“Tell me and I forget. Teach me and I remember. Involve me and I learn.”      Benjamin Franklin


Want to learn how to invest in the stock market without losing money? Stock market games are a great way to practice whether you are a beginning investor or have been investing for awhile. These games are an example of learning by doing, also known as experiential learning and can be effective learning tools. Investing can be daunting for the experienced investor, let alone for those who are just starting out. Virtual games are free, fun, readily available and user-friendly. They offer participants a faster learning curve to build investment skills and better financial habits.

Why Investing Early Matters?

You should start investing early in life so as to have a long time horizon as possible for these reasons:

  • Leverage the power of compound interest  (interest on interest) earned on your initial invesment for significant returns in your retirement and investment accounts.
  • Take on greater risks when you are young and able to absorb the bumps and bruises of downturns.
  • Motivate yourself to save more, spend less so that you can grow wealth.

Investing is a viable means to accumulate wealth and enjoy financial comforts. The earlier you start to save money for investing purposes, the better.  Parents should begin talk to their kids about money when feasible, exposing them to investing basics and developing good financial habits.

Simulated Games Are Suitable For Virtually Everyone

Young people can get a big jump on investing by playing virtual stock market games with parents, friends, in investment clubs, classes or even on their own. Stock market simulated games are a wonderful way to practice and gain experience in investing before you commit your own money. As a matter of fact, I have used these virtual games for years to teach my college students about stock investing, important financial concepts and terminology. The games are a fun way to learn virtual trading and investment strategies in a realistic setting without risking a dime.

Generation Zers, in particular, come from an environment enriched with simulations and games. They are perfect candidates to learn how to invest from virtual stock market games as interactive tools. As digital natives, they have been raised on always-connected cloud-based digital technology from birth. They often prefer video and simulated games to traditional modes of learning. However, the virtual games are user-friendly and can appeal to anyone, even digital immigrants. I have experimented with several games. As a result,  I have settled on Market Watch Virtual Stock Exchange by Dow Jones for my college students as well as my kids at home.

How The Games Work

At the start, each player gets $100,000 or $1,000,000 to invest in a number of US stocks, foreign stocks, mutual funds and Exchange Traded Funds or ETFs. Some games allow trading of foreign currencies, cryptocurrencies, options and other securities. For my college students, I provide some parameters to build their own investment portfolio with a fund of $1,000,000  to buy at least $800,000 of stocks and keep $200,000 or less in cash. You can choose to actively trade daily on the game or buy and hold on to stocks in your portfolio as a long term strategy.The games are free and you pay virtual commissions for each trade.

Most games allow for margin trading, short selling and option trading for more advanced players. From my perspective, I favor the games as a lesson in investments rather than for trading purposes. Returns tend to be better for the long term in retirement and investment accounts. To enhance the learning experience, most of the games provide a wealth of resources to get information about the markets, the economy and more about the companies you are investing. You can schedule a time frame such as a week or month for possible team or individual competitions or even for an indefinite period.

Why Use A Simulated Game For Investing?

1. Active Learning Of Investing Basics

Games are a fun and educational way to learn to invest, a key way to accumulate wealth. There is a greater level of engagement and motivation when you learning a skill through simulation. 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 fear 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.

There are many articles and videos on the sites to better nderstand differences in risk/reward trade-offs and measure your own tolerance to make more risky purchases. Feeling gains and losses are real enough and allows you to pivot in different ways.

2. Diversifying Portfolios Reduces Risk And Growth

When creating your virtual basket of stocks, players begin to understand how important it is to be diversified in different industries. For example, in reality you would not want to hold all fast-growing technology stocks or all safer utility stocks, but rather a blend of different kinds of companies. When looking at a portfolio, you may favor 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.

My son Tyler was playing a simulated game in a stock market club and put all of his money in one stock–Amazon–when it was rising significantly. He was so excited that he was doing the best in the club until one day when Amazon reported quarterly results that missed analyst expectations and they announced a rise in capital spending for their data business. Amazon shares crashed and became “dead money,” a term investors use to mean that the stock’s performance will drag. For Tyler, it was a learning experience about why diversification was important in your portfolio. Concentrating all your money in one stock is a dangerous strategy. It is not good to put all your eggs in one basket.

3. Macro Factors Investors Need To Know

Beginning investors need to understand external or macroeconomic factors that may impact the market. Players should be reading relevant financial news to learn about important events that can sway the market significantly. Learn what makes the market tick. How does the market react to when the Federal Reserve takes action on interest rates, changes in the economy, inflation and international events (eg. Brexit, China trade talks)?. Just understanding what is relevant to your stocks is a big lesson.

