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What are the Best Tips for Virtual Investing?

Article Details
  • Written By: Jim B.
  • Edited By: Melissa Wiley
  • Last Modified Date: 06 December 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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Virtual investing is the process by which investors make simulated trades on the stock market without using real money. This is a service usually afforded online by investment firms and other websites and allows potential investors to manage a virtual account without encountering any real risk. As this is the case, virtual investing provides a good opportunity for investors to test the waters of the market before making actual investments. Investors should use the service as a way to test out theories and strategies they might implement down the road in their actual accounts.

Many people wish to try out the stock market but are reluctant to do so for fear that their unfamiliarity with the intricacies of trading will cause them to lose their money. Websites that allow investors to practice trading by giving them simulated accounts stocked with fake money can help investors to overcome this fear. These sites offer the service for free or perhaps for a small fee and attract both novice and experienced investors. Anyone who tries virtual investing should use it as a way of getting valuable stock market experience.

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The ideal way to practice virtual investing is to use it as a test run for an actual account. As there is no risk of losing actual money, investors may be tempted to give themselves unlimited imaginary accounts with which to play, making endless simulated trades in the process. If the virtual accounts don't reflect investors' actual financial situation, the process amounts to little more than a game. Investors should try to treat their virtual accounts as if they were stocking them with their own money.

In addition, virtual investors should be aware of how their trades would affect their accounts in real life. Many virtual investing sites allow their customers to make unlimited trades, but on the actual stock market each and every trade carries a commission charge that investors must pay to their brokers. Finding a site that works commission into the equation is a good way for an investor to manage a realistic virtual account.

Investors should always be willing to try new things when they are virtually investing. For example, experienced investors who concentrate on stock trading might want to use their virtual account as a way to test out other investment opportunities, like options trading or the foreign exchange market. Even if they wish to stay within their normal comfort zone, a simulated account should be the place that investors try out strategies and see if they're viable. In this way, a virtual account can help take some of the guess work out of the investing process.

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