How To Trade Stocks Without Risk: Try Virtual Stock Trading Systems

Want to do some free online stock trading? You can paper trade without risk or cost.

OptionsHouse Virtual Stock Trading
Check out OptionsHouse for virtual trading.

Here’s my message to investors who are about to put a substantial amount of money into an incredible investment they’ve heard about, and who are anxious to have that money working for them: be careful! Totally trusting a financial professional without knowing anything about the stock market is going where angels fear to tread. The financial investing system is not designed for people who know nothing about it, so why not get some experience? Most potential investors have heard of online trading, and they have seen the commercials on TV. Some have already tried it with varying results.

How To Trade Stocks Without Risk: Try Virtual Stock Trading Systems

While long term investing methods are the best way to go in order to grow your assets over time, you may still feel inclined to try your luck with stock trading. If so, then why not play the stock market as a game to begin with? You say that you don’t have time to set up a separate spreadsheet to track your fake investments. I have the perfect solution for you. Start trading without risking any real money. There are virtual stock trading systems that allow you to do this. For instance, when you set up a fantasy portfolio with an online broker and execute trades on that portfolio, you’ll get to understand the stock market without taking on any risk. Here are a few sites that can help you paper trade with fake money:

Online Discount Broker
Virtual Stock Trading System
Zecco Zecco Zimulator
Scottrade Scottrade ELITE Virtual Trading Demo
OptionsHouse Virtual Stock & Options Trading
optionsXpress optionsXpress Virtual Trading
Trade Monster Trade Monster Virtual Trading

Fantasy Stock Trading Case Study: Virtual Stock Exchange

I have some experience with one site that allowed me to practice trading this way. It is called Virtual Stock Exchange, which is made available by Market Watch. It is a very reputable financial news source. It offers a free stock market simulation game anyone can play over the internet.

You can play this game alone or against a friend in another city. A while back, I played a Virtual Stock Exchange game with my brother. We both had $100,000 to start a portfolio with. After signing up for the game, you add your friend or family member, and then when you sign in to your portfolio, you are ranked against the other player(s). What we did, which was most helpful, is to discuss various companies that were making headlines each week while we played the game. We had different portfolios, and we competed against one another to gain the maximum returns.

If you are wondering who won — well, I did, but not by much. I had higher returns over a month long time period. You can buy long or sell short. On that point, not everyone realizes that selling a stock short involves a substantially higher risk than buying long. When you sell short, you are hoping that the stock will go down in price so you can retire the investment and take a profit by buying it back at a lower price.

What if the stock goes up instead of down when you sell short? Some stocks rally to higher levels and may not drop back down to a lower price level for a substantial amount of time. If that happens to you as a short seller, you’d be out the price of the investment, and you’d also be losing more money as the stock price climbed higher. You are also borrowing the money to sell the stock short and are therefore leveraged. Sounds risky? It certainly is… and that is why I would recommend that you try paper trading first when you’re learning various stock trading strategies.

Recently, I just checked my fake portfolio and found out that I made a great amount of money since I last checked it months ago. The nice thing is that I can get to keep my account in the Virtual Stock Market forever. Anyone who signs up here can create new practice portfolios and can continue to revise and modify their old allocations. Another useful tool they have: all of your stock ticker symbols are linked to company news and reports.

In closing, I would suggest that you check out the Virtual Stock Exchange or any of the other sites and virtual trading communities listed in this article. Even if you don’t get to keep the money you make as “profit” by trading this way, you’ll gain a few important benefits. These virtual stock trading systems teach you the patience that you need to become a good investor. Over time, the hope is that you’ll develop the intuition and skills required for you to be comfortable with the stock market. The education you gain from learning the ropes and understanding how the stock market works is quite valuable in itself.

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