Virtual trading software, modern version of virtual portfolios, are the training wheels to get you started (that you never heard about). Of course, first time investing and trading is scary. You’re doing something you’ve never done before, never practiced, and you’re doing it with your hard earned money. If you learn with real money, and lose, you can’t play again. Sounds crazy right?
But wait! Most brokers now comes with virtual trading software, giving you the full market experience using fake (paper) money. That’s why virtual stock trading is also commonly known as paper trading. We have a whole product section on MarketHeist dedicated to great paper trading software and apps. Don’t have to settle for spreadsheet-like virtual portfolios on Yahoo! Finance.
Paper Trading/Virtual trading/Investing Simulator Software
You’ll be surprised at how much you’re missing with virtual portfolio websites like Yahoo! Finance or stock market game websites. The difference is how realistic the buying and selling experience is. You can only get this by placing orders with actual broker software and real-time market data. Your broker’s virtual paper trading software allows you to do that, but safely with fake money. Think of it like practicing for your driving test in the car that you will actually use. On the other hand, practicing with a virtual portfolio website or stock market game is like having never touched a steering wheel and not knowing where the gas and brake pedals are!
Virtual trading and other stock market simulators helps give you confidence. You can try safety orders like Stop Loss and Limit orders with fake money, so you’re not worried about making a costly mistake.
In fact, every concept, tool and strategy we cover in this series can be tried with paper trading. If there’s something you don’t quite understand, try it with paper trading, not real money. Why throw money away on practice shots when you can get the techniques down for free?
Two Ways to Use Paper Trading Platforms: Beginner and Advanced
How you use a paper trading simulator will depend on your experience, but the reason will be the same: for safety. Confusion, unfamiliarity, human error. That’s risky.
You want safe investing, safe trading. It doesn’t matter if it’s changing diapers or working your mobile phone, people can learn to do anything, it often just takes a few tries to get the hang of it. You give yourself a chance when you practice with paper money. Why? Losing real money is the most demoralizing experience that will stop you from learning the simple foundations of investing and trading. These foundations aren’t hard. Anyone can do it. But if you’re afraid to even try because you’ve lost money before, you will never get the hang of it. You’ve already lost.
Some things to practice (we will cover these in detail later in this series):
placing orders to buy and sell shares of stock.
placing Stop Loss orders to limit your loss.
placing Limit buy orders so you automatically buy at the price you want, not higher
placing Limit sell orders so you automatically sell at the price you want, not lower
buying and selling a stock in stages. For example, buying 100 shares, then another 100, then another 100, for a total of 300.
setting stock price alerts so you get an email alert, computer alert, or mobile alert
practice a simple strategy. Use that strategy for every stock buy and sell, every time.
most important: that strategy should make more money than you lose.
Beginners also need to pay attention to this. In addition to broker paper trading platforms, there are a ton of separate paper trading software and simulation software, each with it’s own strengths and purpose. Why are these software out there? Successful investors and traders make a living in the market because caution and safety comes first. How do you do that? Test, evaluate, test.
Even when there are new investments and new techniques out there (which there constantly are), professionals know to test these new things out. For professionals, experimenting with ideas on paper trading platforms and simulators allow them to see how well those ideas would work.
Are these ideas even worth doing?
Is this technique for me?
Do I have the right skills and experience for this strategy?
Should I use options or futures?
Virtual paper trading and simulators allow you to answer these and other questions without risking money on unknowns. Just because something seems like a good idea doesn’t mean it is. Don’t lose a ton of money just to find out.
ETN (Exchange Traded Notes),
ETF (Exchange Traded Fund),
High Frequency Trading,
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