TMX Learning Centre – A trading simulation/virtual environment to learn investing

TMX Learning Centre – A trading simulation/virtual environment to learn investing

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I wanted to help people interested in learning to invest. I searched online for a good trading program for people located in Canada, and came across TMX Learning Centre – http://www.tmx-edu.com/en/ . This week I am going to try out this program, and provide feedback on the blog.

This program allows you to trade equities and derivatives. I recommend starting with equities for a beginning investor since equities are easier to understand.

Step 1: Create user account by using the link below.

https://tmx.inovestor.com/Authentication/?ReturnUrl=%2f

Step 2: The welcome page will provide the option to name your portfolio and input the amount of money you would like to trade with. Don’t worry this is not tied to any of our bank accounts. I found it is really useful when we can simulate real life like conditions. I am going to start my portfolio with $5, 000. Give your portfolio a name and input only the numbers E.g. 5000. I recommend you start with an amount you would be able to invest with in real life.

Step 3: Now that the virtual trading account is setup, let’s explore some other functionalities available to us through this setup. There is a page for getting the quotes of various stock symbols:

https://tmx.inovestor.com/VirtualTrader/Quote

 I looked up two stocks that I am familiar with. BlackBerry, which has a ticker symbol BB and Royal Bank of Canada which has a ticker symbol RY. Both of these stocks trade on the Toronto Stock Exchange (TSX). Stocks trading on an exchange are represented by symbols, for example, BlackBerry’s symbol is BB.

How to use this page:

  • You type in the symbol of a company and hit the search icon, and it will return the results for that company if the company trades on TSX and the symbol is accurate. You can find a list of companies that trades on the TSX using a stock screening tool:  http://web.tmxmoney.com/screener.php?qm_page=36049. Will write a separate post on how to best use the stock screening tool.
  • When you click on the individual stock result returned, it provides more details about the stock. See image below.  Will write a separate post on how the different details can be used to help understand a stock further.

Step 4: Once we have determined a stock to trade, we can place an order using the trade window. For example if I have decided to buy shares of Royal Bank, I will input the ticker symbol for Royal Bank in the search box and hit return.

  • Let’s say if I had decided to invest about 30% of my portfolio ( $1532 out of $5000) into the Financial Services industry by buying Royal Bank shares. I will place an order for 20 stocks ( 1532/76.59 = 20 stocks) .  
  • Each order I place has a transaction cost. This is the amount of money you pay the bank/trading service for processing your order and the use of their systems. In this case the transaction cost is $9.95. When profit is calculated after a stock is sold, need to ensure we also take into account the transaction cost.
  • Whenever we place an order, we have the option to set the price that we want to buy the stock at which is called the limit price. What this means is that your order will only get processed when there is a seller available in the market willing to sell at that price. If you set your price at market, your order will get processed at whatever the current market price the stock is currently trading at. If you are trading in a stock that is considered fairly stable in terms of price movements and in stable economic times than it is safe to set the order at market price. I consider RBC to be a stable company and the current times to be a stable time for Financial Services industry, as such I am going to set my trade at market price.
  • A stop order is used to set a stock price point that we would like to buy once the stock has reached it or sell once the stock has reached this point. A stop limit order is combination of a stop order and a limit order. This is a specific price we would like to buy once a stock has reached a specific price point. Both are used in monitoring and controlling buy/sell orders when the investor does not have time to actively monitor and trigger trades. We will explore such order types when we look into trading strategies.
  • Once I am ready to place my order, I hit the preview button.
  • Read and continue on with any other pop up buttons that show up, now you should be able to see your trade waiting to be filled. I have placed this trade on a Sunday. The markets does not open till Monday morning, such that my trade will be in open status till the market opens and the order is filled.

Now that we have learned about how to place orders, just need to figure out the right stocks to trade in!

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