When Craig Coleman, 17, and his three team mates lost pound;40,000 on the stockmarket they knew they had to do something. Down to their last pound;60,000, they took advice and sold poorly performing shares. “We then did a lot of research on the internet and in the financial papers, and invested all the rest in one company,” Craig says.

Fortunately, their make-or-break shares rose almost immediately. “We then got a bit of a taste for risk-taking,” he says. “We started looking for any indications that companies were about to merge and invested in them.”

This high-risk strategy paid off. At the end of the trading period their initial pound;100,000 had become pound;140,000 and Craig and his team finished second in the Portfolio Challenge. This is the largest investment competition in the UK and is organised by ProShare, an independent organisation that promotes financial education and share ownership.

“ProShare’s ultimate goal is to make financial education compulsory at GCSE,” says Tara Golshan, head of education for the company. “At the moment it’s put in citizenship and PSHE, but tends to get lost among all the other areas of those subjects.”

Although some schools have incorporated the Portfolio Challenge into the curriculum, most do it as an extra-curricular activity.

“The competition provides essential requirements for students’ future careers: practice in research, evaluation, the application of numbers, oral and verbal communication, teamwork, decision making, presentation skills and IT,“Tara says. “We also want to encourage young people to think of careers in the City and to counteract the stereotype of the guy in a bowler hat, which many students still have.”

Aimed at students aged 14 to 18, the competition is the kingpin of the ProShare Student Investor programme, sponsors of which are the Department of Tradeand Industry, the London Stock Exchange, HSBC, Bloomburg and Foreign Colonial Investment Trust. Other aspects are the ProShare Forecast Challenge and the ProShare Young Business Writer of the Year (see box).

This year the number of students participating in the programme has risen from 11,000 to 17,000, with 621 schools taking part in the Portfolio Challenge.

Students work in teams of four and from November invest in, monitor and manage a fantasy portfolio over five months. The last competition’s six finalists showed a particular talent, returning an average profit of 4 per cent, beating the FTSE All Share index, which fell by 10.6 per cent.

If they progress to the regional and national finals they have to submit an essay, give Powerpoint presentations on set topics and undertake other challenges, such as designing a website for novice investors. The first prize is pound;2,000 for the school or college; pound;200 for each team member, and a trip to New York.

Craig Coleman did his trading at Caldicot Comprehensive School in Newport, where the challenge was organised as a lunchtime activity. “I’m dead keen on business challenges,” says head of business studies, Moyanne Monday.

“This one has taught them problem-solving, communication and IT skills and given them an insight into careers.”

At St Georges School for Girls, Edinburgh, which this year fielded the winning team, business studies teacher Sandra Stenhouse ran the challenge in the business management higher class with 17-year-olds. “Four teams were involved and we devoted about 35 minutes a week to the competition over the first five weeks. After that they got on with it themselves, though the winning girls were given a bit of time in class as they progressed.”

Sandra was considering running it as an extra-curricular activity so that students other than those who take business management could participate.

“Students don’t have to have a sound understanding of financial investment before they start and they learn a great deal by taking part,” Sandra says.

“They increase their knowledge in financial investment and develop all kinds of interpersonal skills such as teamwork, communication, problem-solving, using IT and presentation skills as well as working to deadlines.”

Unlike the Caldicot foursome, the Edinburgh winning team played safe, relying on their initial research. “We sold shares in Marks and Spencer and bought shares in Gucci. Mamp;S had been falling for some time and they were starting to drag the overall value of our portfolio down. All the other companies remained the same throughout the whole competition. We didn’t want to panic buy or sell,” says team member Jennifer Anderson, 17.

The competition has changed her life. “I’ve learned a lot of crucial information about finance,” she says. “I’ve also decided to do a business course at university as I feel more confident and interested in the financial part of business, and I’m trying to organise to go over to New York next summer to work for a financial institution for a few months.”

During their New York trip the St Georges team visited financial institutions and now they have contacts there, she adds.

Other schools also made links with local companies. The Caldicot team, for example, were invited to visit Deutsche Bank in London.

At Portsmouth Grammar School, business and economics teacher Daisy Tabtab runs the challenge as part of the school’s business studies provision in Years 9 to 13 and in a lunchtime “stockmarket club” open to Years 7 to 13.

Students work in one of the school’s two IT suites, with one member of staff present to give support. Forty teams entered the Portfolio Challenge this year - 20 in their business studies or A-level economics classes.

Alison McDougall, 14, and her team,who were the youngest finalists, did it as part of business studies and it then became extra-curricular. She says the important thing about investing is maintaining a balance between risk and safety. But will she invest in the stock market in the future? “Probably,” is her non-committal response.

Jennifer Anderson is also cautious: “I need to wait and see if I make enough money first.”

And Craig Coleman? He’s already got his own portfolio and an online account and is set to do business studies at university.

To enter the ProShare Portfolio Challenge visit http:proshare.innovation.gov.uk. Registration closes on October 31. For more information tel: Tara Golshan on 020 7220 1757