Just wanted to post this link to a stock trading simulation I found. Haven't tried it yet, but it looks pretty cool.
They give you $100,000 in fake money, then you can trade any securities listed on the major exchanges. Of course, I think that unless it's your real hard-earned money on the line, your decision-making process won't be the same and you won't really learn what you would and should do in a real market situation. Nonetheless, it's a good way to learn the ropes without losing your shirt.
1 comment:
This is a great idea. I did a project similar to this in High School. Each team had $10,000 to invest in stocks and the team that had the highest return, won.
I remember everyone was excited in investing in large companies like Coke, Mc Donald's and Disney.
Intuitively, I knew that that was a losing bet. What I did was convince my team to buy penny stocks. I told them that if it went up a dollar, we'd double or triple our money.
In the end, we won. One of my buys was an oil exploration company or something. They came out with an anouncement that they had discovered a new technology. That boosted the price of the share just enought to quadruple our money.
In the grand scheme of things, this does a great job at illustrating why fund managers can beat the market: Higher Risk. Those smaller stocks inherently have higher risk that they will go under, but they can also strike it big.
The other part of my story is that most of the other "penny" stocks we bought did not do very well, or just stayed stagnant.
Managing risk is what its all about.
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