The Paper Trade Chase
You're a new trader - you're excited, you're enthusiastic, you're driven by the possibilities. You also have no clue where to start! "Overwhelm" is an understatement. The gurus and market fakes circle overhead squawking about courses and products and systems and sure things. What's a newbie to do except withdraw into her/his shell and breathe a sigh of relief? Then you remember - you saw it on www.haveitallwithoutriskingadime.net: "Rule #1: Always start out by paper trading." Yes, a first step; a safe foray into the wild world of trading.
So what do you do? Where do you start? Well I'm here to help with no-nonsense, common-sense advice and guidance. Paper trade? Here's how you do it: Google™ "Paper Trade", pick the first site that "feels" right, click the link, fill out the online information fields and start trading! Don't make this complicated - the services are all very similar. They vary only in the breadth of assistance they provide: Real time or delayed information; simple charts or the whole enchilada of indicators, oscillators and "personal" advice; fee or free.
Small concerns really. Just get started! Come back here later and I will fill you in on some additional aspects of paper trading including why it may not be the best thing for the new trader. What? You want to read about that now? Okay. I'm going to give you some guidance on why paper trading is not always the best course of action for a beginner, contrarian advice to be sure but hear me out.
First of all paper trading is a "risk-neutral" activity. Do not underestimate the profound influence of fear and greed over market behavior. All trading activity, regardless of which investment vehicle, is the result of human interaction - buyers and sellers. When precious and scarce resources are involved (i.e. cold hard cash) we humans are often prone to throwing rationality out the nearest window and taking the wild ride on the emotional roller coaster. Given this aspect of day-to-day trading activity, it is important to experience this in all its glory. And often that means staring at the emotional beast as it stares back at you from your computer screen. Risk, reward, timing, insight are all distorted through the carnival lens of fear and greed. Paper trading fails to convey the emotional impact of trading with your own money.
The second point I want to make about paper trading is that it often fosters procrastination. When you trade without risking your own money, your trades have no compelling impact. Your trades resulted in a gain? Great, but so what?! Your actions resulted in a loss? Great but so what?! There is always one more time period to test. There is always one more indicator you want to play with. When does it end? Trading in real-time with real money makes this a moot point. The lessons and consequences of your activity are burned into your mind. That kind of learning can never be accomplished by paper trading.
So, paper trade if you must but be vigilant. Paper trading to learn the basics is a valid investment of your time. Anything more and you must be aware that you may be indulging your comfort zone. Daytrading is a serious business and a clear, focused eye on the brutal reality of trading will only help you and your career as a trader. Don't avoid reality, use your own money - a modest amount to start, but learn the market the fastest and most memorable way: by taking the blows and surviving with insight, experience and knowledge. And then open a paper trading account for you daughter or son: an excellent way for a teenager to learn the rules of the game.
