ONLINE STOCK MARKET SIMULATORS – WHY WE PLAY THE GAME INSTEAD OF INVESTING

Originally Published through Yahoo Voices

A stock market simulator is a program or application that attempts to reproduce or duplicate some or all features of a live stock market on a computer or on a network so that a player or member may practice trading stocks without financial risk. Most of the currently active simulators can be broken down into two major categories – financial market simulators, and fantasy simulators. 

Financial Simulators
Some examples of financial market simulators are Investopedia.com’s simulator, eInvesting.com’s simulator, or Stocksquest, all of which allow you to generate a portfolio based on real stock entries, but with fantasy money. TradingPlaces is an Australian stock market simulator that is funded by an Australian hedge fund and sponsored in part by JP Morgan to allow university students to practice and partake in stock trading so they can see if they want to go into that field of employment.

All of the currently active financial simulators use a delayed data feed of between 15 and 20 minutes to ensure that you cannot use their data to trade actively on a competing system. Because they use actual stock symbols, even with a fantasy portfolio you can get a feel of what it is really like to trade shares on a live stock market. As such, they can be a very valuable tool for both students and day traders who want to see if they have what it takes before they get their feet with their own money.

Investopedia is a very good resource for this, because not only can you learn how the market works, they have a huge online resource of terms and terminology. And, if you want to play with real money, it just takes a small switch in your account and you can go live. One account allows for both fantasy and real trading, very convenient.

Fantasy Simulators and exchanges

Fantasy simulator examples are The Hollywood Stock Exchange or the TV Stocks Online stock exchange, both of which trade fantasy stocks that represent real world items that would never be a real trading commodity. Hollywood trades stock in upcoming movies, movie stars, directors, and also film funds; while TV Stocks trades currently airing primetime television shows in both the US and overseas.

Other simulators that trade in non-real commodities are the TerrorXchange, GolfInvestors, and NewsFutures. TerrorXchange is a predictive system based upon worldwide terrorism probabilities, GolfInvestors lets the user buy and sell professional golfers, and NewsFutures allows the player to buy and sell future news events on the possibility of them occurring. such as The next Ice Age, or chances of an asteroid strike.

BlogShares is a long-running stock market simulator that trades in the popularity of online web logs or blogs. this game boasts more than 40,000 active members and has a high ranking among website popularity indices.

The PPX or Popular Science Prediction Exchange is a very new simulator that is based off the technology behind the Hollywood Stock Exchange and it is used by the team behind the magazine Popular Science to predict future events and see how close the players and the market can come to whether or not the event will actually occur.

Some simulators focus on sports and have been linked to active betting and wager based systems. Some sports related simulators include Jox Stox, ProTrade, and Wagerline. On these sites you can sometimes play with fantasy money, but most of them expect you to seed your account with real money before they let you play. This has caused some of these sports markets to be classified as gambling sites and be forced offshore of the US or be completely shut down.

Technology and implementation

Most of the online stock simulators run on either Java, JavaScript, ASP or php with a mysql database. Some of them are open source, and others are proprietary with the code being sold as valuable prediction market software. An example of a proprietary code is the Hollywood Stock Exchange. It’s system runs on a secure ASP server and is called the Virtual Specialist application. This has been licenced to a number of clients including MGM, Lionsgate films, and Popular Science. An example of non-profit code is the TV Stocks Online application. This was developed as a simple market exchange program and runs off a php base using MySQL. Fairly simple code without any advanced algorithms has ensured this system remains online without failure. Plus, it’s portability means that other markets can be developed without too much retooling.

The burning question would be, why go to the trouble of building a game when you can go and buy shares in a big booming company like Google. The answer is fairly simple; not everybody is a stock market guru, and very few really understand how the markets work. A lot of people buy shares and watch their investment dwindle away to nothing. Playing the games can give you the knowledge of how to make the market pay off, or let you know that you should not put your hard-earned cash into stocks because you don’t know how to make it happen. So, in short, if you want to invest, try a stock simulator first, get your feet wet with no risk, and have some fun doing it.