Practice Stock Trading Account
A practice stock trading account allows a potential investor the opportunity to simulate investing in stocks without risking any real money. There are several Internet sites that allow you to invest in a virtual stock exchange using virtual money. It is considered a game and allows you to compete against other people, sometimes for prizes. However, virtual stock exchanges mimic real stocks and follows their actual performance. Many players go on to invest in the real stock market.
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Types
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There are several types of virtual stock exchanges that allow you to open a practice stock trading account. The most popular one is called VSE Market Watch and is run by the Wall Street Journal. It primarily concentrates on the major domestic exchanges for the average investor. Other practice stock trading accounts, like those found on the website Investingexperience, are geared toward potential day traders. Some practice stock trading accounts focus on international markets like those at the site Stocksquest (see Resources below).
Function
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Opening a practice stock trading account is usually free.The virtual stock exchanges require that you open an account and select the stock exchanges in which you wish to virtually trade. These include the New York Stock Exchange, Nasdaq, AMEX and foreign exchanges. You can also practice buying and selling mutual funds. The practice stock trading account gives you the option of competing against others over a set period of time or just competing against yourself.
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Features
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Practice stock trading accounts allow you to select the features you play with. You decide how much virtual money you start with, how you invest and how often your buy and sell. Real world features such as limit trading and margin accounts are also available. You even decide when the game ends and the conditions of victory.
Identification
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When you virtually purchase a stock on a virtual stock exchange, its performance is the same as in the real world. If that stock increases in price in real life, then your virtual stock increased in value by the same amount. This makes it easy to follow the progress of your virtual investments. You can watch financial news networks to evaluate your practice stock trading account. The virtual stock exchange websites also track your progress.
Considerations
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People tend to be bolder with virtual money than they are with real money. When there is nothing to lose there is little fear. Consider this when moving from a practice stock trading account to a real stock trading account. Real money can really be lost. Past performance on a virtual stock exchange is no guarantee of similar performance at a different time in the real markets.
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