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What is a stock market simulator?

illustration - a monitor screen with a graph

A definition of a stock market simulator refers to a programme that replicates a live stock market. It allows users to create virtual portfolios of stocks and other financial instruments without undertaking financial risks.

Platforms like these replicate the behaviours and features of the stock market in actual time. New and inexperienced investors can use simulators to experience stock market trading without putting any capital at risk. 

Originally, learning how to buy and sell stocks without using “real” money was known as paper trading.

Today, traders and investors can use stock market simulators to become familiar with trading the financial markets. Many online brokerages and websites include them as part of their product offering for you to test your investing strategies risk-free before committing real capital.

Key points

  • A stock market simulator is a programme that mimics a real-life stock market, allowing users and would-be investors to learn trading without assuming any real financial risk.

  • There are different types of simulators catering to different degrees of trading expertise. Some simulators cater to new investors and are easy to use, while others offer a virtual trading environment for advanced options trading strategies very similar to the real thing.

  • Despite their advantages, stock market simulators can’t replicate the human emotions of fear and greed that influence the decision-making process.

Stock market simulator explained: Different types and usage examples

Now that you know what a stock market simulator means, let’s check out the different types of platforms available to users. They differ from each other in their features and complexities.

Some simulators cater to new traders and investors and are easy to use, offering users the chance to learn simple risk-management strategies like stop-losses and limit orders.

Complex stock market simulators offer a virtual trading environment for advanced options trading strategies. It is important for users to begin learning on a simple interface before moving on to a more sophisticated platform.

Let’s look at a brief stock market simulator example to understand how these platforms work.

Let us assume a trader has learnt basic technical analysis and wants to apply their knowledge to the market.

The trader has analysed the S&P 500 Index (US500) and identified support and resistance levels for an exchange-traded fund (ETF) that tracks the performance of the S&P 500 Index.

The trader can test their understanding of the market by opening a position based on their studies in a stock market simulator without investing any money.

The S&P 500 ETF performance in real life will be mirrored on the simulator. The trader will be able to analyse whether the ETF price holds at identified support levels or breaks out after breaching resistance levels.

Most importantly, the trader will be able to experience the unpredictability and volatility of the stock market through virtual market simulations.

Pros and cons of using a stock market simulator 

Now that we’ve briefly looked at how a stock market simulator works, here are the advantages and disadvantages of using these platforms that investors need to be aware of:


  • Stock market simulators are great learning tools for new investors. Investors can practise basic investing strategies and experience live markets in real-time without risking their capital.

  • Stock market simulators can help introduce new investors to investment research by exploring price charts, historical price data, milestones and financial metrics.

  • Stock market simulators give novice and experienced investors a chance to back-test and optimise their trading strategies in a risk-free environment.

  • For novice investors, a stock market simulator is an effective and safe way to be introduced to market volatility.

  • Market participants can also participate in stock market simulation competitions to win prizes without deploying capital.


  • The biggest limitation of a stock market simulator is that despite replicating the performance of live markets, trading on such a simulator cannot reproduce the human emotions of fear and greed that are influential in the decision-making process of a market participant.

  • Some stock market simulators may offer only few securities under restricted trading parameters compared to real markets.

The bottom line

While new investors are encouraged to test their trades on stock market simulators to experience the markets in real-time, they need to remember that making profits in a virtual trading environment does not guarantee profits in real markets.

Investors have to acknowledge the unpredictability of the stock markets and should learn to manage their risks accordingly. 

Nevertheless, learning on stock market simulators is a great way to start one’s investing journey. These simulators provide a safe environment for investors to learn lessons that can be applied in the future. Novice investors can also try their hand at using risk-management tools and various trading strategies.

Remember that your decision to trade or invest should depend on your risk tolerance, expertise in the market, portfolio size and goals. Always remember to do your own research before investing in an asset. And never trade money that you cannot afford to lose.


What is the most realistic stock simulator?

The demo trading account is one example of a platform that allows users to simulate trading the financial markets in real-time. WallStreetSurvivor is another example of a stock simulator. However, the best choice of platform for you will depend on your personal preferences and expertise in the stock market.

How do you use a stock simulator?

A user registers with an online stock simulator and trades on real-time market information with virtual money. The difference between an actual trading platform and a stock simulator is that no capital is risked when using the latter. This gives investors a chance to back-test and optimise their trading strategies in a risk-free environment.

Remember that making profits in a virtual trading environment does not guarantee profits in real markets. Always do your own research before making an investment or trading decision. And never invest or trade more than you can afford to lose.

Is there a free stock market simulator?

Multiple stock market simulators, such as the demo trading account and WallStreetSurvivor, are free. Others offer advanced trading simulations for a monthly or annual fee. The best choice of platform for you will depend on the resources available to you, your personal preferences, as well as your expertise and knowledge of the stock market.

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