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From paper money to real money?

  #14 (permalink)

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A lot of excellent posts have been made on this topic already.

This one pretty much sums it up, in my opinion:

MiniP View Post
Your going to get 1000 different answers and most will be correct but you need to figure out what works for you.

Most or all are correct, from different points of view. You can pick and choose the perspective that makes the most sense to you.

I would emphasize a few things, most of which have already been mentioned:

1. Don't bother with the 2-week demo offers. They give you enough time to get acquainted with the trading software, but not enough to get acquainted with trading. Open a small broker account (many will offer small minimums, check their websites) and then you can trade SIM without artificial time limits.

2. Until you have traded real money, your own hard-earned cash that you don't want to lose, you will have no idea what trading is like, or what it is about. No amount of SIM will duplicate this, unfortunately. So, use the SIM trading the same way that musicians use their practice, and do it to develop skill and technique in a format where mistakes can be learned from, but don't really matter. But don't confuse the practice for the real thing.

3. Trading with a very small balance is simply not safe, although it looks that way. If the account is too small, then you are seriously at risk of just blowing it out, and you also are very likely to be too afraid of losing it to make good decisions. (Yes, this conflicts with what I just said about opening a small account for SIM . But just as you should not stay in SIM forever, you should not cripple yourself with an underfunded account. If money is a big issue, you might want to look into FX currency trading, which allows very small dollar amounts to be risked, and/or the micro currency futures on the commodity exchanges. There are some trading journals on FIO by traders who are going this route. But the amount at risk needs to be relatively small compared to your account size or you will mentally short-circuit.)

When should you try live? Up to you, of course, but without it you will not be able to progress beyond a certain point. Scrape together or save some real money, put some into a live account, and, when you feel ready, technique-wise, put some into live trading. You will likely be horrified at how different it feels, but that's the point. Confronting the risk and reality of trading is not the same as a musician confronting the risk and reality of performing, but it is similar enough to make the point.

You can periodically go back into SIM for practice, but trading is actually done with actual money. Yes, by the way, you will lose something too. Try to keep your head and to learn from it. (Which is easier said than done.... )

Good luck. No one can tell you what will be right for you, but you can find out by your own experience.

Bob.

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