Then it started seeming like more and more of the other players were cheating by getting real-time numbers from somewhere else when we were supposed to be using the game’s 15-minute-old figures.

The simulation actually helped me. I am now less confident of my ability to guess what’s going to happen next with a company. So now most of my money is in funds (and well diversified), although I still invest some money (which I think of as “play money”) in specific companies that I think will do better in the long term that one might guess from the price.

I could see that it might be dangerous, because if your whole simulation is during a period when the market is rising, you may come to feel invincible. I was lucky that the market tanked midway through. Most of these simulations are very short-term and thus simulate only what it’s like to be a day-trader. To test how most people should invest, the simulation should last at least ten years! Oh, well, some practice can be more helpful than no practice.

It could also be dangerous because when you first start out you probably have less than $100,000 to invest, so the trading fees might be quite a bit more relevant than in the game.

To kill five week at the end of the year (our curriculum is short), I have my kids create their own portfolios. They pick and trade stocks creating a a good learning experience. We’ll dig into the mathematics of when to sell, not to, and all the other probability behind it.

A few get lucky and make some money but most don’t do the proper research. The downside is they get in the mindset of short term gains. I’d imagine this also true of most folks.

The portfolio’s they come up with are always a hoot.

I split the initial money between a few companies I knew something about, and I barely ever trade. I have thresholds for how much I’m willing to lose, and how much something can go up before I rebalance. We’ll see how this works as time goes by.

It’s about a site that lets you invest virtually and earn real money.

Great point.

This is Kacie’s husband.

I agree with you and Kacie, both. Everyone should try out simulations to learn how to invest and analyze how the market works. Playing with fake money changes a lot of strategy in investing, however, so people should be cautious.

A large part of finance is the management of risk, and studies have shown that long-term investing is most effective. On the other hand, simulations encourage excessive risk (such as investing in penny stocks), and frequent interday trading.

This might be a good follow-up post for Kacie.

Thanks,

Shane