🔎 How can I start Paper Trading?

🙋 Can you recommend the best platform to start paper trading?

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✔ As you know, paper trading is purchasing shares in a simulation rather than with real money. Paper trading is a great way to learn about trading.

If you’re just starting out, Marketwatch, Investopedia or eToro will help you get started quickly, so you can focus on the stock analysis. They are very popular and well-known brands. With a bit more experience, you might want to try out TD Ameritrade’s paperMoney platform based on their thinkorswim platform.

Bear in mind that trading itself is likely to be less lucrative than investing in low-cost index mutual funds once the costs of time, effort, and risk are taken into account.

If you decide to try paper trading, step back and ask yourself why you want to do it. Some of the best reasons to do it are to learn about finance and because you enjoy it. USNews offers the following excellent advice:

By opting to pick individual stocks, you’re betting on your ability to beat the market and exceed the return of the stock market at large. This is extremely difficult to do: 88% of professional fund managers, whose entire job is to beat the index, fail to outperform their benchmarks after a five-year period. After a 15-year period, nearly 94% of managers fail at that task, according to the SPIVA U.S. Scorecard, a study by S&P Global.

Individual investors face even bigger hurdles to success and not just because they don’t have the luxury of dedicating their entire working life to studying investments. Psychological mishaps like buying when stocks are on a run and selling when they’re down, as well as overtrading, are largely to blame for the miserable actualized returns of everyday investors.

So, while this principle is arguably the least satisfying of the seven, it’s also the most fundamentally important. By choosing to pick stocks and not buying a low-cost index fund like the Vanguard 500 Index Fund (ticker: VOO) that automatically earns you market returns, you’re engaging in a bit of hubris and choosing to go against the odds.