The term "virtual market" is used to refer to any markets that allow trades over the Internet. More specifically, however, a virtual market is a domain on the Internet that simulates the trading of stocks and other financial instruments. The basic function of the virtual market is to provide a simulation of the actual stock market. Throughout simulation, the virtual market makes use real companies, real stocks and real prices. In effect, the virtual market becomes an apt tool for market education, analysis and practice.
Individuals who make use of the virtual market range from experienced and long-time investors to beginners and first-time investors. Usually, beginner investors use the virtual market as a place to learn about how the stock market functions. This includes learning about actual market outcomes on the prices of stocks. For experienced investors, on the other hand, it also such members to practice trading strategies and refine their practices. Most virtual market providers also give users access to market analysis tools and other services. Such tools and services are similar to those used to trade on actual stock markets.
The virtual market functions on two different levels. First is the actual level. In actuality, the virtual market is a program or Internet application that simulates the stock market. Usually, users have to register with Internet sites in order to have access to the virtual market. This allows people from around the world to interact and trade with each other, through the Internet, over the virtual market. Users can normally create "games" of their own, or they can join an existing virtual market game.
The second level of function of the virtual market is as a market. As a market, the virtual market is meant to mimic and mirror actual stock market values, activities and movements. This means that the virtual market makes use of actual stock quotes to formulate its basis. When virtual traders buy or sell stocks on the virtual market, the market is affected and prices change. Since the virtual market is meant to mimic stock market activity, participants can use the virtual market to practice trading strategies and analysis skills.
Although it is not advisable to base your investments solely on results in the virtual market, there are many advantages for using a virtual market. Perhaps the most significant advantage is the ability to learn and practice on the virtual market. This is a powerful tool for familiarising yourself will the stock market.