I am often asked it it worthwhile to “practice” trading by first paper trading. I have very mixed feelings on whether or not its useful.
The main reason that I am not a big fan of it is because there is none of the emotions you will go through with real money on the line.
You dont have the feelings of fear when the stock you bought starts tanking. Or feel the elation and greed when the stock you just bought goes on a moon-shoot. You will NOT have these emotions when you paper trade.
With that said however I can make a case for it having some benefit. For instance, if you are a newbie and have never traded before or have very limited experience then you can practice entering orders.
So if not are not familiar with how to enter a conditional order, a stop limit order or just a stop order a paper trading account does serve a very useful purpose.
Placing the wrong order with real money can be an expensive mistake, so if you are not familiar with the various type of orders then you need to learn how they work and how to place them.
With a paper trading account you can practice till your hearts content! You can also try out various swing strategies and see if you can make some “money” with them.
So just keep in mind that everyone can be a genius paper trading, it is when there is REAL money on the line and you are feeling the emotions of fear and greed you will see how good a trader you are.
If you decide to try paper trading, I have done some research and SureTrader will give you a FREE $100,000 paper trading account to practice with.
I am probably going to switch to them from TD-Ameritrade for my real account because their commissions are VERY low, just $4.95 for up to 1,000 shares. Pretty cheap.
One way to take some of the emotions out of the equation is to use a professional stock picking service. You can ride their coat-tails while you gain experience. Here are the two stock picking services I use:
Regardless of which Stock Picking Service you use or if even if you choose to go it alone, please download my free eBook: “The 7 Habits of Millionaire Traders”
– Robert Walsh
