, other traders will buy and sell based on that information. When a huge count is announced, often the stock will rise in price prior to its halt. Conversely, when a low number is announced, it’s a good time to short, at least temporarily. For Screen Count rumors, check Box Office Guru on Wednesday nights.

Expert Estimates: Aside from hinting at screen counts, the Box Office Guru will give his predictions for a movie’s opening take. While he’s not terribly accurate, his opinions have a lot of impact on the Exchange. If a stock is trading at H$35, and BOG predicts it will make $18 million (for an imputed $52.20 adjust), you can bet the stock will go up.

Watch for long “legs” on released movies

Movies that continue to draw large audiences beyond their first or second weekend are considered to have “long legs”. They also tend to de-list (as all movies do, 4 weeks after their wide release) much higher than their adjust price, so you’ll want to buy some stocks after adjust. This happens very frequently during the summer and the holiday season, so keep your eyes open. Check out Bruce Nash’s analysis at The Numbers, for reasonably up-to-date Estimated De-list Predictions (“EDP’s”). A hint: kid flicks tend to have great legs during the summer, and every movie tends to do have great legs around Christmas.

Shorting those limited-release dogs

Movies that play on fewer than 650 screens do not halt and are not adjusted on their opening weekend. They also don’t make a lot of money – especially those that play on just a few screens in New York and LA. Lots of these limited-release dogs will de-list under a dollar. (This is not to say anything about their quality as films – it’s just a statement of fact that they don’t perform well at the box office.) But because they never get adjusted based on earnings, many of these stocks will trade at several times their actual value. You can take advantage of this situation by holding a short position on these films as they approach their de-list. (They don’t move much in price during the weeks immediately before de-list, so don’t be afraid to wait before shorting and use the cash elsewhere.) Again, check Bruce Nash’s The-Numbers for EDP’s and de-list dates. Shorting these stocks for de-list is a great opportunity for small portfolios, because they don’t require a large investment, yet earn spectacular returns! This kind of guaranteed money is called “arbitrage,” although several people on Ticker Talk like to call it Anti-Arb.

Playing the bond adjusts

Adjusts are the only reason you should ever hold a bond in your portfolio. You can read the rules for an explanation of why and how bonds adjust. But even if you don’t understand them, you can still make some pretty great profits every Thursday evening. Your first stop should be HSBR’s Bond Charts. There you will find that all of the work has been done for you. Just find the bonds that are going to adjust, and buy or short accordingly. This used to be a much more profitable strategy before everyone started using it, as now market prices tend to approach adjust prices very closely in the days before the actual adjust, but there are still plenty of opportunities for very quick profits.

Playing the IPO’s

This can be pretty tricky. IPO’s tend to move a lot in the days after their release, so unless you have a lot of time to invest, I recommend staying away from them altogether. Occasionally, there will be a great IPO opportunity, especially when HSX puts out a stock of a movie that is very close to release. The other problem is that HSX doesn’t give a whole lot of info about the stocks being offered. I like InHollywood, an industry database with tons of information on almost every movie in development. It offers a free trial membership, so it is well worth checking out if you’re going to play. I think a small portfolio shouldn’t be invested in IPO’s at all, as the money could be much better spent elsewhere.