Options Trading Simulator (Chaptre 1)
Options Trading Simulator
There is a close link between stock trading and options trading. However, options are not the same as stocks. Options are largely used to generate a profit using much smaller investments compared to stock investments. Another use of options is to insure against losses. There are quite a number of reputable simulators online and one of the most reliable and trusted one is the simulator from Investopedia. This firm is not only the leading financial information and services firm but has an amazing wealth of resources online. The simulator uses actual data from stock markets so as to produce real life experience of using a real brokerage account.
Introduction to the trade simulator
The trade simulator is used for a number of reasons by different people. For instance, instructors use it as an instrument to teach their students all about the stock and options markets and how to use it. Some people use this simulator to try out new trading strategies while others just use it to find out what the real trading account feels like. Basically, the main purpose of the simulator is to make you simply, or any other user, a better trader. There are a couple of tabs located on the top side of the user interface. When you click any of these tabs, then more links will appear and these will offer you more choices. Here is a look at the 7 separate tabs found on the online trading simulator.
Tabs on the trading simulator
- Home: The home button takes you to the home page and gives you an overall outlook of your trading account. Here, you are able to access other tabs and get to the pages you desire. At the home page, you also get an opportunity to change your settings and profile.
- Portfolio tab: This particular tab provides users with a summary of the stocks, shares, options and all other holdings.
- Watch list tab: This particular tab enables you to easily and efficiently track any stocks you want but without allocating any cash to any part of the portfolio. It is easy to add new stocks and manage the current ones from here.
- Stock research: The stock research tab comes with important tools that enable users to carry out research on the performance of stocks and of companies that they may be interested in. Some of the tools available include a ticker lookup tool, a research tool and so much more.
- The trading tab: This tab contains the simulator where users get to enter or input their trade orders. They are also able to review all open, failed and outstanding trades.
- Ranking tab: Another tab you will notice on the options trading tab is the ranking tab. This is an important tab that instantly lets you know of your current placing enabling you to opt for any specific competition.
- Messages tab: This is a tab that allows users to check your messages that are in your inbox. There will sometimes be messages sent to you and users will also be able to send messages to others.
- Games tab: There is a games tab on the trade simulator that allows any user to manage, review and create games. You will find active games which you can join and participate in. users are by default invited to join in some games and the choice to join in or not is voluntarily made.
- Awards: Any user who successfully completes different trade simulator activities, especially trade activities gets to receive an award.
- Help: It is always good to know that help is at hand whenever needed. As a trader and investor, if you ever need help with tutorials or have any general questions, then you simply need to click this tab.
Using the simulator to place orders and buy stock options
You are now familiar with the tabs on the trade simulator and can use these buttons at any stage of trade. The next step now is to set up and submit a trade using this simulator. We will now endeavor to purchase 100 shares of Walmart Stores Inc., abbreviated as WMT.
First, choose the trade tab and then enter WMT and 100. Figure 100 is entered in the quantity field while WMT is entered in the symbol field. The transaction needed is “Buy” while the price selected is market. The simulator will require a duration period and here you choose “Good Till Canceled”.
Now select the Preview Order so as to view the order confirmation. The Preview Order will show the stock purchased, the type of trade, price and many other essential details that you need to trade successfully.
Please take a minute and confirm each and every detail on this preview. Ensure that all the details match what your trade details are. This is indeed a confirmation process, that you are buying 100 shares of Walmart Stores, abbreviated WMT at market rates. For a real trade online, you would be charged a commission fee of about $20. Brokerage firms will charge you a commission for executing the trades on your behalf.
As soon as you confirm all the details on the Preview Page are, you may then proceed to submit the page. This will confirm your purchase of 100 shares of WMT at current market price. The order will now be filled when the next available opportunity presents itself. Should an order be placed outside of regular working hours, then the order will be executed first thing on the next trading day. Your order can be confirmed by checking out the order submission page. The stock simulator will confirm this for you.
