Paper Trading – Testing the waters for sharks
Don’t risk your money on untested strategies. You will get bitten by the Wall Street sharks. I always test my new strategies on paper for a month. Its fantasy stock trading!
Here are the rules:
1. Pick your dollar amount. Be realistic. If you aren’t trading in the millions, don’t do it on paper. $500 is a good starting point.
2. Write down your rules and stick with them.
3. Your buy amount is the closing amount of the day you buy. Write down the date and amount.
4. When you sell, it’s the closing amount on the day you sell. Write this down as well.
5. After a month check your profit/loss. How did you do?
By doing this, you can decide if the strategy has merit or is a dud! Its better to find this out before you risk money. This is good for short term trading. If you are in the process of saving money (Part 1 – How much money do you need? Investing for only $50 a month) then use this to get more familiar with the market (long term or short term). You can modify the rules a bit to try day trading, but it’s more extreme.
Got a new rule to add, a question to ask or simply want to comment please do so below. I love comments, it brings joy to blogging!