Advantages To Using a Virtual Stock Exchange

Success businesswoman choosing one of different types of diagrams in virtual future interfaceIf you want to learn how to invest in stocks, then using a virtual stock exchange game is a good starting point. There are numerous stock exchange “games” out there that allow you to experiment with trading in a realistic environment without putting your own money at risk.

When you sign up for a virtual stock exchange, you will have the chance to use trading platform software that is very similar to the real thing. You will also be able to practice managing your money and understanding the basics of charting or putting your fundamentals analysis skills to the test.

One of the main areas where people fall down when they start trading for the first time is that they don’t understand the basics of bankroll management. They commit too much to the same part of their portfolio or they throw good money after bad when they start experiencing losses. Free trading platforms give people the chance to make these mistakes and learn from them without putting real money at risk. Traders can also use these free platforms to do a “test run” on a signals provider before they start using them for real.

It is important to note that while these virtual exchanges are great practice tools, success on one of these exchanges does not guarantee success in real life. Some companies provide demo accounts that let you test out their trading platforms and make “live” trades, but not only is there a lag on market movements compared to the real world, the fee structure that they use on the demo accounts may differ from the fee structure that they operate on their real accounts. The difference is small but it exists and when you are trading in small amounts, it can have a massive impact.

One mistake that some novice traders make is to use massive balances in their demo accounts and then open a live account with a much smaller amount of money. What they fail to realize is that trading with a small budget exposes you to much more risk in terms of a bad trade wiping out their entire bankroll. In addition, they make smaller profits than they would on bigger trades, so even when reinvesting those profits, it takes longer to “snowball” their way to a sizeable bankroll.

If you go into a practice account mindful of these risks and these potential mistakes, then you can learn a lot from them. Even experienced investors can use them as a way to test out new methods of trading and they can be a fun way to introduce beginners to the way that the market works. There are even some competitive virtual exchanges where people can play with limited bankrolls and win real-world prizes if they manage to make the greatest profits. The wisdom of spending time in those if you are actually a good trader, however, is questionable. Why not trade real money instead and earn returns on your investments?