Tuesday, November 6, 2007

Paper trading

Paper trading (sometimes also called "virtual trading") is a simulated trading process in which would-be

investors can 'practice' investing without committing real money.

This is done by the manipulation of imaginary money and investment positions that behave in a manner

similar to the real markets. Before the widespread use of online trading for the general public, paper

trading was considered too difficult by many new investors. Now that computers do most of the

calculations, new investors can practice making fortunes time and time again before actually committing

financially. Investors also use paper trading to test new and different investment strategies.

Various companies offer paper trading services, some free, others with charges, that allow investors to

try out various strategies (some stock brokerages allow 14-day 'demo accounts'), or paper trading can be

carried out simply by noting down fees and recording the value of investments over time.

The imaginary money of paper trading is sometimes also called "paper money," "virtual money," and

"Monopoly money

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