The internet has made it easier than ever to be an investor. However, there are pros and cons to this. The upside is that a record number of people have access to the markets. The downside is that a whole lot of these people have no idea what they’re doing. And jumping head-first into a random stock can be costly… especially when they’re playing with real money. Because there’s a big difference between investing and speculating.

This is where stock trading simulators can be beneficial. It’s the perfect way to test a trading strategy before finding out it doesn’t work… and losing your shirt.

The stock market is one of the greatest wealth-creating machines humanity has ever seen. But not everybody who throws a few bucks at some stocks will see a return on their investment. And the recent onslaught of new investors has proven that to be the case.

At the beginning of 2020 online brokers like TD Ameritrade, Charles Schwab and Robinhood reported spikes as high as 170% in new accounts. And a lot of people who jumped into the markets at exactly the wrong time – they didn’t actually know what they were doing – watched their money evaporate.

For every “overnight millionaire” story, there are hundreds of people who watched their nest eggs get fried because they took on too much risk. They skipped due diligence and followed their impulses.

Instead of blowing a bunch of money to see whether you’ve got a knack for this investing thing, it’s a lot easier (and cheaper) to test a theory and learn the basics on a virtual market. So before betting on a pennant chart leading to a big win or following a sawtooth pattern to time the market, assess your strategy. Let it play out in real time on a trading simulator.

This will make you a better, wiser investor in the long run. And developing an understanding of how the markets work will reward new investors with an education to last a lifetime.

The Five Best Stock Trading Simulators

Here are the five best stock trading simulators we’ve tested recently:

Coming in at No. 5…

NinjaTrader has an exceptionally robust toolbox available to its users. And while this trading service has a proper brokerage service, its stock trading simulator is just as expansive. Users can back-test their strategies, run real-time screeners and do some advanced charting. Among its most interesting features is the ability to turn back the clock and see how you would have done in different time periods. All of this makes NinjaTrader a top stock market simulator.

The only mark against it is that NinjaTrader’s free trading simulator requires a download and isn’t simply available online. But the process is still straightforward, and it’s easy to get started. You just give your email address, and you’ll be set you up with temporary login credentials once the download is complete.

At No. 4 Is…

HowTheMarketWorks.com has been around for a while, but the oldies can still be goodies. Setup is simple. You just make an account, decide how much cash you want to start out with in your account and get trading. The tabs at the top of the dashboard offer a glimpse of your virtual portfolio. And that’s where you’ll find the place to start trading. It’s all straightforward and looks similar to many brokerage accounts.

This stock trading simulator also features the ability to set up a trading game with friends to compete for the best returns. This is an ideal platform for new investors because of the vast array of educational material it contains. The major drawback is that this trading simulator only features the ability to trade stocks and exchange-traded funds (ETFs) – no options or futures trading is available.

At No. 3…

Ready to Start Trading?

There’s a famous story about the legendary hedge fund manager Ray Dalio. At age 12, he bought shares of Northeast Airlines right before it merged with another company. On his first trade, he tripled his money. Most of us aren’t quite so lucky, which is why it’s so important to develop a sound investment strategy… before you actually put your money at risk. This is where using some of the best stock trading simulators comes into play.

Some investors get lucky. Some don’t. But there are scores of smart ways to go about investing. Nonetheless, it almost always makes sense to put your investment theories to the test before jumping in whole hog.