Virtual Paper Trading Platforms How They Work for You?

When trading in the stock market, there is nothing wrong with wanting to make a little more profit, especially when none of your hard-earned money is at stake.

This brings us to the question:

What Are Virtual Paper Trading Platforms?

Virtual paper trading platforms, also known as stock market simulators, give the trader a set amount of virtual money to trade in a given time horizon – which behaves exactly like a real-world scenario imitating the stock market.

Consequently, the traders who earn the maximum profits are the “winners,” but if you lose in a trade, you don’t have to bear the burn of the losses because none of the money on the line is real. But the best part of paper trading platforms is that they provide curious traders with an invaluable experience, which they can use in the stock market.

So, suppose you are interested in learning the ins and outs of stock market trading. In that case, paper trading platforms can help you gain some special tricks before you put any real money on the line. However, this is not the only reason, and this why next we are going to discuss:

Why Use a Paper Trading Platform?

When trading in the real stock market, traders are not competing with each others’ returns. Making profits is all about exceeding or equalling the performance of a benchmark index.

For instance, if you are investing your hard-earned money by picking individual stocks, and after three years, your average returns are not as high as compared to the S&P 500. It would be better for you to start investing in low-cost index funds that follow S&P 500.

That said, if you somehow manage to conquer the index and make a decent profit with your stock picks (which is most unlikely the case, even for long-term and experienced investors), then it would be safe to assume that you have “outperformed” the stock market.

When investing in the real stock market, you can not measure success in a matter of weeks or months. It takes years before you start making a decent amount of profit on your invested stock picks.

Keeping all the things mentioned above in mind. Here are four reasons why you should try a virtual paper trading platform:

  1. You’ll get all the basic knowledge of investing. Most of these virtual trading platforms provide you with the education that you can use while investing. In addition, the user gets multiple sources of information, like tutorials, articles, demos, and a platform to interact with an online community of investors. It can give a beginner investor a deep insight into the world of stock market investment.
  1. It’s the safest way to learn the inner functionings of the stock market by placing trades and building a profitable portfolio. There’s a reason why a student needs to take guitar lessons before they can play the instrument like a real musician. And that is why they first practice for hours in solitude before they get on the stage. The virtual paper trading platforms are perfect for making rookie mistakes, such as missing the order types and typing errors in the ticker symbols. On the other hand, if you make similar mistakes on a real trading platform, you can severely damage your portfolio. You may have to suffer a significant financial loss.
  1. You can test and implement new trading strategies and find out what works best for you. Trying to find effective ways of expanding your trading portfolio? Committing your hard-earned money to new and trading strategies can prove to be a little risky in the long run.

Additionally, suppose you plan to put your money in high-risk trades that involve futures, forex exchange, and commodities. In that case, you need to be extra careful with trading choices because you are putting actual money on the line. With virtual paper trading platforms, you get a chance to save your money with the benefit of trying new and more profitable strategies. 

  1. You get to learn the most crucial lesson in trading – keeping your emotions in check. Let’s talk about Warren Buffet, one of the most successful investors of all time. He believes that the key to becoming a successful investor lies in controlling your emotions.

Additionally, virtual trading decisions are less likely to affect you emotionally. Because you are not putting actual money on the line. But the mind doesn’t always fully grasp the situation. For example, think about roller coasters, haunted houses, or a scary-looking doll. No matter how many times you have seen or experienced them, they still scare you. Even when you know, they are harmless and safe to deal with.

That said, the emotions you feel when investing in virtual paper trading platforms are a trailer of what to expect in the real-life trading scenario. So, when you practice your trading strategies in a stock market simulator, you get to know about your mental strengths. And also the ways to cope with the problems you may face during a trade. 

So, last but not least, if you agree with all the points mentioned above, you must be asking yourself:

Where to Find Virtual Trading Platforms?

For a virtual trading experience that works exactly like the real thing, you can’t get a better option than trading platforms offered by the actual working online brokerages. These virtual practice accounts perfectly imitate the broker’s functional trading platform.

Most of them are free to use. However, first, you may have to set up an account to use their paper trading platform. Any reputed broker will provide its customers with the same tools that active users implement during their trades. A few of these tools are stock screens, watch lists, and live feeds vital to making the right decisions.

To Sum it Up

A stock market is an exciting place, and it can help you earn millions of dollars in a matter of a few seconds. However, to acquire the benefits of this fantastic vehicle of investment, you need to make sure you have all the necessary tools and information. And a virtual trading platform only provides such knowledge and experience that you can use to earn profits and minimizes your losses in the stock market.