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What is Mock Trading?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 05 November 2016
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Mock trading is a process that involves the creation and implementation of stock trades that are not conducted in a live market. Sometimes referred to as simulation trading, mock trading allows novices to effectively test their ability to choose wisely when making stock purchases and sales. The student does not actually invest any resources and thus does not stand to lose anything while engaging in this type of educational process.

One of the advantages offered by mock trading is the ability to learn without incurring any loss during the process. This makes it an ideal learning environment for students who hope to build careers in the financial world, or who will someday be expected to manage the assets of the family business. The mock stock trading process replicates all the elements of an actual trade, but involves none of the risk. As a result, there is room for trial and error without losing any financial resources at all.

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At one time, mock trading was more of a classroom exercise that involved monitoring the movements of stocks using resources such as the daily newspaper. Today, it is possible to utilize a number of different software programs to set up a mock portfolio and then manage the assets while simulating various types of market activity. Many of these software packages also include the capability to factor in events such as the results of political elections, the failure of a major player in a given market, or even the occurrence of a natural disaster.

Along with standalone software for creating mock option trading scenarios, there are several websites that provide the ability to learn by trial and error without the fear of losing money. These sites make it possible to set up a mock trading account, establish a margin, create a portfolio, and then engage in simulated trades based on real time information available from various markets. Considered an improvement over other methods, the ability to consider current market conditions while creating trades can make it possible to quickly see the results of various strategies as they relate to stocks, bonds, and currency trades.

One other benefit of mock trading is that the process makes it possible to become familiar with different trading markets without encountering any risk. This provides the student with the ability to study the volatility of each market, what to look for in terms of indicators that signal a profound and sudden shift in the marketplace, and become familiar with the dominant stocks, bonds or commodities with each market. Information of this type can be absorbed in a relatively short period of time in comparison to other approaches.

Mock online trading, as well as more traditional and low-tech examples of mock trading, can make all the difference between successfully launching a trading career or becoming discouraged early in the game. While many of these online products charge a small fee for access to the mock day trading programs, the cost is considerably less than incurring a loss in an investment deal.

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