Last Updated on 21 September, 2020 by Therobusttrader
Whether you are someone who has recently taken an interest in stock trading or someone with years of experience, stock simulators are your best friends. Practicing on a stock simulator is the best way to prepare yourself for actual trading. However, there are a number of different stock simulators on the web and it can be difficult for you to decide which one of them is a cut above the rest.
The best free stock trading simulators include TradeStation, HowToTradeTheMarkets, TradingView, MarketWatch Virtual Stock Exchange, and TD Ameritrade. All of these stock simulators have their positives as well as negatives. Taking a look at the strengths of each simulator along with its weaknesses can help you decide which simulator is the one for you.
So let’s have a look at these stock trading simulators, and see what features they offer! But first, we’ll just have a look at why you should use a stock trading simulator!
Why Use Stock Simulators
Stock simulators essentially allow you to trade stocks virtually. This means that while the prices in the stock simulators will mirror the stock market in the real world and you will have a set amount of money that you can invest, you will not actually be making any trades.
Instead, you will be able to build your own virtual portfolio and use it to closely monitor your trades. Nowadays, virtual stock simulators have pretty much everything you need including the various different order types that are offered by modern brokerages.
Since the price of all the stocks that you have traded will accurately reflect their prices in the real world, you can use stock simulators to see how you would have performed if you were trading on the markets. While stock simulators are more common than others, other simulators are also available such as forex, futures, and commodities.
There are numerous reasons why you might want to use a stock simulator. Here, we outline two of the most common ones.
New Traders Learning the Rules
This is by far the most common reason as to why people use a stock simulator. New traders who do not have a lot of experience under their belt should not jump headfirst into the stock market. Instead, they should first drip their feet in through stock simulators and learn how to trade properly.
One really important tip for new stock traders is to trade on the simulator as if you were trading with real money. You might be tempted to make extra risky bets since the cash in your account is not real. However, it is really important to instill discipline in yourself and make sure that you are actually ready to trade on the markets.
A stock trading simulator is also the perfect place for new traders to begin using their first trading strategy. During your early days, you will probably do better if you utilize strategies that have worked well for other people in the past. Eventually, you can use the experience and the insight that you have gained to modify the strategies and eventually build one on your own.
Just be aware that most trading strategies don’t work, so make sure that your strategy is verified and vetted through both backtesting and robustness testing.
Testing and Backtesting New Strategies
The stock simulator is not only used by beginner traders. In fact, it is quite common to see highly experienced traders who have made a killing in the markets for years using a stock simulator. This is because a stock simulator is by far the best place to try out new strategies before you go live with them.
There are two different ways to test a new trading strategy, testing and backtesting. It is best that you use each of the aforementioned methods to make sure your strategy works.
Testing involves running a strategy live on the stock market and comparing the returns against a benchmark. This is a tried and tested method that is used by traders worldwide. Backtesting, on the other hand, utilizes your strategy on past data from the stock market to see how well it performed.
Remember that a strategy which is actually flawed may net you a profit in the short-term. This can be due to a number of factors such as the general market trend or favorable market conditions for your strategy in the short-term. Backtesting to some extent takes care of this problem since you can apply your strategy on data which goes back years.
It is much better to see your virtual account take a hit rather than lose your hard-earned money. As such, remember to first try out a new strategy even if you only made a slight modification to a strategy that you already used.
When Not to Use a Stock Simulator
A stock simulator is definitely a great tool for traders. Still, it has its limitations. There are certain cases where you may not want to use a stock simulator.
Perhaps the most obvious one would be if you are a long-term investor. While it is a good idea to use a stock simulator if you are someone who engages in for example swing trading, it might not be a good idea to use a stock simulator if you invest based on fundamentals.
This is because investors who trade stocks based on their fundamentals often hold positions for multiple years. Such traders often do not care about price movements in the short-term, relying instead on catalysts to move the stock price near its catalyst value. In other words, knowing if such a strategy works or not will take many years, which simply isn’t feasible.
This pretty much applies to any trading strategy that is as long-term as the one mentioned above. Do remember that a stock simulator is still a great tool even for long-term investors. If you are someone who has the patience to use a stock simulator for a long time before you actually invest your own capital, then you definitely should have a look at it.
Is a Free Stock Simulator Worth It?
As is the case with almost everything else, the paid options are better. Usually, paid stock simulators come as a package with an online brokerage account. These simulators allow you to have access to a lot more data than the average free simulator. On top of that, they might also have additional features that could be of use to advanced traders.
Still, there are many good, free options on the market, if you just look carefully enough! That is why we have studied all of the mainstream stock simulators in depth and tried to create a list for people who want to use a simulator but do not want to shell out cash. Using a leading free stock simulator should not have any major disadvantage compared to a paid one!
The stock simulators listed here are as robust as the paid options (in most cases). At the very least, they should be more than enough for any trader to accurately trade in the stock market and test themselves before going live.
Official Data vs. Free Data
Perhaps the biggest advantage of using a paid service over the free one is that you get access to the official stock market data. The data that is used by free simulators is sometimes provided by third parties. As such, there is a chance that it is lagging behind the quotes from a stock exchange.
