Stock Market Game

A stock market simulator is a game-like program or application that imitates real-life stock trading on a device so that an individual may practice how to trade stock without real risks involved. Closely related to this is paper trading or virtual stock trading. Paper trading is a simulation-based trading in which new investors can practice trading without using actual money.

Stock Market Games

Stock market simulators can also be referred to as ‘stock market games’. They are simply speculative games that allow players to trade stocks, options, futures, mutual funds, ETFs, or currency in a simulated or virtual market. Investors get to see what moves stock prices. These games exist in different forms, however, the fundamental concept is that they allow players to gain experience by trading stocks in a simulated environment with no real risks. They can also be for entertainment purposes for investors who only want to test out new strategies.

Players can also compete with each other to see who ranks higher or who can predict the next direction the stock market will take. Many of these stock market games imitate real-life stocks from the New York Stock Exchange (NYSE), Nasdaq, AMEX, and other major market indexes. However, not all the stock market games are based on financial markets as some are based on sports and entertainment stocks.

Understanding Stock Market Simulation

The first thing to note about stock market simulation is that trades and investments are not real. The simulation is merely an imitation of real life stock market instances. That is, the investment positions and trading behave similarly to the real markets. They are primarily used for educational purposes.

Stock market simulation or stock market games is a great way for new investors to experience trading on the stock market and learn trading strategies and techniques before committing their money into it. Especially paper trading which is mostly used by investors to try out new and different investment strategies.    

One major advantage simulator games provide over textbook learning is that investors can create various positions simultaneously and compare the performance and payoff characteristics across various strategies. For example, in a textbook, you may learn that writing a covered call is synthetically the same as writing a naked put. However, in practice, you will find out that there are differences. In that, with a paper trading account an investor can set up a bull credit bread and a bull debit spread at the same time and monitor how the payoff for each position changes by the market’s moves.

With simulation games, investors can learn other advanced investment strategies such as short-selling, leverage, forex and derivatives trading. Gaining mastery of these advanced strategies would usually require a high level of practice and technical knowledge. Before venturing into the real world, investors can test these strategies with paper trading to avoid incurring an excessive risk due to unpreparedness.

Types of Stock Market Simulators

There are tons of stock market simulators to select from- each with its benefits and features. Some of the simulators offer basic investment options and strategies to select from. While others are more complex to use and offer advanced securities options like currency trading and options. There are also others that are simply for learning purposes. While others are more challenging and include contests that provide new investors the opportunity to not only test their skills but also earn actual money.

There are two major categories of stock market simulators: Financial market simulators and Fantasy simulators.

Financial market simulators: This type of simulators allows users to build portfolios based on real stock entries and also allows them to train with virtual currency. In addition, most financial simulators use delayed data feed of 15 to 20 minutes rather than live data feed to prevent users from using their data to trade actively in the actual system. By doing so, the user would be able to practice trading with funds that are not real but in a real-world context. This would also help the user determine whether or not they are ready to start investing by themselves in the real-life context.

Fantasy market simulators: Simulators in this category trades shares of real-world entities that are not usually listed on a market exchange such as television shows or movies or sports. Sports-based simulators are often linked to active betting and wager based systems.

Generally, you can determine which simulator is best for you based on your skill level and trading interests. However, if you are unsure about your skill level, you may begin with basic simulators before advancing to more sophisticated simulators.  

How do the simulator games work?

Basically, each player gets $100,000 or $1,000,000 at the start to invest in US stocks, global stocks, mutual funds and Exchange Traded Funds (ETFs). In some cases, parameters can be set for the participants by an administrator. The parameters may require the participants to build their own investment portfolio with $1,000,000 in virtual cash and buy at least $800,000 worth of stocks and keep $200,000 cash.

Some of these games allow trading of foreign currencies, cryptocurrencies, options, etc. As well as margin trading, options trading, and short selling for more advanced investors or players. Participants choose to actively trade daily on the games or buy and hold stocks as part of a long term strategy, just like the real-world.

Why use simulators for trading and investing?

Learning how to invest and trade with simulated stock market games is a good way for anyone to experience the stock market before actually going into it. Just about anyone can participate in these games, playing with friends, classes, groups, investment club members, or individually. These games allow you to practice and gain experience in the stock market before committing your own money. They are also a fun and less risky way to learn virtual trading and investment strategy in a real-life context without risking real money.

