Home Business Insights & Advice The benefits of using an online trading simulator – before you invest real money

The benefits of using an online trading simulator – before you invest real money

by Sarah Dunsby
2nd Aug 18 7:47 am

If the idea of padding out your retirement fund by investing in online trading intrigues you, you are not alone. At the same time, if you have no experience or training in the field of investing, you have choices, you can go to a broker and trust them to make put your money to work for you, or you can learn to do it yourself and avoid the many fees charged by most brokers. You can take classes, read books, study websites like Warrior Training, and more. All of this will help you to reach your goal, but before you invest any real money, you might want to consider investing some time practicing your newly acquired knowledge using an online trade simulator.

Why Use a Trade Simulator?

The most straightforward answer to this would be, “Can you afford to throw money away as you learn to invest?” If you have been avoiding investing in the markets because you are afraid of losing your money, you need to take a step back and consider whether or not this is the right time to step into the market at all. But, if you use a trade simulator, you get all of the experience of the real markets without any of the risks.

The average simulated trade simulator program will start you out with a fixed amount of money in your “investment account.” These programs are designed to take the complexity of online trading out and make it easier for beginners to understand how the market works, how to invest, what to look for, and how to develop the right trading strategies.

Simulating the Real-Life Market

The trade simulator allows you to buy, trade, short-sell, or trade your options in much the same way as you would on the NYSE or NASDAQ. The top simulated stock trading simulator programs also include your costs such as broker fees or commissions. The reason these charges are included is to allow you to see how they can affect your bottom line. By incorporating these charges in the simulator, you learn how to manage your money better when the time comes for you to make your investment decisions.

With trade simulator, you get to track your investments, follow the “simulated” markets. This allows you to enjoy success and commiserate your losses without actually losing any “real” money. As you invest using the simulated stock trading program, you should use an Excel spreadsheet to track your investments, your gains, and your losses. Doing so will make it much easier for you to see what’s going on and to measure your profits and losses.

By tracking this information in a spreadsheet, you can better determine your profit to loss ratio. The information can also be used to determine whether your current investment strategy is on point or if perhaps you need to go back to the drawing board and look at new and different investment strategies.  The reality is that unless you know where your mistakes (poor investments) are, it is challenging for you to make the necessary changes to improve your investment strategies.

The idea behind doing all of this in a trade simulator is that you are doing it all with “play” money, allowing you to hone your investment skills without risking any “real” money. Most experts agree that you should spend several months honing your skills using a simulated stock trading program. Only when your successes outweigh your losses significantly should you invest in the live stock market using your own money.

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