According to a CNBC story, Warren Buffet started his first business of selling lemonade when he was just 5-years old. He chose to sell it in front of his friend’s house which saw more traffic. As a 10-year old, Warren got a chance to visit New York. One of the three things he wanted to see there was the New York Stock Exchange. It was there he realized that investing in stocks can make his dream of being wealthy come true. Eventually, he got a chance to ‘mark the board’ at a stock trading office on Saturdays, where the young Warren would write the stock prices on the board with chalk. At 11, he started investing in stocks.

Besides being the story of how Warren Buffet became the richest man in the world, this story points out to another important fact. Even as a young boy, Buffet was very hands-on. He believed in learning by doing.

In the digital age, financial market simulations can help you develop your own investment strategies. In this article, we will talk about eight powerful tools that can help you pick up skills to grow your wealth (or nurture a bright career as finance professional). These include:

Capital Market Simulator (CMS)

If you are a blogger or a tech entrepreneur, you probably know about the other CMS – the Content Management System – which is the backbone of a website, web portal, or blog. This CMS is different. It is an interactive game that simulates the stock markets. The Instructor holds the reigns of your experience as a trader in this simulated environment, as you deal with the high-pressure trading scenarios and learn to tackle volatile markets.

If you want to learn how to raise capital through shares, bonds, and long-term investments, this is the game you should play. It allows you to practice trading in Options, Commodities, Equities, Fixed Income Assets, Forex, Futures, Energy, and other derivative instruments. One can also analyze their investment strategies in detail using metrics like Sharpe Ration, Information Ratio, Sortino Ratio and Treynor Ratio. You may also check out your Profit and Loss (P&L), Risk-Adjusted Return On Capital (RAROC), and Value at Risk (VaR) when you incur losses – all this without risking a penny.

The institutes that provide finance training courses may use it to train students online – even if they are distributed globally. They can also use the CMS Simulation Writer to customize the experience of their students and align it with their program curriculum.

Portfolio Management Simulator (PMS)

Portfolio management is about deciding upon the investment mix one would like to hold to meet his or her financial goals while balancing risk against performance. A step up from the CMS, PMS trains you in Private Banking, Wealth Management, and Hedge Funds. Here, you can put the theories of asset allocation or modern portfolio fundamentals in practice. You can perfect the techniques of portfolio construction by allocating (virtual) funds in more than 10,000 equity and fixed-income instruments.

The game allows you to trade in the emerging markets and check out your performance in all the major exchanges across the world. You can simulate different market and economic conditions here to learn about strategies that work best in various scenarios. You delve into sector-related risks, geo-centric risks, currency risks as well as political risks that one faces in the real-life markets and also learn about instruments like agri-markets, options, metals, forex, and futures.

Fixed Income Trading Simulator (FITS)

The Fixed Income market is quite massive and complex. This simulation training helps you learn about different money market instruments as well as fixed income securities. It helps you learn how to hedge risk and manage your financial goals and expectations.

As finance students trade in an electronic marketplace in government, money market instruments, and asset-based investments, they learn to develop a fixed income portfolio in different scenarios – that can be based on historical scenarios or designed specifically for the clients.

Forex Trading Simulator (FTS)

Forex stands for Foreign Exchange market or currency market. Here, people trade in currencies. It is this market which determines the foreign exchange rate that we hear of so often. Unlike equity markets, trading here takes place over-the-counter (OTC). It is the largest market in the world in terms of trading volume. This engaging Forex Trading Simulation platform helps you learn how to survive and thrive as a Forex trader.

Instructors can create market conditions to be static or volatile as per their choice. It also allows you to analyze one’s performance anytime they want.

Real News Trading Simulator (RNTS)

Interestingly, this dynamic and interactive platform helps you understand the role news plays in the investment decisions one makes. The competitive element that this simulator brings into the class can make the financial learning programs challenging and engaging for the students. The participants can be divided into teams, which will compete with each other in taking long and short positions strategically in the market up to the limit imposed on them. Trades are done at current market prices and a running account of profit and loss determines who wins.

College students who are interested in becoming finance professionals in the future may find it very interesting. In fact, a tutor who provides assignment help to students on corporate finance shared, “I think all students of finance and trading programs must use this tool to understand how media can affect our investment decisions.”

The live data feeds as well as simulated data is used to provide experiential learning to students and help them understand how economies work, and how to make market predictions.

Real Market Simulator (RMS)

If you want to practice trading of global instruments with live pricing, this is the simulator for you. You can play it over several days or weeks at a time. Beside current prices, it offers advanced trading options such as stop losses, overnight trading, and limit orders.

You can play individually as a trader or form teams (if you are enrolled in a college or an institute) and compete with each other. The game can be used by hundreds of finance students simultaneously.

Dynamic analytics allow traders to see their individual portfolio and allocations and benchmark it against the performance of their peers. Besides the performance metrics like Alpha, Beta, and all the ratios, the game also has a leadership broad where they can see the winners and the losers, the amount they win or lose, and the number of trades they made.

Options Strategy Analyzer (OSA)

Options are a type of derivatives that are mostly used for speculation and hedging risk. They are contracts but unlike futures, the owner of options is not under obligation to sell or buy an underlying asset before a certain date or at a set price.

In a call option, you pay some money to the current owner of the asset and tell him that you would like to buy it at a set price within a set time period. If you buy it before the set deadline, you have to pay the price mentioned in the option. If the deadline expires and you still want to buy the asset, you’ll have to pay the market price for it. This is called speculation.

A put option is made by the current owner of the asset to hedge his risk. He makes a contract with a buyer (by paying some money for it) that he can sell his asset at a set price within a set deadline to the buyer. Even if the market crashes during that period, the seller will not lose much as the buyer has already agreed to buy his asset at a fixed price. If the deadline expires, the owner will have to sell his asset at the prevailing market price.

Options trading can be a stock, stock index, bonds, currencies, commodities and other derivatives. The OSA simulator is a standalone product that can help you perfect the strategies like checking parameters of hedging, calculating prices of options, understanding historical and implied volatility and several other techniques.

Enterprise-Level Training Simulation Platforms

This simulator platform is a powerful tool for academic and organizational trainers allowing them to develop customized business simulations. It can usher in a wave of innovation in how to teach the most advanced techniques to those who deal with the financial and capital market sectors.

 

Author Bio: Rruchi Shrimalli is a Content Marketing Manager for transtutors.com, askIITians.com, GoAssignmentHelp.com and several other websites. She is a writer and a journalist at heart, and has been writing articles on various aspects of the Education domain since 2010. Her articles have been published at Shiksha.com, India.com, and Employment News among others.