Conventional trading requires huge investments, which doesn't appeal to all investors, especially those entering this world. It's no wonder that fantasy trading has become so popular. It offers the perfect alternative that goes far beyond lowering your investments while giving you a chance to profit. Fantasy contests are also terrific for learning the trading basics and preparing for traditional markets.
If you feel ready for fantasy finance, these fantastic tips will help you convert your stocks into real money. Here is how to make the most out of these contests!
1. Learn About Different Competitions
Fantasy trading has reached an entirely new level in the last couple of years. Many new platforms have been launched, which gives participants a chance to pick between many open competitions.
Here are some parameters that can vary:
The number of competitors. Invstr offers classic fantasy leagues where you need to climb the leaderboard and compete against hundreds of opponents to win prizes. StockBattle, on the other hand, offers an exciting concept where you can participate in head-to-head duels.
Duration. If you don't have much free time, short-term, 15-minute competitions are a wise choice. Those who prefer long-term strategizing can choose tournaments that last for days or weeks.
Assets. Although stocks are the most common choice, some platforms offer crypto assets. Digital currencies are a new hit among traders, and fantasy contests keep up with this trend.
2. Read the Rules Carefully
It's up to you to choose a fantasy finance platform that suits your preferences. But before you join a competition, make sure to read its rules carefully. It's the fundamental tip for anyone trying fantasy trading, mainly because tournaments often have different sets of rules.
Some contests require you to choose only five stocks for the entire portfolio. Others give you a certain amount of virtual currency to choose the stocks. In some competitions, only the winner takes the prize pot. You can also find fantasy contests where several players at the top of the table split the prize fund. Other specific rules could also apply, such as how many stocks you can trade in a specific timeframe, and more.
All of this indicates that you need to read the competition rules carefully. It will help you create and prepare the best strategy for that tournament. You can also rest assured there will be no surprises once the tournament starts.
3. Don't Hesitate to Experiment with Different Strategies
Some traders play safe and pick only from the top ten of S&P 500 stocks. Others prefer looking for gems that could land the most points to edge your opponents. The beautiful thing about fantasy contests is that they allow experimenting with different strategies. It's the best way to pick a style that suits you, which will help you in conventional trading later.
You need to adapt the strategy to the chosen competition. The same tactic might not be profitable for short and long-term stock performance. If you pick a fantasy finance tournament that lasts only 15 minutes, volatile stocks could land higher profits. On the other hand, those stocks that you believe will have a steady growth can be suitable for long-term contests.
Some participants like to focus their odds on a single stock. They choose their favorite that should land the most points. The other stocks for their portfolio are far less volatile, and that stability ensures they can't surprise you with significant value drops. Other players prefer to spread the risk across the entire stock selection. It ultimately depends on finding a style that suits you. If you feel comfortable with a specific strategy that suits the competition, that gives you the best chance of landing those real money prizes.
4. Take Advantage of Freerolls
Many fantasy contests require a real money investment to enter and compete for actual prizes. But if you are a newbie and want to get some experience first, freerolls are a wise choice. Platforms like StockBattle offer a smart approach for beginners.
They allow a specific number of freerolls with real money prizes. These fantasy contests are great for learning how to pick stocks for your portfolio. You'll also understand the website's interface better, which makes you more comfortable for subsequent tournaments.
Freeroll fantasy trading allows you to build an initial real-money portfolio. If you prove your skills, you can have a decent starting sum. After free competitions, you can join duel tournaments to double up the investment. The right strategy and wise moves allow traders to profit without investing a single cent.
5. Use the Tools Available to Analyze Assets Before Choosing Them
(Source: StockBattle screenshot)
It's always good to have a little luck, but fantasy trading is essentially a competition of skill. You need to predict which assets will perform better than your opponents. It's impossible to do that by using your intuition. That's why you need to find a fantasy finance platform offering useful statistics on stocks that you can choose for the portfolio.
Here is how to use asset analysis to your advantage:
Check the latest asset price fluctuations. Can you notice a sudden drop or increase in the last 15 or 60 minutes? If you play short-term competitions, you can use that trend to your advantage.
Analyze how stock value moves in the long run. This can give you a general idea if an asset has been stable lately. It's suitable for long-term fantasy trading sessions.
Focus on graphs and charts to determine stocks' volatility. A stock with higher volatility is riskier but can also help to yield more points.
6. Follow the Latest News and Events
Information is power and that's 100% true in trading. You need to stay on top of all the latest news and events regarding the stocks you plan to choose. If there's a pending company sale or a structure change, it could affect its stock value.
Positive and negative press can both affect market assets in minutes. If you find the latest information about a particular stock, that could give you an advantage over your opponents. You can add (or remove) that stock to your portfolio in time to ensure it provides maximum value to your selection.
7. Try the Hedging Strategy
Hedging is a controversial strategy, but many traders brag it helped them maximize profit. The basic premise is to bet against yourself, which you might find weird.
Here is an example - let's say you participate in a competition that has a generous prize pool. You might have invested real money hoping to win the main reward. The hedging strategy involves picking another fantasy trading competition. In that tournament, you should pick assets you didn't choose for your selection the first time. You'll invest less in that second competition but enough to cover your losses if you fail in the main tournament.
If you win the primary fantasy contest, that's great! You won't lose much of your earnings by covering yourself in the secondary competition. And if the primary option fails, you still have the alternative. If you win there, you'll cover the investment in both contests. It's a protection mechanism that helps to keep your balance positive.
Fantasy trading is an enjoyable way to profit while keeping your investments low. Ultimately, the best tip I can give you is to cover every possible detail and make intelligent moves. If you are picking stocks for your portfolio, analyze graphs and charts, and don't forget to check the industry news.
You also need to pick fantasy contests that suit your preference. Investopedia Stock Simulator is an excellent free way to learn how the market works. But if you want to take the excitement to the next level, StockBattle has 15-minute duels that will keep you at the edge of your seat. Apart from choosing stocks, this platform also offers fantasy crypto competitions. Short-term sessions maximize the thrill and give you the chance to double your balance quickly. And while choosing your portfolio, don't forget to apply tips from this article!