- by Garima Mohta
- 17th Oct 2020
Ten Reasons Why Everyone is Learning the Stock Market Trading Game
Stock market games are a great way to practice whether you are a beginning investor or have been investing for a while. These games are an example of learning by doing, also known as experiential learning and can be effective learning tools.
Reasons, why this is on-trend these days, are as follows:-
1.Gain basics of investment – Games are a fun and educational way to learn to invest, a key way to accumulate wealth. Players can quickly fill and modify their portfolio by buying and selling stocks with ease. Many people avoid investing because they believe it is too complicated and fears losing money. Those are valid concerns. That’s a prime reason why getting your feet wet with the game allows you to get more comfortable. Trying out trading and investment strategies are less intimidating.
2.Diversifying Portfolios Reduces Risk And Growth – Creation of virtual basket of stocks needs proper understanding of how important it is to be diversified in different industries. When looking at a portfolio, you may favour growth stocks, value stocks, stocks with above-average dividend yields or a blend of these. Virtual investors can become attuned to market information that may affect one stock or particular group more than others.
3.Important macro factors – Beginning investors need to understand external or macroeconomic factors that may impact the market. It would be beneficial for players to read about relevant financial news to learn about important events that can sway the market significantly.
4.Dealing with market volatility – From the relative safety of playing a virtual stock market game, players can better understand that market volatility happens regularly. Through virtual games, you'll be aware of rhythms in the market and how to prepare for a volatile market and accordingly can explore strategies to deal with turbulence without the loss of real money.
5.Competition With Your Peers Is Realistic – Most games rank players play daily and allow to see each other’s stock purchases, performance and ranking. They can research what stock (or stocks) pulled them down, and decide if they should buy more with available virtual cash to reduce their cost basis. Young people can engage in collaboration and collegiality within their group.
6.Boosts Confidence And Self-Esteem – The reality of picking stocks and learning some investing basics is a big confidence booster. The conclusion of playing these games is that it is fun to learn how to invest, how to invest in one's accounts with their own money and become more confident in one's abilities. It also provides the incentive to put aside savings for investment purposes which is a worthwhile accomplishment.
7.Learn how the markets and indices work – It makes one acquainted with the popular markets and indices. Namely, the NYSE and NASDAQ, and the S&P 500 and the Dow, respectively (if you’re trading in the US). By watching their fluctuations, learning their patterns, and so forth, is an important part of investing. And using a stock market simulation puts you right in the thick of things.
8.The idea about brokerages – To trade on the stock market you have to use a brokerage. Brokerages are essentially the intermediary that makes sure your orders go through the way they’re supposed to and nothing gets screwed up. There’s a common system shared between the various online brokerages and you would need to learn how this works so you can invest effectively.
9. Test investment strategies – There are a variety of investment strategies one can use when they trade on the stock market and it’s important to try them out before you implement them in your real portfolio. With the help of simulated portfolio you can experiment with long-term and short-term strategies, and different portfolio allocations and diversification techniques.
10.Mind mapping and engaging – Investing isn’t a game, but trading on a stock market simulation is fun. You don’t need to worry about your real money and you have the freedom to experiment. After all, watching your virtual portfolio increase in value is great positive reinforcement.
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