Paper trading is the practice of trading (buying and selling) securities that have simulated value instead of real value. Paper trading has been around for years and is a great way to practice various investment strategies and tactics without risk – since you’re not using real money, you’re not going to lose real money.

The current bear market is an excellent time to try paper trading. These market conditions present particular hazards to inexperienced (and even experienced) investors, so it’s great to find a safe environment to experiment with different investment strategies and not lose your shirt.

That said, not all paper trading platforms are alike. Let’s look at a few of the ways we built marketGOATS to stand out from the rest and deliver you more.

First, the stakes are entirely different. Several platforms offer cash and other prizes. marketGOATS does too. But that’s just the beginning. We intend to register with the SEC to allow investors to open investment accounts with mG. Investors will be able to put real money with GOATS they choose that have been vetted to manage money using mG. marketGOATS will shift from pure paper trading to a hybrid paper trading and real investment platform. You can still play in our simulated environment to your heart’s content, but there will be opportunities to manage and invest real money.

The playing experience is also different on marketGOATS. For example, you can build multiple portfolios, each with a different strategy, to see how they perform under market conditions. You can build from scratch or start with pre-set portfolios that you can customize, including a bear market portfolio. We’ve also made the marketGOATS platform a social experience with community forums and group competitions, so you can network with and learn from your fellow players. 

Additionally, our simulation focuses on asset allocation via stocks, crypto, and ETFs instead of just individual stock selection. There’s a few reasons we have ETFs in the mix. First, about 70% of any given portfolio’s return is attributed to asset allocation, or being exposed to the right sectors, countries, regions, themes, and so forth.¹ As such, getting the asset allocation right is often the most important part of constructing a diversified portfolio. Second, only 4% of stocks from 1926-2016 created 100% of the excess return for stocks above the U.S. Treasury Bills.² As such, the odds are low that an individual can pick what stocks will outperform in the future. And finally, most actively managed funds run by professional fund managers cannot beat their respective benchmarks over time using just stock picking.³

mG’s focus on portfolio construction, asset allocation, and long-term viability will lead us to our ultimate goal: to find great money managers and enable people to invest in them. I hope you’ll give marketGOATS a try today. You can sign up free at marketgoats.com. 

(1) Renato Staub and Brian Singer, CFA. 2013. “Asset Allocation vs. Security Selection: Their Relative Importance.” The Journal of Performance Measurement, vol 16, issue 3 (Spring)

(2) Hendrik Bessembinder. 2018.  “Do Stocks Outperform Treasury Bills?” The Journal of Financial Economics, vol 129, issue 3, pages 440-457

(3) James Choi and Kevin Zhao.  2020.  “Did Mutual Fund Return Persistence Persist?” National Bureau of Economic Research. http://www.nber.org/papers/w26707