Most practice accounts end up as a pile of tickers someone happened to like on the day they opened it. That teaches nothing, because there is no plan to test. This module builds a portfolio the other way round: plan first, structure second, sizes third, and only then the tickers.
A plan does not need to be long. It needs to exist before the first trade, because a plan written afterwards is just a description of what you already did. Five lines are enough:
Put it in your notes now. Every later module — reading the account, auditing diversification, surviving a drawdown, keeping score — measures your behaviour against these five lines.
A widely used structure for someone learning to pick stocks is core and satellite. The core — often 70% to 80% of the money — sits in broad, low-cost index funds that own hundreds or thousands of companies. The satellites are a handful of smaller positions in individual stocks you have researched. The core does the heavy lifting; the satellites are where you practise judgement, and where a mistake cannot sink the whole account.
Here is one illustrative split of the $100,000. It is an example of the structure, not a recommended portfolio:
| Sleeve | Weight | Dollars |
|---|---|---|
| Broad US index fund | 40% | $40,000 |
| Broad Canadian index fund | 20% | $20,000 |
| International developed-markets fund | 15% | $15,000 |
| Five individual stocks at 4% each | 20% | $20,000 |
| Cash reserve | 5% | $5,000 |
| Total | 100% | $100,000 |
A portfolio that is all satellites — fifteen stocks and no core — is a valid thing to practise, but be clear that you are testing stock picking, not investing in general, and compare it against an index fund when you keep score.
“4% each” in the table above was not arbitrary. The risk-budget method sizes a position from the damage you will accept if you are badly wrong, not from how much you like the company:
If you are willing to lose 2% of the whole account on any single stock, and a given stock could plausibly fall 50%, the position is 2 ÷ 50 = 4% — $4,000 of $100,000. If it then does fall 50%, you lose $2,000: exactly the budget. A speculative stock that could go to zero gets 2 ÷ 100 = 2%. The riskier the holding, the smaller the position — the reverse of what excitement usually does.
The Manage Your Risk course covers this method in depth, including adjustments for volatility. For practice, one budget and one honest estimate of the downside are enough.
Orders are placed in shares, so the dollar size has to be converted:
If you want your practice to match a broker without fractional shares, round down to whole shares in the simulator too.
Cash earns nothing in the simulator, so it can look like a waste. It has three jobs. It lets you rebalance or add to a position after a fall without selling something else. It absorbs mistakes — a position sized too large can be trimmed without scrambling. And in a real account, a separate emergency fund is what stops a job loss from forcing you to sell investments at a bad moment.
A small reserve of 2% to 10% is common in practice portfolios. Whatever you choose, write the number into your plan so that “I’ll just put the rest in” is a decision, not a drift.
Because the simulator does no currency conversion, a TSX price in Canadian dollars and a US price in US dollars are added together as if they were the same money. A $100 US share and a $100 Canadian share each cost “$100” of your virtual cash, even though in reality — at an exchange rate of, say, 1.37 — the US share would cost about C$137.
For learning, pick the simplest honest option:
Once the plan is set, you can buy everything on day one or phase in over several months. Historically, investing a lump sum immediately has beaten spreading it out roughly two-thirds of the time in Vanguard’s long-run studies, simply because markets rise more often than they fall. Staging in reduces the regret of buying just before a drop, at the cost of usually earning a little less. Either is defensible. What matters for practice is choosing one in advance and writing it down.
Educational purposes only; not financial advice. Paper trading is a simulation: no real money or securities are involved, and simulated results do not reflect the spreads, fees, currency conversion, taxes or emotions of real investing. Historical figures are illustrative and are not a forecast. Always do your own research and consult a licensed advisor.