(Q)
I was just wondering how long you should paper trade before you use real money. I know it is different for everyone but i am just looking for any rough idea from you experienced traders. Many thanks, Jitka N.
(A)Jitka,
I have long had a problem with the word „papertrading“ – I think of „papertrial“ instead.
Anyway, to elaborate, papertading implies that you are actually simulating real money trading, when in fact the psychological aspects of the latter on the traders cannot be known until you are in the cockpit, so to speak.
I, despite of having, teaching and trading my own system, am constantly doing papertrials of various methods, indicators, etc., just to see if they have merit. It is reassuring to know that a particular trading method is able to perform consistently on paper prior to committing to it.
Most importantly, when you have what you believe to be a good trading system, force yourself to think through the entire trade – entry, risk/reward, expected exit levels, protective measures. And apply these for any market scenario, ie market moves against your position, moves sideways, or moves with you. The most critical to face is the first – and it will, I can assure you. And this is where the psychological forces must be addressed prior to committing real money. Understand that fear and greed are what move markets and you must be prepared to deal with prior to real trading.
And one more thing – when you eventually find „your“ system which works for you – stick with it. Dont listen to anybody else. In my early days in this fabulous biz, I was making these mistakes. I wanted to be 100% sure of the trade before I was about to put it on and was checking every source known to man before I stepped in. In doing so, I also put on a trade suggested by my broker and lost (and the damn man didnt even apologize, hehehe). I put a trade based on someone elses advice and lost. Please dont make the same mistakes I did. Learn from them. Please.
Quit searching out a method, rely on a method you already have and most importantly – LEARN TO TRADE.Look at it this way – we all have a method to use. Quit searching out a method, rely on a method you already have and most importantly – LEARN TO TRADE.
I, in my early days, was focusing on all methods and ignoring the art of trading. I stopped shopping around for advice, came up with my own system and using it exclusively ever since. And didnt look back ever since. It takes time and effort to learn to trade, please dont short change the effort required and listen closely to those who have already made the mistakes. It cheaper this way.
Hope all this rambling is meaningful to someone.
Tom out now.