What is the biggest difference between stock market simulations and real stock trading?

Reply Sat 5 Jan, 2013 08:05 pm
First, my confession: I am not a real investor. I am a pretty successful pretend stock market trader, though. For the last month or so I have been running a few stock market simulations with virtual cash and the results of these simulations were fairly surprising. I am now under the impression that when it becomes time for me to make actual investments, making money in stock trades might be relatively easy.

I am realistically cautious, however. Surely, there must be something I am missing. If anybody has some insight into what the biggest difference between stock market simulations and trading in the real stock market (perhaps some experience in both types of trading or some understanding of typical mistakes made by new investors), I would be most appreciative.
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Reply Sun 6 Jan, 2013 12:40 pm
One big difference may be that if you are pretend trading with lower volume stocks, the software will trigger a buy or sell as soon as the price hits a specific level. In the real world, just because a price is met does not mean it will hit that price for you. Make sure you are pretend trading only with stocks that have very high daily trading volumes (like over 1 million trades per day)! There is a HUGE difference in the DJIA vs pink sheet stocks. Never trade pink sheets stocks - you will only loose your money.
Reply Mon 7 Jan, 2013 05:08 pm
Appreciate the answer, Buffalo.

I was aware of the volume issue and have been avoiding stocks with an average daily trading volume of less than 1 million. My intention is to trade even higher volume companies as I make enough money to negate the percentage lost by brokerage fees (given my averages, I estimate that I need about $7000 in cash assets before I can start trading stocks with market value over $5 per share).

"Pink sheets" is a new term to me but after reading up on them, it appears that I am not trading any pink sheet stocks. My understanding is that stocks with ".pk" ending their symbol are pink sheet stocks.

I really appreciate the insight. Is there anything else that you can think of?
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Reply Fri 29 Aug, 2014 06:52 am
A stock market simulator is a program or application that attempts to reproduce or duplicate some or all features of a live stock market on a computer so that a player may practice trading stocks without financial risk.
A requirement imposed on market makers (and in some instances, non-market makers) to report each trade immediately after the transaction is completed.
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