In the late ’90s, at the height of the dot-com bubble, it seemed as if there was a new stock-picking simulation game being launched every week. These simulations were not so much training exercises as completive events tailor-made for the financial media, who, in their zeal to capitalize on the excitement of a raging bull market, wrote glowing profiles of the winners, often framing them as market geniuses all but guaranteed to make millions in the future.

In reality, most of the winners were never heard from again. Worse yet, for the simulation participants, the outcome was starkly binary—win or walk away with nothing of value. In a game of boom or bust, with a finite simulation period, there was no reward for employing prudent risk management practices or investing conservatively.

It’s not that way anymore. Thanks to simulators, you can now compete in trading simulations where even if you’re not the winner, you’ll gain valuable experience that will help you be more confident when you’re ready to put real money into the market.

Not Your Grandparents’ Stock Market Simulation

Traditionally, stock market simulations have been very basic: choose a stock or portfolio of stocks, and the person who has the best return when the simulation ends, wins. But today, trading simulators like paperMoney, used in the thinkorswim Challenge sponsored by TD Ameritrade, offer simulators to become familiar with the mechanics of trading through hands-on interaction—all without risking a dime.

In such simulation environments, you participate using an interface that simulates the look and feel of a live order entry platform. This allows you to place orders, manage positions, and develop strategies just as you would with real money. And it’s here in this pressure-free environment that you can safely experiment with different styles and approaches to trading.

For example, suppose you’re primarily an equities trader but have always been curious about options. Options are certainly not for everyone, and this could be a great opportunity to explore the dynamics of options trading and how adding options into your portfolio may affect its performance. This can be especially true when it comes to exploring complex options. You may not wish, for example, to put on your first iron condor or other multiple-leg options spread using real money, but in the simulated environment, you can experiment with such trades in order to better understand them.

Have you ever wanted to short a stock but were reluctant to try? You’re not alone; shorting is possibly one of the most intimidating and misunderstood trading strategies—even by those who’ve been active in the market for years. But in a simulated environment, you don’t have to be intimidated.

Value for Everyone

Perhaps the best thing about participating in a fully interactive simulation is that a tremendous amount of educational content can be integrated right into the trading platform. Tutorial videos and demos covering topics like charting, analysis, and technical indicators can help participants develop strategies that they can then test to see how they might perform in the real world.

The bottom line? Whether you’re a novice or an expert, a day trader or a value investor, a technician who relies on indicators or a fundamental investor who focuses only on data, a simulator can be a great tool.

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