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Friday, December 2, 2011

Learn investing without expensive tution fee of losses-do paper trading on mock portfolios

Many books/articles on investing all advice the reader to learn as much as he can, because he will incur the cost of learning either outside the market(books/time spent/tutition fee) or inside(losses)! But still, many of them suggest that the only way to really learn is to get your hands dirty, open a demat account, execute small trades and watch them. But, those positions are necessarily smaller than the final amount one would tend to invest. And then, if there is a better way, then why not try that?

Many websites offer the facility of mock portfolio and analysis. There is little to choose between them. But from experience, I can say that the MoneyBhai mock trading facility offered by moneycontrol is perhaps the best, because it
  • replicates market conditions to the extent possible
  • Gives you an initial fixed amount
  • Imposes brokerage costs etc and order limits
  • Infuses that competitive edge due to leader scoreboard, daily portfolio updation etc. That helps give that excitement to all concerned. 
  • Has quite decent analytics, to permit dissecting that mock portfolio. 
Of course, the flip side is for those who cannot access that site during market hours(due to office proxy etc), that game is difficult. But even for the, assuming they are long term investors with infrequent orders(to be anything else is dangerous from both career and monetary angle), they can request a friend/relative to update the initial orders and then watch their strategy evolve. Now, one may question that for those buy and hold investors, an Excel spreadsheet will suffice. That is correct, but it would still not have that competitive angle.

Lest anyone mistake this post as a plug for moneybhai, let me clarify that I have no monetary or other interest in that website. The only reason for this post is that if it saves even one reader the experience of suffering harrowing losses in the virtual world, I would consider it a job well done.

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