Playing virtual stock games can be an entertaining way to learn about stock trading. Referred to as paper or fantasy trading, some online mock trading platforms allow participants to research and trade stocks without risking real money. Game rules can vary by platform, but the basics of virtual stock games are quite similar.
Some brokerages have virtual platforms that allow clients to practice stock trading prior to engaging in real-world transactions. For beginning investors who have no broker, other online sites concentrate solely on virtual trading and allow participants to play free. Follow the online directions to register on the platform you choose.
The site will give you a specific amount of virtual money to invest, but may limit the total number of trades. For example, some games will restrict players to a set number of trades per day. Others have no limit and allow you to trade at-will. This works well if you want to practice day trading.
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Many virtual stock games use actual market prices, and game trades are made at current market prices. Players must follow the online directions to buy and sell stocks for their virtual portfolio. With no real money on the line, some just pick stocks at random and learn as they go. Others will pick stocks familiar to them and see how they play out. For example, you could build a virtual portfolio of stores you regularly shop at or companies that produce your favorite products.
To win in the virtual world requires the same knowledge and strategies that work in real investing. Most mock stock trading games determine winners by which competitors hold the most valuable portfolios in virtual dollars at the end of the game period. Others determine a winner by who beats a particular real-world stock index by the highest percentage.
Strategies in the virtual game are about the same as they are in the real world. For instance, there's no rule saying you can't put all of your stocks in one industry, such as energy companies. However, if that industry loses economic power during your game, your entire portfolio will take a serious hit. Spreading the risk by investing in multiple industries is a proven investment strategy. A completely opposite strategy is to simulate day trading. This equates to speculating in stocks, buying and selling within one trading day, and investing large amounts to capitalize on small fluctuations in share prices. Regardless of your strategy, start paying attention to financial news sources. When you find a few you trust, keep up with them and their advice on stocks you might want to buy or sell.