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Options Trading Simulators Explained

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Written by Timothy Sykes
Updated 3/31/2023 16 min read

Options trading simulators, also known as paper trading programs, let you make options trades without risking real money. Options trading is one of the harder strategies to learn — options trading simulators let you make mistakes without blowing up your account.

I don’t want you to use an options trading simulator as a crutch, or as a video game. I think you can learn a lot from paper trading if you’re serious about it, but there are some things you can only learn from trading with real money, like emotional control.

If you’re a beginner trader trying to see whether options trading is right for you, options trading simulators can help. Paper trading is also useful for experienced traders in testing new trading strategies or backtesting past trades.

Want to start paper trading but don’t know which simulators are the best? Read on to find out!

What Are Options Trading Simulators?

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Option trading simulators are trading platform modes which give you hands-on experience trading options on the stock market without using real money. It’s simulated trading with virtual money, so it feels like you’re actually trading.

The big difference is the emotional factor I referenced in the intro. Your virtual balance gives you a free pass to make as many mistakes as you like — and you can always reset the simulator if you want to start fresh. This is the biggest limit of paper trading, and why you should start trading with real cash as soon as you can.

The best paper trading apps simulate real trading environments, helping you get a feel for them. You should look for an options trading simulator that uses real-time data and charts. It should also reflect corporate actions like dividends and stock splits, and incorporate commissions and other fees.

The goal is to get as close to real trading as you can.

Why Use an Options Trading Simulator

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If options trading simulators are so close to the real thing, why not practice making trades for real instead? Well actually, there are a few good reasons…

While nothing beats real hands-on experience, paper trading has a wide range of benefits that can sharpen your trading skills.

For options trading beginners, paper trading can be a way for you to familiarize yourself with the tools and learn the ropes. It’s a risk-free way to see whether options trading is right for you.

For experienced options traders, there’s no shame in going back to paper trading when you have spare time and want to test new options strategies and trading styles. You can even record your paper trades and discuss them with your trading community — whether that’s my Trading Challenge, your friends, or another community like a Discord trading group.

Take my student Dan Irish, for example. Before joining the Challenge, he was bleeding money — down $12,000 in less than four months! Then he spent a few months using a trading simulator to hone his technique.

Now he’s up to $1.9 million in lifetime profits — that’s real money we’re talking about.

I’m not the only person telling you to paper trade either. Millionaire options trader (and Trading Challenge mentor) Mark Croock recommends using a trading simulator when trying the options strategies he teaches in his Evolved Trading program.

Want to learn from the best options trader I know? Sign up for Mark’s Evolved Trader program today!

What Is Virtual Options Trading?

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Virtual options trading is another term for paper trading or trading simulation. It refers to the virtual funds you use for trading.

Top 5 Options Trading Simulators Available on the Market

My options trading simulator picks are:

No trading platform or broker is perfect — that includes their options trading simulator modes. Luckily, you don’t have to choose. You can try as many as you like, and see which one fits you best.

When evaluating options trading simulators, I’ll look at a platform holistically. If you’re paper trading on a platform, it’s likely that you’ll be trading on it with real money one day soon. You might even try paper trading at the same time as you trade with your real account.

Let’s get in my options trading simulator picks!

1. Power E-Trade — The Go-To Options Trading Simulator

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My first options trading simulator pick is Power E-Trade.

There’s a simple reason for this — E-Trade is one of the brokers that both Mark Croock and I use most. And Power E-Trade is its pro-level platform.

I like trading penny stocks with E-Trade. It’s the broker I started trading with over 20 years ago.

But E-Trade also works for options trading — as well as options paper trading.

There are some quirks. For some reason, “Today’s Net Gain” reflects the total market value of your options trades. Don’t try to figure this out — this is just a glitch.

E-Trade’s options trading simulator also comes with $100,000 in virtual cash.

Why I Like It

In 2017, E-Trade acquired OptionsHouse, which was an options-focused brokerage platform. E-Trade brought some of OptionsHouse’s more impressive tech directly into its Power E-Trade platform.

Power E-Trade is great for visualizing risk and reward for complex, multi-leg options trades. Its StrategySEEK stock screener lets you search options trades by cost.

Again — not every feature translates to paper trading. But if your goal is to transition to actual trading, it all matters.

2. Interactive Brokers — The Most High-Tech Options Trading Simulator

My second options trading simulator pick is Interactive Brokers (IBKR).

IBKR is one of the other brokers I find myself using most. It has some of the greatest market reach of any broker… which includes the OTC penny stocks I like to trade. Its executions are also world-class. If you opt for an IBKR Pro account, you can even control your order routing for better-priced order fills.

I don’t short much anymore, but IBKR is dynamite for shorting… although I’d recommend you skip ahead to our #3 simulator for my current favorite.

On the platform side, IBKR is stacked. Its many platforms and trading tools can be customized to fit all kinds of traders… especially the ones with big trading accounts.

It isn’t an accident that IBKR’s paper trading accounts start you with $1 million in virtual cash.

Why I Like It

Options traders are a primary target of IBKR’s hot tech. Check out all of these options-centric features:

  • Write/Rollover Options Tool — the Write tool scans your uncovered positions and creates options for them; the Rollover tool replaces soon-to-expire options with similar but later-expiring ones
  • OptionTrader — this screen provides a complete view of available options chains
  • Options Strategy, Probability, and Volatility Labs — these tools provide some of the best options training available. If you’re an intermediate or above options trader, they may drastically affect your trading

If you’re a tinkerer at home with advanced tech, you might want to give IBKR a look.

