What you need to know!
So you’ve heard that you should "paper trade" to start rather than beginning with real money, right? But do you know what paper trading actually is?
Below we explain just what you need to know to paper trade! Trust us, you want to paper trade. You’ll gain confidence in trading, learn about your weaknesses and strengths, and become better equipped to trade “for real”.
Paper trading is done in the same way that actual trades are done, except with fake money. The best way to practice with paper trading is to go back in time on Telechart and pretend you are placing trades as if it were current day. This will help you determine what you would have done were this a real trade, but remember, no cheating! Do not look ahead in time to see what the play actually did until you have already made your decision!
Once you’re comfortable with your trading skills (about 10 successful practice trades), you should begin doing real trades with a small amount of money in order to “get your feet wet”. Feel free to continue paper trading, but realize that when your actual money is involved you’ll respond differently, so as soon as possible, begin trading using a small amount of real money. Follow the steps below for how to paper trade:
1. Open Telechart
2. If you have not already done this, import David Mitchell’s Settings into Telechart. If you need help doing this, please see the “David Mitchell’s Settings” Tab on your Insider page for instructions.
3. In Telelchart, click on the Main Button. (This is found below the New and Jump buttons. We call it the “Main Button” because the text on it changes.)
4. Locate and click on ‘A+ Best Indices’
5. Next, click ‘S&P 500’
6. Go back in time by using the left bracket key [. (Next to the letter P)
7. Go back to September 3, 2009. You will see the date flashing in yellow at the top right corner of Telechart. You can see at this point that the S&P 500 is bouncing up off of its support line.*
8. Click on the Main Button
9. Look for the watchlist that says ’30 or Less’
10. Click ’30 or Less’
11. Press space bar to scroll through the list of stocks
12. Find stocks that are rolling or trending up
a. draw trend-lines
b. Find stocks that are bouncing up off of support.
13. Enter data on spreadsheet
a. Date Bought
b. Price Bought
c. Stop Market Price (Stop Loss 8% of buy price)
d. Estimated Sell Price
e. Date Sold
f. Price Sold
g. Profit or Expense
14. Then press your right bracket key ] once. This shows you what happened to your stock that day. Press it again until it reaches your resistance line or stops you out. Record your results on the spreadsheet.
15. Repeat the above steps to do as many paper trades as you would like.
Don't forget to get out there and try this for real once you've been successful at paper trading! We can't wait to hear how well you do!
*Note: You always want to base your plays off of the S&P 500 (when it is bouncing up off of support, find stocks that are bouncing up off of support; when it is getting close to its resistance line you need to think about exiting your up plays because it will be hitting its resistance line and going down.)