Can someone tell me the differences between a stock simulator and the real stock market?

Hi, I am 12 years old and for the better part of a year I have been practising on a virtual stock market simulator on Investopedia.com. Now, I have made a very good amount on the simulator, about a 1 percent increase every day even when for a good part of the day I am at school, and have to resort to doing long

Hi, I am 12 years old and for the better part of a year I have been practising on a virtual stock market simulator on Investopedia.com. Now, I have made a very good amount on the simulator, about a 1 percent increase every day even when for a good part of the day I am at school, and have to resort to doing long term trades instead of the quick short term trades I much prefer. So, logically the only reasonable conclusion I can draw is that I have an unfair advantage in a simulator, and as such I was hoping some people could tell me some of the differences there are between a simulator and the real thing. Just because I know a lot of people are going to say this, don t include psychological differences because trust me when I have a lot riding on this because I know that if I don t do this well I will have to spend the rest of my life working a shitty office job that pays 40k a year while if I can do this I will never have to leave my home (mostly), I will be rich.

Best Answer:

shashwata: There are two big differences between simulators and real world.

1) Most simulators do a poor job of including trading costs. Stocks do not have a single market price, but rather a bid price (what someone is offering to pay) and a higher ask price (at which someone is willing to sell). The difference is called the bid/ask spread. There are also commissions (fees) each time you buy or sell.

2) Simulators are totally unrealistic on small illiquid stocks, and a total joke on penny stocks.

@Judy is correct that no one makes 1% per day in the real world.

Other answer:

shashwata:
In one word: Emotion

You have no invested interest in the simulator. You put your real hard earned money on the line, and its a whole new ballgame son… One oops in your trading can wipe out not only your 1% per day, but all your capital… and its bound to happen. I know. I've seen it over and over in my career. There are no shortcuts to wealth outside of blind stupid luck.

Do your homework, invest in solid financially strong companies, collect dividends, reinvest dividends, diversify.

John:
1% a day is small potatoes in the penny stock world. I don't know what you have heard about penny stocks, but if you have, it's probably stuff like "they're too risky," "they're gambling," and the misinformation goes on and on. However, if you want to turn a small amount of money into a sizable amount, penny stocks are the best and easiest way to do it. Note that I said easiest, not easy, you will still have to work hard to achieve success in penny stocks, but the good news is that like I said previously, most people disregard them, so there is plenty of opportunity. You asked about the differences between a simulator vs reality and you hit the nail on the head with the psychological impacts, which to me is the biggest and most substantial difference between the two, so you kind of answered your own question there. 🙂

If you are interested in trading, check out Tim sykes, I have learned pretty much everything I know about penny stocks and trading from him. This is his free guide.
http://www.timothysykes.com/penny-stocking-101-how-to-get-started-with-penny-stocks-chapter-1/

If you enjoyed that, then I would seriously reccommend purchasing his How To Make millions dvd. I've watched all 35 hours of it and believe me when you finish it, you will have a good grasp on penny stocks and trading. https://profit.ly/store/info/250?aff=6924

One last bit of advice is not to cocky. I know it can be hard not to get prideful, but always remember that greed will lead to your doom in trading, always trade safely, which you can learn how to do from Tim. On a personal note, I believe it's important to give all the credit to God because all of our success comes from the minds he gave us. Best of luck to you and if you have any questions I will be happy to mentor you in any way I can, so email me at tradesmart101@yahoo.com

Judy:
Sure you have, but in the real market you actually have to put out the money, which gives you a whole different attitude toward risk. The best professional investors putting out REAL money don't make 1% a day except when the market is soaring. lots of luck.
shashwata:
OK, Jesus there were a lot of spelling mistakes there. Sorry about that I was writing on a small phone so I can't write very well and for some reason Yahoo answers won't let me update the question. Ether way, I hope the general point I'm trying to make still gets across.
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