So, you want to get introduced to the stock markets, but you don’t want to deal with the stresses and anxieties of a brokerage account? Luckily for you, you can start playing stock market games (such as the ones offered on TradingLeagues) and take your first meaningful step toward the fascinating world of stocks! Let’s have a look into the important things to remember while playing the stock market games.
Why stock market games?
Many of us are curious about the stock markets, but are not willing to take the plunge and open a brokerage account. Even if you do have a brokerage account, you may not have the time or resources to monitor your positions and trade actively.
Stock market games provide a fantastic alternative to the “formal” option of opening a brokerage account. You get introduced to the nuances of stock price movements in a skills-based arena, and you even have the opportunity to win money if you do a good job!
7 things to be aware of while playing stock market games
While there certainly are many benefits to playing stock market games, it’s important to keep the following things in mind when making the decision to play them.
Is the stock market game genuine?
Before deciding to take the plunge in a stock market game, it’s important to do some basic research behind the company and product offering itself. Here, Google is your friend. Visit the company’s website and look for signs of authenticity. If the game is offered on a mobile app, what are users saying about the game on its reviews? Who are the founders of the company, and are their credentials trustworthy? If there is an ability to win money via the games, are users claiming that they are able to withdraw their winnings?
The more research you do, the more informed your decision will be.
Where is the skill component?
Since stock-picking is a skill, you want to ensure that the game you are playing clearly involves skill, and isn’t determined by complete randomness and luck. Spend some time understanding how the game works, and ensure there is a skills component clearly coming through to determine winners.
To do this accurately, you need to spend a bit of time and understand exactly how the games work. You may also want to read reviews on Google for the game and see what others are saying about the skills component.
How does the game work?
It is critical for you to know exactly how the game works, from start to finish! Here, the best way to achieve this is by actually playing a few games and ensuring everything makes sense to you. Remember, it’s a stock market game, which means it should not be overly complicated. If there are free games available, start out with these so that you have basically nothing to lose. If the game is complicated to the point that something doesn’t feel right – this is a red flag, and it’s time to escape!
How are winners determined?
This question can be approached in different ways, but the simple question to ask yourself is this: if you play a game, how do you become a winner? The rules of the game should explicitly define how winners are determined. If there is the ability to earn money by winning, you want to also understand what the winning function is. For example, is it a winner takes all system? Is there a 1st/2nd/3rd place winner? Likewise, you want to see if there is a guaranteed prize pool component. We’re getting a bit technical here, but many skills-based games offer guaranteed prize pools, regardless of the number of participants.
Don’t be afraid to poke your nose around a little. The more time you spend asking and answering these questions, the more informed you will be. You may want to directly ask questions to the publisher / company if you cannot find the answer online or on the application.
What is the skill the game is trying to cultivate?
Imagine practicing how to kick a soccer ball, thinking you’re going to become a better runner.
Sounds ludicrous, right?
And yet, that’s how it is with skills-based games. Just because a game is skills-based (and not based on blind luck), doesn’t mean that you’re in the clear. You should also be able to determine exactly which skill the game cultivates. For example, in a stock market game, some skills which can be cultivated include:
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- – Picking the best-performing stock out of two (or more) stocks
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- – Predicting the future stock price of a stock
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- – Building the best portfolio of stocks
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- – Being the best day-trader of a stock
And much more. This is important because otherwise, you may have false expectations from the game.
What are the risks involved?
Generally, if you’re playing stock market games, the potential risk will be substantially lower than the inherent risks associated with trading via a brokerage account. That being said, you want to clearly understand the risks involved. How much money can you lose per game? What is the financial implication of losing, say, 10 – or even 20 – games in a row? Here, it is important to understand the risk of each game offered. Many stock market applications will include multiple games, and each game may have its own risks.
What is the potential monetary upside?
Assuming you are playing a stock market game where you can earn real money, a simple question to ask yourself is: what is the potential monetary upside? Meaning, how much can you actually win? Based on the reward distribution, the number of players, and the entry fees, the answer to this question will vary. However, you should still have a solid answer to this question before deciding to commit ample time and resources towards the game.
The bottom line
There are a lot of great reasons why you should consider stock market games. They are fun, provide a great way to learn about the movement of stocks, and also provide a way to earn money. However, you should keep the 7 important points discussed in this article in mind before deciding to participate in the game in a serious manner.
It may require a bit of time and research, but we can assure you that it will be worth it.