4. How To Deal With Market Volatility

From the relative safety of playing a virtual stock market game, players can better understand that market volatility happens regularly. The most experienced investors are often surprised about dramatic changes often caused by headline risk or recession worries. By virtual investing you become more aware of rhythms in the market and how to prepare for a volatile market. You can explore strategies to deal with turbulence without the loss of real money. Are you better off trading actively in a weak market or sticking to a buy-hold strategy? Games allow you to experiment with money without the fear of losing it.

5. Competition With Your Peers Is (Almost) Realistic

Never let a chance to compete with your peers go to waste! Most games rank players on a daily basis and allow you to see each other’s stock purchases, performance and ranking. My students tell me that they check their rankings daily, if not more often. If they lose a top ranking, they often get upset. I need to remind them that it is virtual money and we discuss strategies. 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.

You can form teams within the game structure simulating portfolio managers who consult with each other. Young people can engage in collaboration and collegiality within their group. These are great soft skills to build for your careers.

6. Building Confidence And Self-Esteem

The reality of picking stocks and learning some investing basics is a big confidence booster. Every individual I have talked to about playing a simulation stock market game tells me the same three things: it was fun to learn how to invest, they will be investing in their own accounts with their own money and they have become more confident in their abilities. The game provides many of my students with the incentive to put aside savings for investment purposes. That is a worthwhile accomplishment.

Popular Simulated Stock Market Games

There are at least 5 games to choose from that allow for competition, awards, alternative securities and provide resources for players. Here are some of my favorites.

1. Marketwatch Virtual Stock Exchange

MarketWatch is a top financial and news website owned by Dow Jones. The Virtual Stock Exchange game can be customized by an administrator such as a parent or teacher providing $100,000 or $1,000,000 in private or public mode. The game provides rankings for each player. Administrators can customize trading parameters. Participants can trade stocks, global stocks, mutual funds and ETFs.

Players can find and trade stocks in real-time and build their own portfolios They can create, watchlists and have access to articles, videos and charts. There are advanced trading options with specific orders such as at the limit price or less or a stop order,  meaning an order to buy or sell a stock once the price reaches a specified price. There are nearly 40,000 games currently in play.

For the past 8 years, I have administered several games a year with my finance students, integrating the game with the curriculum. In recent years, the game has become more user-friendly with more resources. Student feedback has been overwhelmingly positive. They have fun watching their rankings relative to their peers, finding out why their stock performance has outperformed or underperformed. They find the game quite realistic and are eager to set up their own investment accounts.

2. The Stock Market Game

Although geared for teachers and students, anyone can participate in The Stock Market Game individually or as a team, including a family. Participants can trade their own $100,000 investment portfolio. The portfolios can be a mix of stocks, bonds, mutual funds and cash. Players can participate in a competition or in a non-ranked session.This game is created by the educational nonprofit organization, the Securities Industry and Financial Markets Association, or SIFMA.

SIFMA touts a 2009 FINRA study of The Stock Market Game providing positive results on students in grades  4-10 who played the game, scoring higher on investor knowledge tests.

3. Wall Street Survivor

Partnering with AOL, Seeking Alpha, and The Motley Fool, Wall Street Survivor is among the most popular simulated games available. You can start with anywhere from $10,000 to $10 million in virtual money. There is the option join a public or private league or create your own league. This site is resource-rich and provides courses, videos, newsletters, starter guides and articles. I particularly like that they have resources to analyze a business and its financial statements. As a former analyst, the resources made my heart sing.

You can earn badges and vie for real cash prizes of $2,000 monthly. You practice trading and take quizzes to reinforce your knowledge. According to their site, they have over 1 million users. Wall Street Survivor has a cryptocurrency game as well.

4. How The Market Works

This site has been around since 2004 and is good for classes, groups and individuals. While tailored toward beginning investors, there are advanced resources that participants can use including Wall Street Analyst ratings, financial news, company financial statements and technical charts. You can buy global stocks, mutual funds, ETFs, options and even commodity futures. Customization of games, competitions and flexibility in cash balances are all available.

5. Investopedia Stock Simulator

The respected financial site Investopedia has its own comprehensive stock simulator. You can start with $100,000 in virtual cash. Participants can join an existing game or create a customized game of their own, trading stocks, options, margin trading and adjustable commission rates. Players are ranked, can research their investments and earn rewards for completing various activities. You can connect with over 700,000 traders and investors globally.

Final Words

If you are new to investing, stock market games are a great way to gain experience in a simulated setting without risk of losing your own money. These free games are fun on sites rich in resources to learn at your own pace or as part of a team. You can create portfolios, learn many investing concepts and build confidence along the way. I have found the games have enhanced the investing capabilities of my college students, many of whom are now active investors on their own.

There are many benefits to Investing early in life, even if only putting small amounts to work at first. Learning investment skills and strengthening financial discipline provides a greater chance of accumulating wealth over the long term.

Have you ever participated in a simulated stock market game? If so, what was your experience? I encourage you to try one of the games with your friends or family as a first step to investing for real. Thank you for reading this article. Please subscribe and join our growing community!


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