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Virtual Trading: How Stock Market Simulators Work

These brokers have stock simulators that let you virtually test drive their platforms and try out investing new strategies.
July 5, 2018
Brokers, Investing, Investing Strategy

There’s nothing wrong with a little friendly investing competition. Getting in on a pickup game is as easy as downloading one of the dozens of virtual stock-trading simulator apps and racing to see who multiplies their Monopoly money the most before the clock runs down.

It’s all good fun — a risk-free way for investors to work out those daredevil day-trading urges, claim bragging rights and learn a little bit about how investing works. (Want to start with a leg up? Read about how to buy stocks.) That is, as long as you recognize that a stock-picking game isn’t truly like investing in the real world.

Best online brokers for trading practice

In the real world, investors aren’t competing against other players’ returns. “Winning” is about equaling or exceeding the performance of a benchmark index. Success isn’t determined over weeks or months but years. And, of course, in the real world there’s actual cash on the line.

» Read more: How to begin (and survive) stock trading

For a virtual-trading practice environment that’s close to the real thing, you can’t get much better than the simulated investing platforms offered by actual working online brokerages.

The best virtual trading platforms have a fully functioning setup with the same tools that active customers use.

These practice accounts — sometimes called paper trading accounts — typically mirror the broker’s working trading platform.

Most are free, although they may require you to set up an account. The best give test drivers access to a fully functioning setup with the same tools that active customers use: watch lists, stock screens, research and live or slightly delayed data feeds.

» Learn more: How to open a brokerage account

Here’s a sampling of the stock simulators some top brokers offer:

Virtual stock trading platforms

BrokerHighlightsAccount setup and requirementsHow it worksGood to know
Interactive Brokers paper trading account
  • Advanced trading strategies/products
  • Simulates multiple exchanges
  • Free to customers with a regular trading account
  • $10,000 account minimum
  • Desktop-based platform has full lineup of tools from TraderWorkstation platform
  • Account functions are limited
The simulator is available only to IB customers, but IB offers free demos of its TraderWorkstation and WebTrader platforms
TD Ameritrade's thinkorswim paperMoney account
  • Advanced orders and back testing
  • Foreign exchange and futures
  • Free 60-day trial to paperMoney, the virtual version of TD’s thinkorswim platform for active traders
  • Requires registration
  • Desktop-based platform
  • Virtual IRA "funded” with $100,000 in practice money
  • Offers virtual margin account
The thinkorswim platform is aimed at advanced and frequent traders. The beginner-friendly Trade Architect platform does not have a virtual mirror practice account
TradeStation simulator
  • Strategy automation, advanced orders, alternative market types
  • Can reset account balances at any time
  • Free for TradeStation clients ($5,000 account minimum)
  • Desktop simulator
  • Some features limited based on the customer’s subscriptions to feeds and data
Features on the simulated platform are based on customers' subscriptions to feeds and data

Source: Broker websites

If you’re interested in checking out a broker that doesn’t offer a paper trading platform for potential customers, or if the qualifications for signing up are too onerous, contact customer service and ask if it can provide temporary access to a demo account.

What’s in it for you

Of course, brokers hope that people who sign up for virtual trading accounts eventually convert from dabblers to paying customers. But there’s no obligation — unless, of course, you have to sign up for an account to get access to the stock simulator program.

Even if the relationship remains superficial and temporary, you can get a lot out of the experience, including:

A general investing education: Many of these platforms offer a very real education in investing, with a library of articles, tutorials, demos and, at some brokers, the chance to interact with an online community available to answer technical and investing questions.

A safe space to learn the mechanics of placing trades and building a portfolio: There’s a reason student drivers take the wheel for the first time in abandoned parking lots. The best place to make all the rookie investing mistakes, such as mistyping ticker symbols or misunderstanding order types, is wherever you can suffer the least financial damage.

The chance to test drive new investment strategies and types: Looking to expand your investing repertoire? Trying before you buy is especially important when venturing into new strategies, like shorting stocks and trading options, and more sophisticated investing fare such as futures and commodities and foreign currencies (forex).

The chance to practice deep breathing exercises for trying times: As billionaire investor Warren Buffett says, one of the keys to being a successful investor is the ability to control the emotions that lead other investors astray. Even though investing decisions are less loaded when there’s no real money on the line, the brain doesn’t always fully absorb that concept — think haunted houses, roller coaster rides and movies featuring vintage dolls that come to life and carry out evil capers after dark. The emotions you experience while investing in la-la land provide a preview of what to expect when you encounter the real and unavoidable market ups and downs.