subject: Learning Paper Trading With Trading Simulators - Part 1 - Overview [print this page] Learning Paper Trading With Trading Simulators - Part 1 - Overview
Overview
So, you want to play a stock market, you have read all the relevant books you can get your hands on, what's next? You can find a broker and open up an account and try trading live. But probably the smarter thing is to do is to practice it first using trading simulator. This is called paper trading, because you trade using paper money, never putting real funds at risk. Nothing can replace practicing when it comes to day trading, simply because too many people, who start trading without being prepared, end up losing their funds in a relatively short period of time.
On-line trading simulators are special sites that offer that kind of service, often for free. The benefit of using sites like that, as opposite to some kind of software you need to install on your PC, is that you only need your browser and you can effectively perform the same tasks you would be doing when you start trading for real.
There are many sites that offer this kind of service, often free of charge. Investopedia.com has a very decent simulator, as well as lots of other financial content. I will be describing a different site, however, VivaTrader.com. It is a virtual brokerage site which includes the most detailed stock trading simulator for paper trading. This tool is ideal for beginner traders. Site visitors can freely practice trading, learn a great deal about operating a brokerage account, find out how to make profits even in the declining market using so-called short-selling strategy. The site will allow you to use technical analysis tools, charting and visual alerts and stock scanner for stock picking.
To get started you just need to register. This article will cover the following topics:
Registration
Portfolio Management
Creating Trading Order
Registration
To register click the following link:
Registration Page
And fill out the simple form which includes user name, password and a few other fields.
You will get an email confirmation when you successfully register.
After you are done, login to your account using the user id and password you just entered.
Portfolio Management
Once you login, you will be presented with the list of your simulated accounts. By default the site will create two accounts for you when you register: cash account and margin account. I will not be delving into the specifics now; I will cover these two topics in other articles. For now just think of account as something you use to buy stocks, same way you would use a banking account to pay for things.
By default you will have $100,000 of virtual dollars in each of your accounts. But you can freely create some more simulated accounts with different amount of starting capital. You have $100,000 - you can use it all to buy stocks - let's do just that.
Creating Trading Order
Which stock should we buy? Vivatrader Stock Simulator provides you access to over 5000 stocks. These are real stocks that trade on US stock exchanges, but you can trade them using paper money, although the mechanics of trading process is the same as if you were trading for real.
You can try out various strategies and stock picking techniques, but for now we will just pick one single stock: IBM. Why IBM? Well, just because it is a well known company, you could buy any other stock as well.
Choose Trading from the menu on top of your page and click the Trade Securities menu item. On the page that will open enter information which describes your order:
Stock ticker (that is IBM)
Number of shares (let's buy 150 shares, so just type number 150)
Day order (it means that your order will expire if not filled until end of day)
Market order. It means that whatever current price is it will be used to fill your order
Put in some short comment, if you wish, the comment if for your further use only, it is not indented to be submitted to a broker or to an exchange.
That is it. Now click Continue and check out your order details. If you feel it is looking good, click Submit Order. And... what is next?
It is simple. You order will be priced almost the same moment and once you go back to List of Accounts, you will see some changes in the numbers. You successfully executed your first market order, time to take a break.
In coming articles we will cover more advanced topics, such as stock picking techniques, charting and technical analysis.