• Easy learning of investment basics: This is the primary reason for using a simulator game to invest in the stock market. Players will not only learn how to invest but also do it in a fun and educative way using simulator games. Players can trade stocks or invest with ease knowing that they are only practicing. They can keep doing so until they master the skill. It is also less intimidating or pressurizing for new investors to trade using a stock market simulator or simulator game.

• Portfolio diversification: Simulator games allow players to generate or build diversified portfolios. By doing this, the players will understand the importance of diversifying a portfolio, especially when it has to do with risks. A major benefit of portfolio diversification is that you can mix different stocks in a single portfolio. Where one stock underperforms the others can offset the loss. For example, you may decide to buy stocks of fast-growing companies and mix them with safer utility stocks or other stocks. When building a portfolio using a simulator you will be able to identify growth stocks, value stocks, and stocks with above-average dividend yields. Understanding the different types of stocks will help you determine what stocks to include in your portfolio.

• Risk-Free: This is the best part of simulator games. Players can investor trade with ease as there are no actual risks involved since the games are only imitations of real life situations. Also, players can learn about possible risks that are likely to come up when trading in real-life situations and how to mitigate the risks. Such as the risk of putting all your money in one stock or failure to diversify a portfolio.

• Learn and develop new trading strategies: Continual practice with a simulator will not only teach the user trading strategies, but also allow them to develop new strategies through mastery.

• Learn how to deal with market volatility: Simulator games also prepare users for volatile times in real-life context. Since the simulators imitate reality, it is only normal that users will experience part of market volatility. This would help them understand the market better and know what to expect. There are also strategies that the user can learn and use to explore different methods of dealing with such situations without losing any money.

• Compete with others: You can challenge investing or trading skill by competing with your peers. Seeing the performances of others will help you stay motivated to do better on your stock purchases, performances, and rankings.

Top Stock Market Simulators

There is a wide variety of simulator games available to investors. Various financial companies offer online trading simulation games and tools, as well as paper trading services. These services may be free of charge or come with charges depending on the platform. Some of them usually allow a 14-day demo through a demo account. Outlined below are some of the top stock market simulators to consider.

Marketwatch Virtual Stock Exchange: 

MarketWatch is a popular financial website owned by Dow Jones. Its Virtual Stock Exchange game is one that can be customized by an administrator – a teacher or parent, providing as much as $1,000,000 in private or public mode. The administrator can also customize trading parameters. While participants may trade stocks, global stocks, mutual funds and ETFs. They can trade stocks in real-time, and also build their portfolios and create watchlists. For more experienced investors, there are advanced trading options with specific orders such as a stop order or limit price (i.e., an order can buy or sell when it gets to a specified amount).

Investopedia Stock Simulator: 

Investopedia is a top financial site that owns a comprehensive stock simulator. Participants can begin playing with $100,000 in virtual cash. They are also allowed to either join an existing game or create a customized game for trading stocks, options; margin trading and adjusting commission rates. Players are ranked by their performance, and they can research their investments. There are rewards available for players who complete various tasks and activities.   

The Stock Market Game: 

Created by the Securities Industry and Financial Markets Association (SIMFA), the Stock Market Game is one that virtually anyone can participate in. Although it is mainly designed for teachers and students. Participants can play individually or as a team, trading their own $100,000 investment portfolio. These portfolios can be a blend of stocks, bonds, mutual funds and cash. There are also competitions available for players in the non-ranked session.   

Wall Street Survivor: Wall Street Survivor is among the top stock market simulated games. It partners with AOL, The Motley Fool, and Seeking Alpha to provide players with a good stock market simulation experience. Participants or players can start investing with at least $10,000 and at most $10 million in virtual money. The options of ‘join a public or private league’ or ‘create your own league’ are also available to participants. In addition, the site provides videos, newsletters, articles, starter guides and courses to guide participants. There are also exciting offers such as earning badges and competing for real cash prizes of $2,000 monthly.

How the Market Works:

This is one of the longest simulator games around, in terms of time. Since 2004, this site has been functioning and is available to both individuals and classes or groups. This simulator game suits both new and experienced investors as it provides participants with advanced resources including Wall Street Analyst ratings company financial statements, financial news, and technical charts. Also, participants can buy global stocks, options, mutual funds, ETFs, and commodity futures. There are also interesting offers such as games and competitions.