Virtual Trading

Investors can practice trading stocks, options, futures, and currency with play money. Companies offer virtual trading to advertise their services, and to give investors confidence in doing trades. Some programs require no initial deposit. The investor opens a virtual account and trades, but only using virtual money, to test strategies, and to learn the mechanics of trading. Historical data or delayed market quotes are used to determine account balances, which can be reset to start over. Using historical data to backtest greatly shortens the time for testing strategies.

However, virtual trading simulations are limited because there are no real emotions involved in the trades, which often moves the investor to make unwise choices. It may also build unwarranted confidence, either in one's ability or in certain strategies. While backtesting can be done to quickly test strategies, they don't reflect current market conditions, and, thus, may lead to losses in real trading. Some virtual trading companies include:

• CyberTrader,
• Fidelity (Wealth-Lab Pro),
• FX Solutions,
• optionsXpress,
• Scottrade.

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