Stock market trading is a process in which people invest their money to buy and later sell shares. But it contains high risk. Beginners are more prone to lose their money. So, if you are a beginner, how would you solve this problem? Don’t worry. Every problem has a solution.
The virtual stock exchange is a trading process where no investment of money takes place. This is accomplished for the sake of practice. It is also known as paper trading as no real money is involved.
Here are the steps to start a virtual stock exchange
- Create an account using your email-id.
- You will receive virtual money in your account, say ten lakhs or a hundred lakhs.
- You can immediately start buying stocks.
- Apply all the different strategies to test the trading.
- When you get enough, sell the stocks.
- Don’t forget to analyze your portfolio for tracking profit and loss.
- After gaining enough confidence, move from virtual to real trading and start investing your own money.
The virtual stock exchange has advantages as well as disadvantages. Let’s have a look at some advantages
- No documentation required:
There is a high risk of your documents getting used in illegal tasks if you submit in an unknown platform. Hence, here you will be safe because there is no need to submit important documents.
- No real money is required in the whole process:
You need not invest your money anywhere. In Fact, the platform offers you virtual money for trading practice.
- Will get to know different strategies:
You can’t try any strategies you wish for trading and can make a note of your portfolio from which you got benefits.
- No risk involved:
As no real money is there in trading, you can buy and sell stocks by whatever strategy you wish. By all means, you are safe.
- Learn your mistakes:
Every beginner makes a lot of mistakes and they can learn from them. So that their next step becomes quite easy for them. You can avoid those mistakes in real marketing.
- No limit of trading:
For the virtual stock exchange, no limit is there in trading because the user has to learn all the basic things. If a limit is applied then many attainments would be left behind and have to face some loss in real trading.
- Understanding dynamics of the share market:
You can understand all the steps involved in a share market. For example, how to buy and sell shares or how to invest or withdraw money.
- Build confidence and interest:
Play the virtual stock exchange like a game. The more interest you gain, the more you keep on practicing and gain confidence. Invest your real money with enough confidence.
As no one is perfect in this world, a benefiting aspect will have some disadvantages too. Disadvantages of a virtual stock exchange are as follows
You feel low pressure on yourself:
You won’t feel any pressure on yourself as there is no need to invest real money. The motivation of pressure will only make a person act for the hard work.
Effect of external conditions:
In real trading, a lot of marketing conditions affect the share market. But in most of the virtual stock exchange cases, those conditions don’t matter. That is why virtual stock exchange and real trading aren’t totally the same. One must have some experience in real marketing too in order to become nearly perfect.
You aren’t going to lose any of your precious things in this practice. That is why you are of course going to feel low motivated and show little interest in the virtual stock exchange.
No emotions attached to this trading:
Low emotions for trading may lead to less motivation for weekly checks of the portfolio. Hence, it can quickly bore you and sometimes you even think to leave everything in the middle.
Many of the virtual stock exchanges are unrealistic because companies don’t want to get in networking with practicing parties. So they offer fake trading but this may impact you for real trading and may involve higher risks.
Practice all these strategies while doing virtual stock marketing. You will gain a good knowledge about trading.
Active trading: This type of trading involves buying and selling the shares in a short period of time. This is riskier. An active trader needs to be active at least once a day. You can gain profits through short-term trading.
Passive trading: The buying and selling of stocks would be minimized in order to decrease losses. Once you find a better investing brand, you can invest your money for a long period of time. But you need to keep analyzing the profit and loss. If the losses keep growing in the portfolio, then it’s time to sell it.
Value investment: This strategy involves buying the stocks at a low price when compared to their intrinsic value. This can work best for companies that are underrated. Once they attain a sudden profit, you can gain more through your investments.
Dividend growth investment: Here even if the companies aren’t gaining much profit, they promise to pay for the investor consistently every year. But you need to be stable for a deep-rooted time because gaining profit by this strategy takes a lot of time. The dividend is paid through the compounding method.
Contrarian investment: When the situation is not better during marketing, you can buy the stocks at a low price. But make sure to perform good research on that company. Choose a company that has higher chances to build up its capacity otherwise you would be at a great loss.
Indexing: In this strategy, people usually invest in multiple companies rather than one. If they get a loss in one, then they can keep hope for other investments. This is the least risk you can create.
Try gaining knowledge through knowledgeable books based on investing. Even before starting a virtual stock exchange, you need to have a little basic knowledge about stock marketing. So make sure to begin your marketing career perfectly.