Is there an application or website where I can practice trading US stocks with virtual money?
I traded futures for a brief period in school using the BrokersXpress platform (now part of OptionsXpress, which is in turn now part of Charles Schwab). They had a virtual trading platform, and apparently still do, and it was excellent. Since my main account was enabled for futures, this carried over to the virtual account, so I could trade a whole range of futures, options, stocks, etc. I spoke with OptionsXpress, and you don't need to fund your acount to use the virtual trading platform. However, they will cancel your account after an arbitrary period of time if you don't log in every few days. According to their customer service, there is no inactivity fee on your main account if you don't fund it and make no trades. I also used Stock-Trak for a class and despite finding the occasional bug or website performance issue, it provided a good experience. I received a discount because I used it through an educational institution, and customer service was quite good (probably for the same reason), but I don't know if those same benefits would apply to an individual signing up for it.  I signed up for top10traders about seven years ago when I was in secondary school, and it's completely free. Unfortunately, you get what you pay for, and the interface was poorly designed and slow. Furthermore, at that time, there were no restrictions that limited the number of shares you could buy to the number of outstanding shares, so you could buy as many as you could afford, even if you exceeded the number that physically existed. While this isn't an issue for large companies, it meant you could earn a killing trading highly illiquid pink sheet stocks because you could purchase billions of shares of companies with only a few thousand shares actually outstanding. I don't know if these issues have been corrected or not, but at the time, I and several other users took advantage of these oversights to rack up hundreds of trillions of dollars in a matter of days, so if you want a realistic simulation, this isn't it.  Investopedia also has a stock simulator that I've heard positive things about, although I haven't used it personally.
The key word you forgot to include from Slide 29 is: Free-Riding Investopedia defines free-riding as: In the context of a brokerage firm, a free rider problem refers to a situation where a client has been allowed to purchase shares without actually paying for them, and then subsequently sells the shares (ideally for profit). The problem with this scenario is that the client, if allowed to free ride, can profit from a stock trade without actually using any of his or her own capital. This is illegal. I have not heard of any issues with this type of action being a problem with trading accounts in Australia, nor have I been able to find any such rules on the ASX website or any of by brokers websites. So I think this may be an issue in the USA but not Australia. You should check the rules in any other countries you wish to trade in. "The only ""authoritative document"" issued by the IRS to date relating to Cryptocurrencies is Notice 2014-21. It has this to say as the first Q&A: Q-1: How is virtual currency treated for federal tax purposes?   A-1: For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency. That is to say, it should be treated as property like any other asset. Basis reporting the same as any other property would apply, as described in IRS documentation like Publication 550, Investment Income and Expenses and Publication 551, Basis of Assets. You should be able to use the same basis tracking method as you would use for any other capital asset like stocks or bonds. Per Publication 550 ""How To Figure Gain or Loss"", You figure gain or loss on a sale or trade of property by comparing the amount you realize with the adjusted basis of the property. Gain. If the amount you realize from a sale or trade is more than the adjusted basis of the property you transfer, the difference is a gain. Loss. If the adjusted basis of the property you transfer is more than the amount you realize, the difference is a loss.  That is, the assumption with property is that you would be using specific identification. There are specific rules for mutual funds to allow for using average cost or defaulting to FIFO, but for general ""property"", including individual stocks and bonds, there is just Specific Identification or FIFO (and FIFO is just making an assumption about what you're choosing to sell first in the absence of any further information). You don't need to track exactly ""which Bitcoin"" was sold in terms of exactly how the transactions are on the Bitcoin ledger, it's just that you bought x bitcoins on date d, and when you sell a lot of up to x bitcoins you specify in your own records that the sale was of those specific bitcoins that you bought on date d and report it on your tax forms accordingly and keep track of how much of that lot is remaining. It works just like with stocks, where once you buy a share of XYZ Corp on one date and two shares on another date, you don't need to track the movement of stock certificates and ensure that you sell that exact certificate, you just identify which purchase lot is being sold at the time of sale." "There are people (well, companies) who make money doing roughly what you describe, but not exactly. They're called ""market makers"". Their value for X% is somewhere on the scale of 1% (that is to say: a scale at which almost everything is ""volatile""), but they use leverage, shorting and hedging to complicate things to the point where it's nothing like a simple as making a 1% profit every time they trade. Their actions tend to reduce volatility and increase liquidity. The reason you can't do this is that you don't have enough capital to do what market makers do, and you don't receive any advantages that the exchange might offer to official market makers in return for them contracting to always make both buy bids and sell offers (at different prices, hence the ""bid-offer spread""). They have to be able to cover large short-term losses on individual stocks, but when the stock doesn't move too much they do make profits from the spread. The reason you can't just buy a lot of volatile stocks ""assuming I don't make too many poor choices"", is that the reason the stocks are volatile is that nobody knows which ones are the good choices and which ones are the poor choices. So if you buy volatile stocks then you will buy a bunch of losers, so what's your strategy for ensuring there aren't ""too many""? Supposing that you're going to hold 10 stocks, with 10% of your money in each, what do you do the first time all 10 of them fall the day after you bought them? Or maybe not all 10, but suppose 75% of your holdings give no impression that they're going to hit your target any time soon. Do you just sit tight and stop trading until one of them hits your X% target (in which case you start to look a little bit more like a long-term investor after all), or are you tempted to change your strategy as the months and years roll by? If you will eventually sell things at a loss to make cash available for new trades, then you cannot assess your strategy ""as if"" you always make an X% gain, since that isn't true. If you don't ever sell at a loss, then you'll inevitably sometimes have no cash to trade with through picking