Virtual Financial Markets

A virtual financial market is a method of executing transactions (typically via the internet) that a financial markets trader can use to simulate their investing or trading practices without risking any form of real money.  Thus, the trader can simulate their trading decisions without any actual financial risk.

One of the core advantages of a virtual market is that it can be used to simulate expected future events and be programmed with expected prices to forecast various scenarios.

In recent years virtual trading has become a lot more accessible due to both the growing number of online trading brokers and availability of software for virtual trading.  In addition to simulating trading strategies, virtual trading is employed by companies to test an online broker’s trading platform and execution service before they open a real-world account. Whilst there are plenty of simulators and trading platforms in the market, some of the main ones are TradeStation, TD Ameritrade, Interactive Brokers and Webull.

TradeStation and its virtual platform TradeStation Simulator is a popular platform for high-volume professional traders because the simulator offers all the features of a real-world trading platform.  After registering, a user can trade with any amount of money they require.  One of the main advantages of TradeStation is that it allows users to test out their trading decisions and strategies and use the platform’s real-time data to determine the results.

TD Ameritrade has developed a virtual trading app called paperMoney.  The app gives the user $100,000 USD virtual currency and uses the broker’s thinkorswim trading platform.  As well as the thinkorswim platform, users also receive streaming news and can watch markets as well as their watchlists.

Interactive Brokers uses a ‘Paper Trading’ account to bring its trading platform to virtual trading.  Once registered, a user is given $1 million USD in paper money to trade with.  In addition, a user has access to the broker’s full range of trading tools.  One of the advantages of Interactive Brokers’ virtual trading is that it simulates market conditions with great realism.  Users can experience how they might respond if they were trading in real life.  The sole downside is that you need to both open and find a real-world account with Interactive Brokers before you can use their virtual tools.

Webull has developed a trading app that enables free trading of anything from stocks and derivatives to cryptocurrencies.  It allows users to practice trading through its paper trading feature.  Once registered, users can set their own money amount and trade with their virtual money.  Through paper trading, users can track their strategies and how their trades perform over time.  Additionally, the app allows users to see their daily and overall profit and loss statements as well as how much buying power their portfolio has.

While simulators and virtual trading can be used as a game, they do have some serious real-world uses.  By having access to real-time data, they allow traders to test their strategies without risking any actual money.  Secondly, it allows potential customers to test a broker’s real-world trading platform before they actually start to trade.  As the demand for virtual trading platforms continues to grow, so too does the need to make them as similar to real-world trading as possible.

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