Don’t get carried away
Harshvardhan Roongta, Certified Financial Planner at Roongta Securities explains, âIf you win a football game on Playstation, you don’t consider yourself a good football player; Likewise, if you are enjoying your investments on a virtual platform, don’t get carried away and start investing in the real market. A. Balakrishnan, MD, Geojit Technologies, says, âLearn the skills of stock selection by analyzing financial data on the virtual platform, then build your portfolio. ”
Not an exact representation
Most virtual platforms do not offer a real-time trading environment with live stock prices – there is a 15-20 minute lag. Balakrishnan says, âVirtual platforms represent an elaborate trading scenario that may not reflect real-time market conditions. SAMCO Securities CEO Jimeet Modi said, âIn the real world there are instinctive events, siren price movements, etc., and you can only learn to deal with them with experience.
Strategies do not translate
Using strategies like short selling and taking a call without a lot of analysis is much easier in virtual trading than with real investments. âIf you use derivative strategies without a lot of knowledge or experience, you could end up with losses with your actual investments,â says Sudipto Roy, managing director of Principal Retirement Advisors.
Absence of other factors
When trading on the virtual platform, you would not have taken into account many other factors, such as time horizon of investments, your ability to take risks, investment objective, importance to diversify the portfolio, etc. Himanshu Dani, founder and CEO of financial advisory firm Invest Search says, âYou have to consider all of these factors when investing in the real world. ”
Changes in investor psychology
Investor psychology is very different for virtual and real investments. On the virtual platform, investors tend to follow the fundamentals of investing, such as reducing losses by exiting and holding the winners for the long term. However, in the real world, they tend to do the exact opposite. Many investors hold onto failed stocks while waiting for a rally and fail to make timely profits on the stocks to invest the amount in other long-term value choices. To remedy this, Uday Dhoot, founder of financial advisory firm Oyepaisa.com, advises, âNewbies to the stock market should distinguish between their ‘excitement funds’ and serious goal-oriented investments, and have different accounts for the two. ”