After researching setting up a brokerage account, I found out that there is a free virtual stock exchange game available from MarketWatch which allows you to buy and sell publicly traded stocks with play money. The game even follows the stock market to track your gains and losses.
I created a password protected private game for myself so that I could learn about investing before I use real money. On my first day, I bought 30 shares for GameStop (GME) and 25 shares for Titan Machinery (TITN). I chose these because I was seeking small value stocks to see how they would fare. At the close of the first day, my overall gains metric ended up losing $33.31. I'm sure glad this is just virtual money. I configured the game to last 2 weeks so it will be fun seeing what happens at the end.
The neat thing about this game is that it uses real stock symbols and market fluctuations. I am so impressed that I can simulate real transactions that I would be choosing with a brokerage account. I'll try my hand on the stock market with virtual money for now.
If anyone wants to join, let me know and we can play against each other. We can also set up an advanced game. But first, I need to figure out the normal level.
http://www.marketwatch.com/game/
Update: The game is finished now and I ended up losing $82.62. At one point, my loses were approaching $150 due to a sharp market sell off of TITN based upon less than expected net returns for the company. The GME stock actually performed very well in the last two days and this is what kept my virtual loses down. I ended up learning through this process. Here are some of the lessons that I believe apply to my personal style of investment.
- I don't want to get caught up in trying to ride short term gains and instead I should look to longer term investments with maybe even focusing on dividend stocks. I read that if you pick the right dividend stock, the company actually can use the required dividend payout as a goal to hit for the shareholders which drives motivation for company growth.
- I also came to understand the draw to penny stocks but came to realize that those stocks are the most likely to have the highest risk associated which could mean further loses. But you can do well with penny stocks if your goal is to ride market games and trade actively.
- I found out that there are funds available that will try to chase a market index to equal its performance. This seems like a good option as long as the fees are relatively small. The Russell 1000 based funds seem like a good choice but I need to research these further.
- I read up on stock market strategies that include concepts such as trending value and fundamental index. I need to research these strategies further to see if they would be a good fit for me but the fundamental index strategy seems like a good one.
Now, I think I'm going to start another game which focuses on additional dividend stocks to see what happens. This time, I'll extend the game period to several months.
