Some people just don't get it...
How many of the people posting on this thread who are
AGAINST paper trading are also claiming to be full-time or dual-career traders? How many of the people posting on this thread who are
FOR paper trading make the same claim?
More.
Less.
Many of the people claiming that paper trading is a great way to learn all about trading,
AREN'T TRADING. They're
paper trading. (or sim trading. Whatever you call it, I call it shit.)
Allow myself, to quote myself:
I'm not saying beginners should open an account and start trading $20,000 the first day. They shouldn't (neither should you... learn the platform intimately first) but they should start trading a portion of their capital relatively quickly, if for no other reason than to avoid the false confidence that is inherent with paper trading.
A guy I know very well once told me that he had a better day than I did, because he made over $500 on paper, and I was up only $10 at the end of the day (after fees) with real money. Now, I understand his rationalization, had he been in the market, with live money, he would have been up at least $450 right? I made 4 figures that week (this was on a Friday, I think) but even if my week had been $50, his rationalization would have still been wrong...
...He had six REALLY rough months after going live and he just kept saying over and over, "I never had a down week on paper... this is wrong, something is wrong with the market..." he eventually did "get it" but not until after he had lost some money. Had he started LIVE with a small portion of money, he wouldn't have had the rough period he did, because he never would have made the $10,000 per month on paper...
...the effect of paper trading successfully had really skewed his psyche...
Many of you
Paper Street Soap Company advocates haven't yet figured out why so many brokers offer
FREE simulators. It's because they want you to try their product. The programs always give you fills instantly, and at the best price (a lot of the time it's an even better price). When you want out, guess what? Instant fill. Never a partial. Never. These programs aren't designed to help new traders. They're designed to
SELL PRODUCTS meaning, they want their platform to appear perfect, even though the market is not.
Psychology isn't the only problem new traders face when going Live. It's just as much platform function, or better put, dysfunction. When new traders first go live, they find out that: a) fills aren't instant. b) limit buy orders are rarely filled when and how you want them filled. [That is, if they even fill at all] c) market buy orders are never filled at the bid. d) partial orders suck, and they happen frequently. [with mid-to-large orders, or volatility] e) when you want out of a falling stock, people aren't always there to buy the first instant you want out. f) simulators don't charge margin fees. g) simulators don't have margin calls. h) simulators don't charge exchange fees. i) simulators don't charge broker fees. j) FREE simulators don't charge platform fees. k) simulators don't have mysterious charges on the bill. l) on occasion, data feeds go whack for no apparent reason at all. m) simulators don't require calls to the broker because the platform crashed ["Sir, it didn't crash, it's just down right now." Try making that call a polite and courteous one when you can't enter a sell order and your position is still open on a stock that just broke news you haven't read yet because you're STILL on the GD PHONE!] n) simulators rarely require the usage of antacids. o) simulators aren't begging you to wait just a little bit longer... and lastly, p)
SIMULATORS DON'T MAKE YOU VOMIT!!!
Paper Traders learn these same things when they go Live. However, they've spent days, weeks, months, or years formulating a trading plan based on a market that doesn't exist (at least not as they know it) and they almost always seem more reluctant to embrace the market's inefficiencies. Even then the ones that eventually "get it" have to unlearn even the basic functions of the market, before they can move forward.
Want to know one of the unwritten rules of trading? ALL new traders lose money. Some lose dollars, some lose accounts. But ALL new traders lose money. period. If you're too afraid of taking losses, especially the ones that are just a natural part of the growing pains of trading, then you are in trouble no matter how well you "plan" to trade.
me:
paper trading is masturbation (as hypostomus put it). Quit "Jackin' the Beanstalk" and go introduce yourself to the market. She's a great big fat lady who loves fresh meat. Trust me, she'll like you.