losers. The big practical question then is when that state of affairs persists, for how long, and whether it's in force when you want to spend the money on something other than investing. So sure, if you used a short-term time machine to know in advance which volatile stocks are the good ones today, then it would be more profitable to day-trade those than it would be to invest for the long term. Investing on the assumption that you'll only pick short-term winners is basically the same as assuming you have that time machine ;-) There are various strategies for analysing the market and trying to find ways to more modestly do what market makers do, which is to take profit from the inherent volatility of the market. The simple strategy you describe isn't complete and cannot be assessed since you don't say how to decide what to buy, but the selling strategy ""sell as soon as I've made X% but not otherwise"" can certainly be improved. If you're keen you can test a give strategy for yourself using historical share price data (or current share price data: run an imaginary account and see how you're doing in 12 months). When using historical data you have to be realistic about how you'd choose what stocks to buy each day, or else you're just cheating at solitaire. When using current data you have to beware that there might not be a major market slump in the next 12 months, in which case you won't know how your strategy performs under conditions that it inevitably will meet eventually if you run it for real. You also have to be sure in either case to factor in the transaction costs you'd be paying, and the fact that you're buying at the offer price and selling at the bid price, you can't trade at the headline mid-market price. Finally, you have to consider that to do pure technical analysis as an individual, you are in effect competing against a bank that's camped on top of the exchange to get fastest possible access to trade, it has a supercomputer and a team of whizz-kids, and it's trying to find and extract the same opportunities you are. This is not to say the plucky underdog can't do well, but there are systematic reasons not to just assume you will. So folks investing for their retirement generally prefer a low-risk strategy that plays the averages and settles for taking long-term trends." "With (1), it's rather confusing as to where ""interest"" refers to what you're paying and where it refers to what you're being paid, and it's confusing what you expect the numbers to work out to be. If you have to pay normal interest on top of sharing the interest you receive, then you're losing money. If the lending bank is receiving less interest than the going market rate, then they're losing money. If the bank you've deposited the money with is paying more than the going market rate, they're losing money. I don't see how you imagine a scenario where someone isn't losing money. For (2) and (3), you're buying stocks on margin, which certainly is something that happens, but you'll have to get an account that is specifically for margin trading. It's a specific type of credit with specific rules, and you if you want to engage in this sort of trading, you should go through established channels rather than trying to convert a regular loan into margin trading. If you get a personal loan that isn't specifically for margin trading, and buy stocks with the money, and the stocks tank, you can be in serious trouble. (If you do it through margin trading, it's still very risky, but not nearly as risky as trying to game the system. In some cases, doing this makes you not only civilly but criminally liable.) The lending bank absolutely can lose if your stocks tank, since then there will be nothing backing up the loan." Yes, add the stocks/mutual funds that you want and then you would just need to add all the transactions that you theoretically would have made. Performing the look up on the price at each date that you would have sold or bought is quite tedious as well as adding each transaction. "There are many ways to trade. Rules based trading is practiced by professionals. You can indeed create a rule set to make buy and sell decisions based on the price action of your chosen security. I will direct you to a good website to further your study: I have found that systemtradersuccess.com is a well written blog, informative and not just a big sales pitch. You will see how to develop and evaluate trading systems. If you decide to venture down this path, a good book to read is Charles Wright's ""Trading As A Business."" It will get a little technical, as it discusses how to develop trading systems using the Tradestation trading platform, which is a very powerful tool for advanced traders and comes with a significant monthly usage fee (~$99/mo). But you don't have to have tradestation to understand these concepts and with an intermediate level of spreadsheet skills, you can run your own backtests.  Here is a trading system example, Larry Connors' ""2 period RSI system"", see how it is evaluated: http://systemtradersuccess.com/connors-2-period-rsi-update-2014/, and this video teaches a bit more about this particular trading system: https://www.youtube.com/watch?v=i_h9P8dqN4Y IMPORTANT: This is not a recommendation to use this or any specific trading system, nor is it a suggestion that using these tools or websites is a path to guaranteed profits. Trading is a very risky endeavor. You can easily lose huge sums of money. Good luck!" Just got back from the office, so I can better answer it now. The trader uses the Metatrader platform, which is programmed with a language based off C++. I'm working with him to update some algos now. His strategies running on ToS are more or less proof-of-concept that he streams right now as he sources investors. "You don't seem to be a big fan of trading as you may think it may be too risky or too time consuming being in front of your computer all day long. You also don't seem to be a fan of buy and hold as you don't know what your investments will be worth when you need the funds. How about a combination of the two, sometimes called trend trading or active investing. With this type of trading/investing you may hold a stock from a couple of months to many years. Once you buy a stock that is up-trending or starting to up-trend you hold onto it until it stops up-trending. You can use a combination of fundamental analysis (to find out what to buy) and technical analysis (to tell you when to buy and when to sell). So these are some topics you can start reading up on. Using a technique like this will enable you to invest in healthy stocks when they are moving up in price and get out of them when they start moving down in price. There are many techniques you can use to get out of a stock, but the simplest has to be using stop losses. And once you learn and set up your system it should not take up much of your time when you actually do start trading/investing - 2 to 3 hours per week, and you can set yourself up that you analyse the market after the close and place any order so they get executed the next trading day without you being in front or the screen all day. Other areas you might want to read and learn about are writing up a Trading Plan, using Position Sizing and Money Management so you don't overtrade in any one single trade, and Risk Management. A good book I quite liked is ""Trade Your Way to Financial Freedom"" by Van Tharp. Good luck."