Although this may seem like a huge problem, it is not that big of a deal. Data from third-parties may not be 100% accurate, but it does closely mirror the actual data from the exchange. Because of this, you will be able to reasonably ascertain whether or not a trading session was successful. Since the point of a trading simulator is to learn/test, you should be fine as long as the data is consistent. It should not bee too much of an issue!
The Best Free Stock Trading Simulators
Here is our list of the best free stock trading simulators currently available.
TradingView is perhaps the best free tool for stock traders, period. When it comes to stock charting, there definitely are very few tools which are free and can
compete with TradingView. You can chart anything from stocks to futures to Cryptocurrency.
On top of that, TradingView utilizes the same charting platform for every single market. If you are someone who is planning on trading securities other than stocks, then mastering TradingView’s interface will go a long way.
TradingView allows you to create watch lists where you can monitor the price of stocks that you are interested in. You can also set up alerts for stocks that you are interested in. Like most services of its caliber, you have the option to connect your broker to TradingView and use its charts to trade directly.
Also, you can subscribe to their TradingView premium service which provides you additional features as well as realtime data from the stock exchange. Once you start trading with your own capital, it might be a good idea to subscribe to TradingView premium as their charts are very clear and their interface is very intuitive.
Lastly, TradingView has one of the best social media services of any free stock trading platform. Not only can you share your ideas and charts with other traders who are using TradingView, but you can also follow traders. Following other traders has a plethora of advantages as you can see which charts they share and what they are doing on TradingView.
MarketWatch Virtual Stock Exchange
Although the VSE is marketed as a game by its creators, it is actually a very robust stock trading simulator. When you start on the VSE, you can either create your own game and trade on your own or join a game that is currently underway (there are literally thousands).
Each game has its own set rules. For example, if you are creating your own game, you can decide whether or not people are allowed to trade on margin etc. Apart from that, you can alter settings like the length of the game as well as the amount of starting money.
The main disadvantage of the VSE is that you do not have the same versatility when it comes to the number of securities available as you do in TradingView. The VSE currently only allows you to trade stocks listed on the two American exchanges. Also, there is no option to backtest a strategy when using the VSE.
Competition is a huge part of the VSE, and it is complemented through various different social tools. You can discuss the strategies that you are using with other players or invite your friends to trade with you. You also have a watch list where you can keep an eye on the stocks that you are planning to invest in.
If you are someone who would like to test a new strategy against other traders currently in the market, then the VSE may be the simulator that you need. However, do remember that competition with virtual money can often lead to people taking on an exorbitant amount of risk on the VSE. There is a decent chance that someone in your game (especially if it has a lot of players) will luck into huge returns and be difficult to beat.
NinjaTrader Free Trading Simulator
Ever since it was first introduced in 2003, NinjaTrader has been at the forefront of trading platforms. Like TradingView, it has both a free version and a paid version (which is subscription-based). The major difference between the two is that you can only trade with virtual money on the free version whereas the paid version allows for trading with your own capital.
The free version does have all of the features that you will find on the paid version, which is what makes NinjaTrader so good. You can use all of the charting tools that you would get with the paid version. Not only that, you also have the ability to make use of various different order types, just like you would with an actual brokerage.
Perhaps the best feature of NinjaTrader is its backtesting option. With it, you have the ability to go back decades and try out your trading strategy. It is up to you whether you decide to see how you would do during the dot-com bubble or the 2008 financial crisis.
TD Ameritrade is one of the most well-known brokerages currently operating. Their ‘paper trading’ platform, which is their free trading simulator, only allows you to try it out for 60 days. After that, you need to become a customer of the brokerage in order to continue using the simulator.
TD Ameritrade is perfect for traders who want a robust simulator as well as complete brokerage services in one platform. The trading tools provided to you when you are paper trading are exactly the same as you would get if you were a paying member. TD Ameritrade allows you to trade everything from stocks to commodities, and has a lot of information available for both of them.
One of the main reasons to try out TD Ameritrade is their Thinkorswim platform. Thinkorswim allows you to trade currencies and futures along with stock and has more than 400 various studies and analysis tools available for use. TD Ameritrade is a great choice for new investors who do not want to switch platforms as they become an experienced trader.
At the start, you are given $100,000 of virtual money and you have access to margin trading as well as the various different order types that traders use. If all that isn’t enough, TD Ameritrade also has a very robust news section which helps you make sure that you are up to date with all the latest developments regarding the markets. Couple that with a watch list, and it is very easy for you to keep an eye out for opportunities.
Wall Street Survivor
The Wall Street Survivor is one of the oldest free trading simulators currently available. If you are someone who is new to trading, then this platform should help you get started better than anything else on this list.
Wall Street Survivor has a very modernized interface for its stock simulator and offers you all the features that you would expect from a top of the line simulator. Wall Street Survivor also has leagues like MarketWatch Virtual Stock Exchange where you can compete for prizes. Playing the leagues can be a good way to see if you are improving as a trader and how well you perform under pressure.
