For newbies, one of the best ways to get introduced to trading is by playing stock market games, such as the games offered on TradingLeagues. When one plays stock market games, they do away with a lot of stresses and anxieties associated with trading via a brokerage account.
However, just because you’re playing a stock market game, doesn’t mean that it’s going to be a walk in the park! Trading is going to be difficult, even if you’re playing games in a simulated environment. In order to do well with stock market gaming, one must understand that there are certain skills they should cultivate and enhance in order to become proficient and improve their chances of success.
One thing to keep in mind while playing stock market games is that you are essentially participating in a simulated market environment and mimicking a real-world market environment. Although you are not physically buying and selling securities, the same principles of trading apply to stock market games. Therefore, the skills required to do well in a live market apply equally well to a simulated market, with a few small differences here and there (which we will elaborate upon).
Let’s first define what constitutes a good trader – basically, what skills does a trader require in order to do well? Then, we can hone in on how to cultivate, improve, and enhance these skills. We will do this while keeping in mind that the ultimate goal is to do well-playing stock market games, and not necessarily trading on a brokerage account.
What defines a good trader?
Here are the key factors to enhance the trading skills required to define a good trader:
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- – Patience
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- – Money Management
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- – Proper understanding of risk/reward (or odds) and bet sizing
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- – Prediction skills
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- – Controlling greed
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- – Understanding the psychology of trading
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- – Enjoying the activity
Patience
In order to be a good trader, one must be patient and not take too many trades. In the case of stock market games, patience comes in the form of not playing too many games. Only play the corresponding number of games so that the games remain fun, and are not addictive. This is the best way to enjoy the games and allow the skill to naturally develop over time.
One thing to keep in mind is that patience is inversely correlated with greed! (see below).
Money management
As a trader, it’s important to pay close attention to money management, which is essentially the skill of ensuring you have enough money to continue trading with. In the case of stock market gaming, this comes down to ensuring that you are playing the appropriate games based on entry fees. If you only have a budget of Rs. 100 per month on stock market games, you can maybe think of playing one game per week with a Rs. 25 entry fee.
Proper understanding of risk/reward (or odds) and bet sizing
When you play a stock market game, it is ultimately a skills-based activity. One of the best ways to improve your chances of winning is to have a clear understanding of the risk and reward associated with the game, and then convert this understanding into the proper bet size/ entry fee.
For example, suppose you are playing a Target League game, and the game duration is one day. If you feel very strongly about a stock hitting a certain price bracket, then you can think about playing the corresponding game with a higher entry fee since you feel strongly about your chances of winning. This is one example of playing the odds in your favour.
Prediction skills
Predicting the future stock price of a particular stock is very difficult, but as you gain an understanding of the markets and how and why stock prices move, your prediction skills can improve over time. One of the biggest benefits of stock market games is that, due to the inherent low risk associated with the activity (compared to trading via a brokerage account), you can play a lot of meaningful games, and in the process, get a truly immersive experience of the markets.
Controlling greed
As noted above, the more patience you have with stock market games, the less greed you will exhibit. With stock market games, greed comes in the form of playing too many games, too quickly. Even if you are playing free games, it’s better to spend some time playing games, and then dedicate time understanding why you won or lost the game. Basically, analysing the game after it has concluded to figure out what exactly happened during the duration of the game.
Understanding the psychology of trading
The best traders are masters of psychology! After all, emotions drive the price of a stock up and down. Understanding this nuanced concept can be greatly rewarding, but true mastery comes from a lot of experience. After playing a game, spend some time understanding why the price of a stock may have gone up or down, and then apply this knowledge to the next game!
Enjoying the activity
Last, but certainly not the least: it’s very important to enjoy the activity of playing stock market games! After all, you’re playing a game – if you’re not enjoying it, then something is probably wrong. Perhaps you are playing too many games, or you are letting greed enter the picture, or you’re not spending enough time analysing the outcome of a game before moving on to the next one.
The bottom line
Trading isn’t easy, and anybody who tells you otherwise isn’t telling the truth! With that being said, by playing stock market games, you have the opportunity to get introduced to the financial markets in a fully immersive manner without dealing with the stresses associated with a typical brokerage account. Take time to develop and cultivate the skills listed in this article, and you will improve your chances of winning.
And as Tiger Woods once said – “winning takes care of everything.”