3. TradeZero — The Best Options Trading Simulator for Small Accounts

My third options trading simulator pick is TradeZero.

This isn’t the best choice for either options trading OR paper trading, but — remember — that isn’t the whole picture.

TradeZero is on this list because it’s my favorite broker for small accounts.

TradeZero isn’t for advanced options traders. Its platform only allows you to trade single-leg options for now — they are working to offer multi-leg options chains in the future.

Its demo account is also more complicated than the others on this list. There’s a free version with 15-minute-delayed quotes, and a $59 per month version with real-time quotes.

Why I Like It

I like TradeZero so much because of what it stands for — transparency and great trading tech.

It doesn’t hurt that it’s THE BEST at locating hard-to-borrow penny stocks for shorting… TradeZero was a big reason why I shorted my first stock in years in 2022.

It actually made my $1,081 profit shorting Global Tech Industries Group Inc. (OTCQB: GTII) possible with its killer short locator (starting stake $7,600). E-Trade didn’t have any shares available.

Like I said before, there’s no such thing as a perfect broker. TradeZero might not fit you if you’re looking to trade advanced options or if you want free paper trading.

But if you want a killer platform and a broker that empowers small accounts, I’d give them a look.

Sign up to TradeZero here and get a free gift! 

4. Thinkorswim — The Options Trading Simulator with the Widest Reach

My fourth options trading simulator pick is thinkorswim.

If you have a brokerage account, there’s a good chance that you’ll already have access to it by the end of the year. Thinkorswim has long been TD Ameritrade’s secret weapon — but Schwab will offer its clients access as well in 2023. (Schwab bought TD Ameritrade in 2020.)

Thinkorswim’s options offerings are aimed at more advanced options traders. Luckily, they have an options trading simulator called paperMoney that will give you $100,000 to play with.

PaperMoney restricts you to basic options trading strategies, so it isn’t the best place to work on your Iron Condor skills.

Why I Like It

Thinkorswim is one of the most advanced trading platforms out there, even if its tech advantage has lessened over the years. Its options tools will still give advanced options traders everything they need:

  • Options Statistics — there’s a wealth of analytical data in this screen to form options strategies
  • Options Probabilities — this risk/reward tool is built right into the platform’s options chain building
  • Analyze Tab — this tool builds risk/reward graphs, allowing you to see profit and loss numbers on multiple scenarios of outcome

And don’t forget — the biggest broker in the world will soon make it available for free to all of its customers. So you might already have access.

5. StocksToTrade — A Future Options Trading Simulator Option

My fifth options trading simulator pick is StocksToTrade — not for what it can do now, but because of what it will soon offer.

That’s right — options trading! And if its options trading simulator is anything like the paper trading currently offered, it will rapidly move up this list.

Why I Like It

I think that StocksToTrade has the best paper trading feature of any platform out there. It should — I helped design it.

When you factor in all the things that make StocksToTrade my favorite place to trade, you’ll be in good hands when you make the transition to real-money trading.

StocksToTrade has:

  • Clear, customizable charts — while unique tools are cool, charts are what traders actually use. StocksToTrade has the cleanest charts around
  • A wide-ranging news scanner — I used to have to keep refreshing 20 different tabs to keep an eye on what StocksToTrade delivers in one window
  • Add-on alerts you’ll actually use — for years now, the Breaking News Chat alert service has been my secret weapon — transmitting the highest-quality, tradeable news when it happens 

Get your 14-day StocksToTrade + Breaking News Chat trial here — only $17!

Key Takeaways

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There’s no substitute for real trading experience. But options trading simulators can be powerful tools when you use them for the right reasons.

Beginner options traders need to start small or risk blowing up their accounts. Paper trading risks nothing. Once you’ve developed a strategy, you can try it out with your trading account.

Even veteran traders can learn from simulators. Backtesting strategies is probably more valuable in options trading than in traditional stock trading…

Options traders make predictive trades instead of reacting to the market like day traders do. Instead of gauging whether a new strategy works by risking real money, you can see how it would have played out in the past.

Just remember — there’s more to trading than stacking wins. The best traders learn from the experience of others and not just their own. That’s why trading communities like my Trading Challenge and Mark Croock’s Evolved Trader are so valuable.

Have you tried paper trading or options trading simulators? Share what you’ve learned in the comments below!

Options Trading Simulator FAQs

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Options trading is tough, even when you’re just paper trading. Here’s your cheat sheet:

Where can I practice options trading?

You can practice options trading with your trading platform’s simulator, paper trading, and demo accounts. Look for a simulator that reflects actual market conditions to ensure you get the realest trading conditions possible.

What is the best options trading simulator?

The best options trading simulator is whichever platform you’ll use for real-money trading. Mark Croock trades options with E-Trade — the Power E-Trade platform is equipped with a decent options trading simulator.

Is there an options trading simulator that reflects actual market conditions?

Most options trading simulators on the best platforms reflect actual market conditions. For me, a trading simulator has to reflect actual market conditions — otherwise, you’re just playing a game and won’t get real experience.

Can I earn daily from options trading?

You can earn daily from options trading, but you shouldn’t focus on that. Find the right trades and design a good trading plan — profits should follow.

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”