How Trading Simulators Work

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A trading simulator platform is a tool that gives you a glimpse of a real trading experience. This tool is usually a feature of a full suite trading platform. Most simulators are offered for free, so that potential customers can test the trading features, but their best use is for learning the ropes of the stock market. In the following lines, we will talk a little about the mechanisms and the advantages of these tools, and we will also teach you how to choose the one that will best suit your needs.

The virtual trading experience

A virtual trading environment is very similar to the real experience, the main difference being the fact that you are not using real money. Instead, you are provided with virtual dollars, like in a game. However, the simulator will let you see real stocks and other commodities, sometimes with real time prices and other valuable market data. Even if you can’t buy those stocks for real, you can see whether or not your trading strategies would have worked in real life. Simulators also feature a wide array of market indicators, so they are a great tool for learning the mechanisms behind the stock market. 

Simulator advantages

Aside from the obvious advantage of learning the trading process, simulators can also offer numerous other benefits such as:

  • Gaining valuable market knowledge
  • Learning how market indicators work
  • Building a practice investment portfolio
  • Learning how brokerage systems work
  • Testing short-term and long-term investment strategies

Who can benefit from these tools

First of all, trade simulation platforms are available to any individual who is interested in them. As we already mentioned, most of them are free and they only require a basic signup. So, they are ideal for people who want to learn the basics of stock trading. However, they are also useful in several other scenarios such as:

  • For trading schools or for training new traders
  • For teaching traders, how to use a new trading platform
  • For experienced traders who want to test new strategies
  • For organizing trading competitions (to build team spirit, or to increase motivation)

How to choose a good simulator

There are dozens of simulators on the market, and you need to keep a few things in mind to narrow down your choices to the best ones. For a simulator to get as close as possible to the real treading experience, it should have several key characteristics:

  • Ease of use – When comparing various simulators, narrow down your choices to the ones with clean interfaces. Ideally, you should opt for one with a customizable interface. From this point of view, we recommend the ETNA Trading Simulator which lets you personalize the dashboard with your preferred widgets, so that you can practice in a clean and comfortable trading environment. The tool should also be available on all browsers and operating systems, so that you can use it from anywhere and from any device.
  • Market data – To do proper research before your virtual trades, you will need access to essential market data. The more data you have, the more informed you will be, thus being able to minimize your risks. For rich market data, go for the Etna Simulator that provides not only streaming quotes, but also charts, level II market data and even financial news.
  • Options – The wide majority of free trading simulators will only let you trade stocks, but our advice is to look for a tool that lets you trade several commodities. Moreover, it should have sufficient features to let you test even advanced trading techniques like shorting a stock.
  • Reputation – Many trading simulators work like gambling games, and some are quite shady and try to trick the users into paying hidden fees. So, be very careful and try to choose a reputable software provider, one which has been on the market for several years. Thus, you can rest assured knowing that no one will trick you into fake fees, and you will also have access to quality trading features, aligned to the latest industry standards.
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