Stocks are typically best thought of as long-term investments, but fantasy stock contests are fixing that.

Investing in stocks or crypto is a risky business, as anyone who's ever bottomed out on a bad investment will tell you. But that doesn't mean that there aren't ways to minimize that risk, and even make it work for you. While it's true that the overwhelming majority of traders lose money, that is largely due to their own inexperience as opposed to something inherent in the market. The best thing that any prospective trader can do is to educate themselves about stocks and the market. Fantasy trading contests like StockBattle are a great way to get some practice while making a few bucks in the process, all in a low-risk, fun setting.

'An investment in knowledge pays the best interest'

-Benjamin Franklin

Why Do So Many People Lose Money On Stocks?

Before going over our top tips for choosing fantasy stocks, let's look at why most people fail.

Investing In Rumors

Everyone is always looking for the next big thing. We all wish we'd gotten in on the ground floor of Apple or Bitcoin and that fear of missing out is a powerful drive. Everywhere you look, there's some new rumor that X Inc. was recently bought out by Y Enterprises and the stocks are about to boom. But words are wind, they come and they go and leave nothing behind. Don't jump on the bandwagon - at least not without doing your homework.

Not Doing Their Homework

You wouldn't bet on a sport if you didn't know the rules, the teams, and the odds. It's the same with stocks. Heard all about that hot new start-up's IPO? Don't just throw your money at them, do your research. It takes a lot more than a great idea and some venture capital to be a success. Just cast your mind back to the dot-com boom of the late 90s to see what can happen.

A Lack of Patience

Patience is a virtue. Doubly so when regarding investments. Stocks rarely make massive gains or losses in a single day - barring some unforeseen event. The best thing to do is to sit and wait. Day trading is fun and can be a real thrill, but it's also the number one way that investors lose money on stocks. Profits on stocks come in the long run, more often than not. Even Warren Buffett, arguably the greatest investor in the modern world, says that stocks should be avoided entirely in place of an S&P 500 index fund.

What do these all have in common? The worst thing that you can do when buying stocks is rushing in and rushing out. It's investing, not gambling, and fantasy stocks are a fun and simple way to learn how to get the most out of your investments. Fantasy stock games let you choose a virtual portfolio and buy and sell stocks in real-time using up-to-the-second NASDAQ data. After each game, you can earn a reward based on how well you performed. So, what can you do to help increase your chances in a game like StockBattle?

How Can I Pick a Good Stock?

At the risk of sounding like a broken record, the best thing you can do is research. Look at the company you're interested in. How have they performed over the last few years? Do they have stable leadership? Are they in an industry that might be getting shaken up soon? Look at a company like Microsoft for example. For a lot of people, they represent the gold standard of a stock. A well-known brand name. Wide consumer appeal. Established leadership that is unlikely to undergo radical changes. These are all ingredients in a recipe for continued success on the market.

Compare that to something like Intel. While they are also a globally recognized brand with wide appeal and a proven track record, they are currently experiencing a massive chip shortage and their immediate forecast is uncertain at best. While they are sure to recover in the long term, they are at a very shaky place right now.

There's no magic checklist that will guarantee that a stock will do well, but there are definitely trends that can be taken advantage of. Here are a few questions to ask yourself before looking to buy stocks.

What is your investing goal?

This is the first question that you should be asking yourself when looking to invest or trade. Typically, the main goal of a trader is either income, growth, or capital preservation and this dictates your trading strategy.

Income - Look for companies with good dividend yields and consistent cash flow.

Growth - Newer, smaller companies are a bit riskier but provide far more room to grow.

Preservation - Pick a long-standing and stable company with less gain and less risk.

How much risk are you okay with?

No risk, no reward, right? That's certainly true when it comes to stocks. Sure, that Google stock you own is a safe bet, but it's unlikely to make you much richer over the next few days or weeks. If you're looking for a quick turnaround on your investment, you're going to have to take the plunge and risk some money. How much are you willing to risk? What are your conditions for cutting your losses or taking the money? Ask yourself what your endgame is before you buy.

Should you buy stock in one company or many?

You can only buy so many stocks with the money you have. Should you put it all into one company with a proven track record? Should you spread it around? Conventional wisdom says that a properly diversified stock portfolio is the best bet, however, putting all your eggs in one basket has its advantages. Since 1929, 4% of stocks have accounted for the entire growth of the US stock market. In fantasy stocks, it's even easier. On fantasy trading platforms like StockBattle, players are always given the opportunity to make a fantasy stock portfolio of up to five companies.

What companies/fields do you understand?

Do you have a deep passion for cars? Start there. Where do companies like Ford and Nissan buy their manufacturing machinery? Who supplies the rubber to Goodyear? Leather seats have to come from a farm somewhere, right? Use the area you know about as a jumping-off point and see where you land.

Can I Make Money In The Short Term With Stocks?

While it's certainly possible to make a profit on stocks in the short term, it is certainly the exception as opposed to the rule. But fantasy stocks present a unique opportunity to dabble in the stock market at no risk while still standing to earn some money if you do well.

What are fantasy stocks?

Fantasy stocks should be familiar to anyone who's ever played fantasy sports. Instead of picking players, you pick stocks and see how they perform in 15, 30, or 60-minute games using real-time NASDAQ data. At the end of the game, users are awarded points based on how well their stock portfolio performed. At the end of the day, prizes are given out. Players can learn how to pick and choose stocks for short-term gain before jumping into the real deal.

Where Can I Learn About Stocks?

The obvious answer is…the internet. But that's not super helpful, so let's try to narrow it down. The best place to start researching any stock is by just googling the stock symbol. You'll get a handy little graph that shows you the stock price over the last one day, five days, or up to five years. Click on the YTD (year-to-date) button and take a look at how they've been performing lately.

Looking back at our example from earlier, we can see that Microsoft has shown far more growth over the year 2021 so far. Both have their ups and downs, but at the moment, IBM is far more volatile and has shown no long-term growth.

Now, these kinds of timeframes are great for investing, but for fantasy stock games we need something a bit faster. Well, just click on the '1D' button and see how stocks are performing in real-time.

IBM is actually the one up on the day, while Microsoft has taken a small loss. It's important to know what kind of timeframe you're looking at whenever you make a purchase.

So, if you're curious about stocks, but hesitant to gamble with your hard-earned money, fantasy stocks might just be the perfect way to cut your teeth and learn the basics.