Trading Simulations and Real Money Outcomes

33 Pages Posted: 16 Jul 2020 Last revised: 21 Aug 2020

See all articles by Deniz Anginer

Deniz Anginer

Simon Fraser University (SFU)

Caio Piza

World Bank

Sugata Ray

University of Alabama - Department of Economics, Finance and Legal Studies

Luqi Xu

University of Alabama - Department of Economics, Finance and Legal Studies

Date Written: June 24, 2020

Abstract

Using a novel dataset of trades made on a trading simulator in Brazil, we examine the link between simulation experience and (1) the determinants of opening a real money account, and (2) the performance in real money accounts. We find that more active simulator users, simulator users who take on more risk, and simulator users with the best stock level performance (but not portfolio level performance) are more likely to open real money accounts. These users are also likely to be more active real money traders and significantly underperform in their real money trades. These results suggest that without proper education regarding the hazards of active trading and accurate performance evaluation, stock simulator users may draw incorrect inferences regarding their trading skill and experience real-money underperformance.

Suggested Citation

Anginer, Deniz and Piza, Caio and Ray, Sugata and Xu, Luqi, Trading Simulations and Real Money Outcomes (June 24, 2020). Available at SSRN: https://ssrn.com/abstract=3634775 or http://dx.doi.org/10.2139/ssrn.3634775

Deniz Anginer

Simon Fraser University (SFU) ( email )

8888 University Drive
Burnaby, British Columbia V5A 1S6
Canada

Caio Piza

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Sugata Ray

University of Alabama - Department of Economics, Finance and Legal Studies ( email )

P.O. Box 870244
Tuscaloosa, AL 35487
United States

Luqi Xu (Contact Author)

University of Alabama - Department of Economics, Finance and Legal Studies ( email )

P.O. Box 870244
Tuscaloosa, AL 35487
United States

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