This is done the forex market wikipedia the manipulation of imaginary money and investment positions that behave in a manner similar to the real markets. Before the widespread use of online trading for the general public, paper trading was considered too difficult by many new investors.
For example, investors can create several different positions simultaneously to compare the performance and payoff characteristics between multiple strategies. A textbook may state that writing a covered call is synthetically the same as writing a naked put, but in practice there are subtle differences. Other advanced strategies include leverage, short-selling, forex and derivatives trading. Successful execution and profit generation from these strategies usually require high levels of technical knowledge. The imaginary money of paper trading is sometimes also called “paper money,” “virtual money,” and “Monopoly money.
Stock market simulators can be broken down into two major categories – financial market simulators, and fantasy simulators. Financial market simulators allow users to generate a portfolio based on real stock entries and help them train with virtual currency. Most of the currently active financial simulators use a delayed data feed of between 15 and 20 minutes to ensure that users cannot use their data to trade actively on a competing system. Some simulators can produce random data to mimic price activity. Fantasy simulators trade shares or derivatives of real world items or objects that normally would not be listed on a commodities list or market exchange, such as movies or television shows.
Some simulators focus on sports and have been linked to active betting and wager based systems. Stock Market simulator engines can also be customized for other functions than just basic stock information tracking. Other applications that can be implemented with this software include popularity tracking and ranking from a set scale rather than an actual numerical value. Stock market games are speculative games that allows players to trade stocks, futures, or currency in a virtual or simulated market environment. Stock market games exist in several forms but the basic underlying concept is that these games allow players to gain experience or just entertainment by trading stocks in a virtual world where there is no real risk. Some stock market games do not involve real money in any way.
Players compete with each other to see who can predict the direction the stock markets will go next. Stock market games are often used for educational purposes to teach potential stock traders and future stock brokers how to trade stocks. Stock market games can also be used for entertainment purposes and to engage in fantasy trading competitions. Some stock market games are not based on financial markets at all. These virtual stock markets are often based on things like sports or entertainment ‘stocks’. Players are asked to invest in a particular sports team for example.