The Options-to-Income Guidebook
In This Article
Whether you are a new or experienced options trader, the best chance to make a profitable trade is when you’re confident in what you're doing and confident in your strategy.
What if you’re not necessarily confident?
What if you’re still trying to refine your options trading strategy?
How can you practice without risking your hard-earned money?
Using an options trading simulator.
In this article, we’ll explore how an options trading simulator can help you master options trading — along with 10 options trading simulators you can utilize today.
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What is an Options Trading Simulator?
An options trading simulator is a tool that lets you use pretend money to trade options in a live market without losing real money.
We’ll look at the advantages and disadvantages of an options trading simulator next.
Advantages of an Options Trading Simulator
Because you’re trading with pretend money, there’s no chance of you losing your hard-earned money. Using an options trading simulator is a risk-free opportunity.
You can read about trading options, but it's different when trading in real-time. You can gain valuable experience — especially if you are a beginner investor — with an options trading simulator.
Free to Use
It is not difficult to find a free options trading simulator because there are several to choose from on the market. This is yet another reason why there is no better time than the present to start to practice option trading.
You can learn how to use an options trading simulator and begin to understand what strategies will and will not work consistently when trading options. It removes all financial risk and all credible excuses.
Disadvantages of an Options Trading Simulator
Unrealistic Order Fulfillment
In reality, there are not always enough buyers and sellers in the market. Therefore, unlike demo accounts, some orders are not filled trading live — one of the disadvantages of using an options trading simulator.
Delayed data and other differences between options trading simulators and live trading may build your confidence. Keep in mind this feeling can become an obstacle when you begin trading with real money.
When someone finds consistent success using an options trading simulator, it can lead to complacency.
It’s important to maintain your education about the market, the overall economy, and options trading in general.
Relying too much on an options trading simulator can create passive habits if one is not careful.
Why You Should Use an Options Trading Simulator
Now that you know the advantages and disadvantages of using an options trading simulator, let’s explore 3 reasons why you should use one, whether you are a beginner or an experienced options trader.
Reason #1: Practical Experience for New Investors
Using an options trading simulator can help you build good trading habits. These tools allow you to practice and put in place your options trading strategies.
In doing so, you will also learn the mechanics of placing trades so that there’s no mistakes when real money is on the line.
Reason #2: Develop Psychological Discipline
The experience gained using an options trading simulator will help you stick to your plan and avoid over-trading or impulse trading.
Reason #3: Access to Education
Most options trading simulators offer resources to educate option traders. It’s this knowledge that can help you lower your risk and increase your profit.
The Top 10 Options Trading Simulators
Here are the best option trading simulators for you to utilize now and into the future to grow your options trading skill.
Power E-Trade Paper Trading
The etrade options trading simulator has a lot to offer inexperienced options traders, because it is easy to use and provides a number of different resources to help educate new traders.
Without the high membership price associated with other platforms, this popular etrade simulator helps users:
- Understand risk and reward probabilities
- Learn “plain-English translations of industry jargon”
- Set up exit strategies
- Read over 100+ technical studies
- View a stocks’ expected price move and average implied move
To sign up with this etrade simulator, visit eTrade.com.
“Trusted by over three million educated investors”, Investopedia, along with an options trading simulator, boasts an impressive content library to help you learn more about the craft.
To make the learning process less stressful and more fun, you can utilize trading challenges with other members.
Their platform includes:
- $100,000 in virtual cash
- The ability to learn the methods and strategies of more than 700,000 traders
- You can create trading challenges to sharpen your skills
To register for free, visit Investopedia.com.
Wall Street Survivor
“Learn, practice, earn.”
If you already have a trading strategy in place, and you’re looking for more practice, a great tool is Wall Street Survivor.
Its platform, both desktop, and mobile, includes:
- education tools
- experienced instructors
- a league system that allows you to compete against others to win real money
You can open up an account with $100,000 in virtual money at WallStreetSurvivor.com.
thinkorswim (aka paperMoney)
Rated as the #1 desktop program, thinkorswim helps investors test and develop your strategies as you execute trades, both simple and complex.
With the program, you can experience “fully customizable trading experience, designed to help you nail even the most complex strategies and techniques.”
You can sign up for this options trading simulator at TDameritrade.com.
ETNA Trading Simulator
A trading simulator used by many U.S. universities, educators, and brokers, Paper Trading Platform offers “life-like execution for ETF, equities and options without any risk”.
Standard features like charts, news, and watchlists are a part of the program. Advanced features include:
- options chains
- multi-leg combo orders
- real-time trading with Level II quotes
Learn more about this options trading simulator at ETNAsoft.com.
For investors who want to practice option trading with advanced orders or strategy automation, TradeStation is an excellent option. This options trading platform offers features:
- Real-time data
- Unlimited paper trading dollars
- Backtesting with one of the largest databases of historical market data
- The ability to trade using advanced strategies
This free options trading simulator is available at Tradestation.com.
“Exercise your option to save with eOption,” and practice options trading with $100,000 in virtual cash.
Try the desktop version or mobile app to improve your option trading abilities using the unique features, which include:
- A probability calculator
- The ability to view option chains
- Access to professional research
Practice your trading strategies risk-free with this options trading simulator at eOption.com.
Another fantastic way to practice options trading without using real money is with a Moomoo paper trading account.
They offer a desktop and mobile trading platform that allows you to practice your skills and test your option trading strategies.
With a Moomoo paper trading account, you can:
- Practice trading options with up to $1,000,000 in virtual cash
- Use real-time data to improve your options trading abilities
- Connect with social networking feeds to participate in conversations about specific options
- Conduct technical studies using the charting software
Moomoo is a tremendous options trading simulator with PC, Mac, and mobile versions. Visit Moomoo.com and download the version that works best for you.
Bull Bear Traders
This options trading platform is an excellent choice for those who want to practice options trading with a tool that provides more educational resources.
The simulator comes with a robust list of options trading features, including:
- In-depth virtual options trading classes for beginner and advanced traders
- Level 1 data for options trading
- The ability to customize the tools and indicators to fit your needs and trading style
- Seamless transition from virtual trading to live trading
Bull Bear Traders does not offer a free options trading simulator, but the tools, classes, and simulator are well worth the price. They do have a 14-day free trial you can take advantage of.
Another excellent options trading simulator can be found at Warrior Trading.
This remarkable trading platform was made in collaboration with NASDAQ & the NYSE. They offer education and resources for options traders of all experience levels, especially if you're looking to sell options.
Many of the benefits provided by Warrior Trading include:
- Real-time stock and options trading data
- The ability to trade risk-free, in real-time conditions with $200,000 in virtual cash
- Advanced reporting metrics to professionally analyze each trade
- The ability to make hotkeys to create stop orders, take profit targets, and stop at breakeven
Check out all of the features and options available or jump right in and start to practice option trading at WarriorTrading.com.
The Bottom Line: Options Trading Simulators
Trading options takes knowledge and patience — two skills that can best be acquired in action.
But don’t try to learn it as you go with real money on the line. Instead, use these options trading simulators — and, in some cases, free options trading simulators — to help you put your strategy into play.
That way, when real money is on the line, you’ll make a wise and profitable decision.