Let's assume your demo account shows some good profits after a year. Would it be wise considering to open a real account?
Yes but i would recommend starting with small capital. I remember when i started trading i did it with a 1000$. I kept adding more capital slowly as i became more comfortable. Goodluck
My suggestion is to treat your Paper trading account like it is your real account. Make trades in it at the same size you will be making trades in your real account (if you're going to deposit $5K when you start, only use $5K in your trading account). This will help you treat it as if it's real. All the trades should be the same size as your real account. They shouldn't be gambles, but should be following a system where you plan your trades (entry prices, stop, target, etc.) and stick to that plan. If you are seeing success, there's no defined time to when you can enter the market. As long as you see the system you're using works, you'll know you have a working system. Then comes the hard part. Doing EXACTLY the same thing when it's real money. You already know it works, so stick to it. Don't let emotion run your trades. Don't take unnecessary risks because you just had some money settle after a trade and don't wanna wait a few weeks for a better entry. Don't ignore your targets because you're greedy. Etc etc etc. Good luck!
@T0rm3nted makes some very good points. Let me just add fear and greed to the mix When it looks like the markets are falling off a cliff and the sky is falling don't let that prevent you from buying at bargain prices You still want to buy carefully in case the markets continue to drop. So manage your money and make your buys in tiers to be safe. To add to that, it is good time to buy mid to long term calls. When you have stocks that are skyrocketing in price, don't let greed keep you from taking some profits TTT
T0rm3nted has a great post there. The only other thing I'd add is to remember the disclaimer that is frequently used by funds, "Past performance is no guarantee of future results." As long as you have been using some sort of evaluation of your positions and then position sizing trades to define your risk and have an entry plan and exit strategy on your trades during your paper trading, then carrying that over to real money should be helpful. Following the plan helps eliminate that dreaded emotion factor that T0rm3nted talked about. Good luck...
Thanks guys, I really appreciate your advices. @T0rm3nted Great post mate, thanks. What you said was the first thing I thought when I opened my demo account. There's no point in treating a demo account differently from a real one. I'm treating mine as if it were real money, and I'm doing the best I can to manage it in the right way @Tiptopptrader and @JerryM, good points, I'll take note. Thanks a lot
Since you're asking this question, I suppose you've already decided for yourself that you are ready to begin real trading, and what you wanted from this thread is a confirmation of your feelings
I would advise people to get professional training if they can,before they enter live markets.Demo is fine to test different strategies.One way to prepare you for live markets is to work with a small amount of cash in your demo,say 5000 or less,this way you will be more careful with how your trading and you will feel a bit of pressure to protect it.
In stocks, there are probably 3 overall strategies, growth, value, and income. But portions of each can be combined into your own personal strategy. So you could have one that combines growth and value, value and income, or any other blended approach you can make sense of. It does require some "study" to learn what is incorporated into each of the 3 before one can take the parts of each into a blended approach. Also, in picking a strategy one needs to know the time frame and risk appetite they have.
Okay, someone has to be honest here. Paper trading is for milk toast mambies. The single greatest thing you have to learn is how to take a loss without flinching and you'll never learn that lesson paper trading. Trade small but trade for real, I say.
I agree that no matter how much paper trading you do, you will never learn how to handle your emotions simply paper trading. I disagree that you can't learn anything from it though and that you should not start by paper trading. Paper trading will give you an idea how the market works if you have no experience with it, and will allow you to develop the beginnings of a "system" that works for you. Do you like to learn about fundamentals, technical analysis, etc. Do you enjoy and find success long-term investing with dividends, swing trading, day trading, scalping, etc. If you are unfamiliar with the market or how stocks react to news, chart patterns, etc. you can learn a lot without any risk by paper trading. Once you're familiar with that stuff though, you do need to start small and play around with money you can afford to lose. Handling you emotions is what separates losers from winners, IMO.
For "trading" there are many, many strategies. Check out the Forex Peace Army site for basic training. http://www.forexpeacearmy.com/community/forums/158/ Unless you plan to trade Forex or currency futures, I'd start with Chapter 6 and take the "Fundamental Analysis" stuff with a grain of salt. A primary principal of markets is that price is a function of supply and demand; in the case of stocks, the supply of, and demand for the "stock", not the widgets that the company sells. Therefore, for me, fundamental analysis is useless and besides that, the information available to the public is very subjective and biased to someone's agenda. For example, big interests will "talk" a stock down when they are buying. They control or are in bed with mass media and insiders. Likewise, they'll pour on the praise for a company's fundamentals when they are selling. But of course, it goes without saying, a novice shouldn't buy the stock of obviously crappy companies. If you are serious about understanding how markets really work, you have to become a student of Richard D. Wyckoff's writings, for example his claim for his 1931 course: I, therefore, claim that: -You need never read anything on the financial page of your newspaper except the table of stock prices and volumes. -You need pay no attention to the news, earnings, dividend rates or statements of corporations. -You need never study the financial or the business situation. -You need not understand railroad or industrial statistics, the money market, the crop situation, the bank statements, foreign trade or the political situation. -You can absolutely ignore all the thousands of tips, rumors, reports and especially the so-called inside information that flood Wall Street. -You can discard all of these completely and finally. UNLESS YOU DO THIS YOU WILL BE UNABLE TO GET THE BEST RESULTS FROM YOUR MARKET OPERATIONS.
In my opinion, the broker that you use is very important. Test them for at least 3 months. It might sound long but its not.
For as long as you think you are comfortable enough to dive into the market. However, you must understand that the stock market is the real deal, so learn how to control your emotions because that will place a major role in your success in trading. Good luck
I would recommend that you do not spend too much time on the demo account, I use the demo only to evaluate the work of the broker, and not for training. It is best to immediately switch to a real account, even if small, but real.
I agree, that it's time now to start a real account. One year is a good time for still having a desire to keep the investing activities and make some conclusions based on your demo experience. I've started after 1.5 and now I feel that I should do it much earlier.
You will lose the first few years. Therefore, this time can be traded on demo. It's unrealistic, I know how impatient newbies are.
