The virtual stock portfolio: advantages and disadvantages


 Whether you are a novice stock marketer or an experienced trader, a virtual stock market portfolio will be useful for you to learn how to buy and sell securities, to test new strategies or to follow the evolution of a selection of securities.

Promotional material – This article is provided for informational purposes only, it does not in any way constitute financial, investment, legal or tax advice from Fortuneo, and Fortuneo cannot be held liable for any decision taken or not made on this basis.  Stock market investing presents risks of capital loss.

Would you like to learn how to buy and sell shares or other financial instruments on the listed markets? Are you already a confirmed stockbroker, and would you like to develop your asset management strategies? Using a virtual stock portfolio will allow you to simulate purchase and sale transactions of financial instruments, to confront you without risk to market conditions. Discover the advantages and limits of the virtual portfolio, and learn about the value of this tool for success in the stock market.

What is a virtual stock portfolio?

A virtual stock portfolio is a tool made available to you on the internet, generally free of charge, which allows you to:

to follow the quotation and the evolution in real time of financial securities , in particular by means of alerts;

to simulate purchase and sale transactions of shares or other stock market products as if you were really exposed to the markets, but by exchanging fictitious sums of money.

You will be able to create a virtual stock portfolio with your online bank , or even a specialized site.

What are the advantages of the virtual stock portfolio?

A virtual stock portfolio will be very useful if you are thinking of getting into the financial markets, but your knowledge and skills are not yet sufficiently honed.

Indeed, this tool will allow you to practice buying and selling securities under conditions consistent with reality. Without ever putting your money on the line, you can:

get used to how stock markets work;

Whether you are a beginner or an expert, your virtual stock portfolio can be used to establish, test and improve your investment or speculation strategies , before actually using them on the financial markets.

In addition to traditional stocks, you can usually integrate various values ​​into your virtual portfolio, such as UCITS securities , warrants, stock market indices, etc.

By opening more than one virtual portfolio, you can even experiment with several strategies in parallel, always without risking losing a penny and without affecting your real portfolio.

A way to track a bunch of values

In addition, you can use your virtual stock portfolio to follow the evolution of the price of the securities of your choice. This will allow you to monitor the upward or downward trends of a selection of securities and to analyze their fluctuations, before deciding whether or not to include them in your real portfolio.

What are the disadvantages of the virtual stock portfolio?

The virtual portfolio has certain limits, in particular because it is likely to push you to exaggerate your risk-taking.

Indeed, with a virtual wallet, you know that no matter what, you will not lose money. You can therefore tend to be a little too confident, and to speculate a little too aggressively with your fictitious capital. Your virtual maneuvers can generate great performances, but be careful not to get carried away. Once in real conditions, your scenarios may not be reproduced identically, and you will expose yourself to real partial or total losses of the capital invested.

The emotional dimension, another limit of the virtual stock market portfolio

Another disadvantage of the virtual stock portfolio: by its ‘simulator’ side, it involves a rather low level of stress control. Since your money is protected anyway, your emotions at the sight of a fall in prices will not be as intense as those you might feel in a real situation. However, learning to keep a cool head in all circumstances, in order to always make rational decisions, is essential for success in the stock market.

When should you switch to the real portfolio?

Despite its drawbacks, the virtual portfolio remains very useful for testing your strategies, and especially for getting your hands on the management of stock market assets.  This tool will be particularly practical for training you in basic manipulations, such as placing buy or sell orders . There is no minimum duration of use of a virtual wallet to respect before switching to a real wallet: you can use it for several weeks, even several months. The main thing, before taking the plunge, is that you feel sure of yourself, of your knowledge and of your understanding of the markets.

You can also choose to immerse yourself relatively quickly in the real world of the stock market. This will also allow you to better train yourself to weigh the risks and control your emotions. Then prefer to invest small sums, the loss of which would not put you in the embarrassment, the time to perfect your skills.

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