Simulation training is a great way to learn by trial and error. You can buy and sell stocks in real time without risking any of your hard-earned cash. Not all stock market simulators work well for everyone though. Here are five tips for finding the best stock market simulator for you.
Free or Pay
Even though you are not actually buying stocks, there are free stock market simulators and those that charge a usage fee. Some actually combine both with free and paid options. Weigh the advantages and disadvantages of both carefully. A free simulator may have limited options that do not let you try enough different techniques. On the other hand, some simulators you pay for are not worth the cost. Balance out the pros and cons and pay only for features that you need.
Some simulators are strictly intended for gaming purposes and have very little educational value. For example, some simulators only update once a day, which provides very little feedback to the investor. If you are serious about investing and looking to hone your skills, take the time to find a simulator that works as close to actual market conditions as possible. After all, if your goal is to become a better trader then you need to take your simulation trading seriously.
Does the simulator track all the commodities that interest you? Does it have enough features to suit your trading style? Some simulators only let you do direct buying and selling while others let you practice more advanced techniques such as shorting a stock. Additionally, some simulators many not cover all the markets that want to explore or they only cover a small sample of certain markets. Ideally, you should find a simulator that covers as large a variety of your investment interests as possible.
It is crucial to your education to choose a simulator with a solid reputation. In some cases, word of mouth recommendations will suffice, if you know other investors. If not, try to find out which simulators reputable schools, clubs or other brokers in training are using. Get online and read reviews from other investors. Your best recommendations will come from people who actively use the trading simulator.
The gaming type of stock simulators rarely reflects actual market conditions. You want a simulator that is as close to real life as possible. Choose a simulator that provides timely and accurate information. Compare your simulated results to actual stock market results. If you find huge discrepancies in your information, then you should find a simulator that will give you a better idea of how stock trading actually works.
Using a stock market simulator is not like playing Monopoly. Your goal is to learn about investing, not to be entertained. Take the time to find the right stock market simulator for you and you will be much more successful when you are ready to start making real investments.
About the Author: Kendall Kanz is currently studying penny stocks. She has an investment portfolio but always goes back to a stock simulator before dabbling in new markets.