The utility of “paper trading”

 

In the process of training and learning the techniques of trading, one of the tools that can be useful is the operating in an account with play money or paper trading , which most brokers usually make available to its customers at no additional cost .

Not everyone agrees with the usefulness of this tool and among the arguments wielded by not trading with real money is no intervention of emotions in decision-making and use as a game.

Many of the would prefer to live markets start testing their skills with real money accounts after reading a book or attending a course. It is during the course of its first operations that the novice trader will arise many questions to be addressed and make a wise decision:

Did I take too much risk? How can you fix it ?

Have I earned enough? Do I get now and pick up benefits?

The position is not working. Do I get or hope?

The market is very volatile. That I have to do?

Does the size of the position I have taken is the right one ? How can I know that?

…..

To not reach this situation usually ends with losses, it is interesting to consider some aspects before discarding the paper trading :

  • If no wins in operations in paper trading , there is no reason to believe that it will win real money trading.
  • You can not decide whether a strategy is good or bad based on the result of a single operation, it may have been a fluke. Repeat the same on numerous occasions give a more accurate result.
  • They can engage our emotions being fixed certain income targets that we not be reached to prevent real-operate.

An alternative to paper trading can be achieved by operating in real time with a tiny percentage of capital available, as long as the discipline not to increase the share capital to reach profitability targets will be.

The benefits to be gained by taking this tool seriously ranging from learning platform broker, testing strategies, skills development and operational … pseudo-experience without risking capital.

All this is part of the process of forming a trader, but it takes time and effort. As Mark D. Cook says the following snippet:

(Translation:.. “People underestimate the time needed to succeed as a trader Some people come and think they can sit next to me for a week and become big traders How many people when they go to school go to the teacher and tell – I know the course lasts one semester, but I think I one week have enough Reaching competition is the same in trading than any other profession -.. requires expertise and experience takes time “)

in addition to time, work and effort, it will take a good dose of talent and humility to achieve the goal.

Related articles:

Training for traders: the object of desireĀ 

Phases Development of a TraderĀ 

Tools: Trading Plan