Sometimes referred to paper or fantasy trading; virtual stock trading a simulator stock market. This simulator helps a newbie trader learn the ups and downs of trading in the stock market. This system educates the new trader on the dynamics of trading.
In most paper or fantasy systems, you the trader will be given seed money which you will use to make profit or loss. There are a few websites that have virtual trading platforms where one can actually make some money. These sites also allow individuals to load actual money to their accounts. In most cases, you will find that a site that has an online trading platform also has a fantasy trading platform. Usually the two are the same except that the virtual one does not involve real cash.
The method for determining the price in the fantasy trading system is usually statistical. There are instances where the fantasy market actually simulates real prices as they appear on the online stock exchange. To make money, a trader will analyze the price movement and use the provided indicators to determine where to cash in. Knowing how to use the indicators in a major determinant on whether you will make profit or loss on the virtual market.
Some common indicators that can be helpful in technical analysis include candlesticks, moving averages and trends. This indicators are usually available to help you trade. Knowing how to use them is of high importance if you are to make profit.
These simulators will most likely prepare you for trading in the real market. It should be noted that the game is completely different where real money is involved. When trading with real money, fear and greed usually tend to cloud your judgment.
The biggest difference between these two markets is the money aspect. When trading in the fantasy market, both profit and loss you will make are not real. Also, when doing paper trading, the seed money is a not real. Usually, the website will assign you virtual start up money which you can use to make profits.
The similarity between the two systems is that most strategies that work when trading virtual also work in the real market. You’ll find that a number of websites that are involved in trading stocks online use the same platform in trading both real and virtual stocks. This is usually done to accustom the traders to the system before they start to trade the real market.
Through the fantasy system, you will improve your trading and will be on the right track to making profit. The system will train you on various techniques that will help you make money once you join the real markets. Some common features you will learn include fundamental analysis and money management strategies to protect you from loss.
It is however important to note that trading in stocks involves a substantial amount of risk. You should only trade with money that can afford to lose. You should do fantasy trading for sometime before you can venture into online market. This is of importance and will save you from heart ache and financial woes.
Regards,
Ayush Prem !