No one likes a lemon, whether it’s a disappointing sports car, user-unfriendly trading platform, or sizable stock trade.
Want to take a brokerage account for a lap around the track before you commit your money? Or maybe test a new trading strategy? Thankfully, some brokers offer a free virtual trading environment, so you can test the trading platform, as well as your own mastery of the markets.
Here are NerdWallet’s tips on getting started in virtual trading.
Check Out Your Options
Most brokers offer exposure to a whole variety of asset classes, but can you practice trading any of them? If you’re restricted to stock, and you intend to trade futures, it’s like training for a marathon by practicing pullups.
Featured Broker: With OptionsXpress, you can trade stock, and futures. Their analytic platform starts with $25,000 and is designed to be customizable.
Past or Present?
Active traders rely on up-to-the-second data when trading, whereas casual investors tend to place a couple trades per month and can use delayed quotes. If you intend to trade on trends in real-time, make sure that your paper account behaves in the same manner as your normal account.
Featured Broker: OptionsHouse offers streaming data to their in-depth paper-trading platform. You’ll have tons of features to play with. The only downside is that there are few educational tools for beginners.
Are You Getting the Full Package?
If you’re using the virtual account for the sole purpose of testing a trading platform’s capabilities, then you’d better make sure that you have access to all of them. Some brokers only offer a limited selection of capabilities unless you sign up for an account.
Featured Broker: tradeMONSTER offers a huge selection of stock and options trading tools to practice with in their paperTRADE account. You’ll receive full customization abilities, simplified spread-creation, and risk-analysis for various scenarios.
Some virtual environments are set-up to help first time traders get a grip of the market by providing educational resources and simplified methods. But, even if you go for the intermediate/advanced version, make sure to take the opportunity to learn something about your own trading habits. Do you make silly trades based on “hot-tips”? Do you feel more confident with options than you do with futures? Or are you an investing superstar?
Featured Broker: Kapitall uses gamification to help first-time investors get a grip on the process. You simply drag-and-drop to add stocks to your portfolio. And the best part? Their normal trading system behaves in the same manner. Signing up is free, and you don’t need to commit a dime to start paper-trading. The downside is that you can only trade stocks, and you don’t have as many modeling capabilities.
Measure Your Performance
If you’re using paper money to test a trading strategy, you need to keep in mind where you started, and where you ended up. Every account starts with an initial virtual balance. Keep this is mind, so that you can properly gauge your results.
Featured Broker: ChoiceTrade starts you off with $100,000 in virtual funds to test your skills. While you can only practice with their web-platform, that level of analysis is probably enough, unless you’re a professional day trader.