What makes Wall Street Survivor perfect for beginner traders is its educational component. The Wall Street Survivor covers a lot that a budding trader could benefit from in order to advance in the markets. Not only can you learn about investing and trading, but Wall Street Survivor also provides knowledge pertaining to personal finance.
If you want to test yourself as you become a profitable trader in the markets, you have access to various different quizzes. These quizzes are specially tailored for different levels so that you can continue to enforce what you have learned as you gain experience.
Although TradeStation’s main function isn’t being a stock trading simulator, every client has access to a demo account. There they can trade risk-free with virtual money, while also getting access to the advanced features of the TradeStation platform.
In our opinion, TradeStation is the best trading platform out there right now. It offers advanced features with an easy to use, yet powerful programming language. You also have access to automated trading, where TradeStation will run your strategies for you. That way, you could build your own strategies, and then let TradeStation auto trade them for you. This is how we trade ourselves here at The Robust Trader, and it offers many benefits over discretionary trading.
With TradeStation, you can trade futures, stocks, ETFs, and options on the American market. Unfortunately, you don’t have access to European markets. That is if you don’t sign up for TradeStation Global, that partners up with Interactive Brokers to provide access to global markets through the TradeStation platform.
The TradeStation platform is free for all TradeStation Clients.
Howthemarketworks is a free stock trading simulator that lets you create your own custom stock trading game. With 400 000 individuals using this service each year, it’s one of the bigger alternatives on the market. Each new user gets $100 000 in virtual cash.
The simulator is advertised as “the web’s most popular free stock market game”, which sets the bar quite high! Users can buy stocks, exchange-traded funds, and mutual funds both in the Canadian and U.S markets.
Global stocks from countries like Tokyo, Hong Kong, Australia, and London are also available, together with options and futures contracts. How the Market Works also enables users to do currency trading and short-selling, which opens the door for some more advanced trading concepts.
When it comes to trading modes, there are two available. You can choose between real-time hours, with after-hours trading included, or a fun mode that lets you trade 24 hours a day.
One great aspect of How the Market Works is its educational features. Users can create their own stock trading contest, and invite other players to join. That way you get a much richer experience than if you would have played all by yourself.
In addition to that, How the Market Works also offers access to a range of small courses on how the stock market works and related topics.
Investopedia Stock Simulator
Investopedia, which is a financial site you probably have stumbled upon in many google searches, has its own stock trading simulator. By including and integrating real-time stocks news in the simulator, Investopedia’s alternative on the market is a realistic yet powerful option for those looking for a stock trading simulator.
And just as with “How The Market Works”, you can compete in quarterly competitions, even if you cannot create and customize one yourself. In those competitions you can unlock achievements, that will add a certain number of points to your overall score!
Investopedia’s stock market simulator also includes a number of “how-to guides” that will guide you on topics such as trade types, how to purchase a stock, and short positions.
Stock Trainer is a free app for Android devices that enables aspiring traders to trade the stock markets with a simulated account. The app itself might not look too attractive at first glance, but it has all the essential features you will need. This also includes access to a variety of regions outside the U.S.
An Actual Journal
The last virtual trading simulator is one that you can make on your own. If you are an aspiring daytrader, then this method is not for you. However, those who want to learn how to invest for the long-term have a lot to gain from a journal.
If you are someone who is looking to buy stocks and hold onto them for a number of months or years, then the positions that you will take will be much larger than those found in daytrading or swing trading. On top of that, the number of trades that you make over a given period will also be far less than most other forms of trading.
For this reason, you can simply use the web for analysis and write down your trades on a journal. The best thing about this is that since you already have a trading journal, you can also attain various other benefits of trading journals.
Of course, this does mean that you will not be able to track your positions live. On top of that, you will also not be able to attain all the various benefits that are provided by other simulators on this list such as advanced charting abilities. A journal is not for everyone, but there are some traders who end up preferring a journal over a web-based platform.
Still, it’s highly recommended that you keep a trading journal of your emotional state in each trade. You also should write down the mistakes you’ve made. Later, you may return to your entries, and maybe you will then get a better hold of what’s holding you back!
Tips for Using Stock Simulators
Stock simulators can be incredibly useful. However, you should follow the following tips in order to get the most out your simulator experience.
- The first one is quite obvious. Treat the simulator as if you are trading with real money. It is important that you instill discipline in yourself while trading right from the get go.
- To continue, remember to practice real risk management techniques, as managing risk gets more and more important as you continue to build your portfolio.
- Many traders often reset their virtual account after a run of bad luck. Avoid doing that as you want to simulate the real world as much as you can.
- If you find yourself getting absorbed by the competition in ‘league trading’ and making foolish trades, disconnect and try to make trades without the distractions of a league.
- Once you are consistently making a profit, be careful when switching over to real money! Trading live brings a lot of new emotional challenges!
Whether you are a new trader or an experienced one, there is use of the simulator for you. New traders can learn trading while experienced traders can try and perfect new strategies before going live with them.
We have highlighted several free stock trading simulators above. Many of them offer the same functionality, and you should be happy regardless of which one you choose!
If you still cannot decide between these simulators, then it might be best for you to give each of them a try before you pick. They are free after all!