How to Practice Stock Trading Online

Trading stock online can be intimidating. It can also be costly if you don't know what you are doing. It is worth your time to practice stock trading online before using actual money. It will give you confidence and allow you to work through most mistakes made by beginning investors. Follow these tips to practice stock trading online.

Step

Locate a virtual stock exchange. These are fantasy stock-trading games that you play online. They use real gains and losses from real stocks. Only the money is make believe. VSE.marketwatch.com is a division of the Wall Street Journal. Investingexperience.com offers a game geared toward people who want practice as day traders. Others include wallstreetsurvivor.com, stocktrak.com and simulator.investopedia.com.

Step

Open an account. Joining a virtual stock exchange is easy. Most games are free. Some offer prizes for winners. You pick which stock exchanges to use (NYSE, Nasdaq or AMEX), which stocks or mutual funds to invest in and whether you want a public or private game. You can also decide how much virtual money to start with and the conditions of victory.

Step

Focus your practice stock trading on where you plan to eventually invest in real life. If you are curious about small cap stocks, then practice with them. If you are intent on mutual funds, then give them a try. It doesn't make sense to practice with risky IPOs if you never plan to buy them for real.

Step

Experiment with different investment strategies if you are not sure how you wish to invest. When you practice stock trading online, you can have several competing portfolios with different investment strategies. You could try aggressive, moderate and conservative portfolios side by side to see how they do.

Step

Keep an eye on your virtual investments like they are real investments. Virtual stock portfolio hosts usually provide market research and sometimes real time stock quotes. Many allow you to monitor your performance relative to other players in the game or other portfolios in your practice account.