NAVIGATION

Paper trading

The first thing to do when learning to trade online is to learn the art of paper trading. What is paper trading & how do I succeed at it?

Basically, trading online can be a risky business for most but if you learn about the markets before you jump in, then it can be very rewarding. Paper trading enables you to make trades from the comfort of your own home without risking any money.

All you need to do is select the stock that you think is going to move up & then write down your trade on a piece of paper with the amount you purchased it for, the time & date you purchased it at, the state of the markets at the time of purchase, were they up or down or moving sideways? Remember market timing is very important even if you are just paper trading as its the main aspect you'll want to learn in order to make successful trades.

If you make several paper trades a week & then go back to your trades at the end of the week then you can see where you were doing well or where you were failing. Paper trading online is a really useful way of learning the markets without risking real money. You can use this technique to make money trading but you need to know that its better to get a lot of practice first rather than rushing in & losing your money.

When you're 80% successful at making successful trades then you can risk your hard earned cash.

So why do so many people swear by paper trading online? Quiet simply it works. Nobody should trade the markets unless they are well versed in paper trading first. Once you start, you'll see exactly what type of trader you are, are you a cautious trader or do you just charge in i.e. are you a bull or a bear ?

Another great tip here is to set your cash limit. So, lets say you have $10000 dollars in real cash to put into the market, then only paper trade with $10000. There's no point in paper trading online with a million if you don't have a million. By paper trading with only the amount of cash you really have, then you will know exactly how much you're going to make when you start trading for real.

The great thing about this method is that you'll learn a great deal more from your mistakes because you can keep making them without loosing your money. Most traders who loose on the markets probably never took the time to study their trades; they just went straight in, too eager to make money.

This is a big mistake & you should just never enter the market blind. Always have an exit strategy, always know what the market sentiment is. Are the markets ranging or are they up or down, is it earnings season? There are just too many variables that can affect your trades so its better to practice paper trading online first rather than just charging in.