| For varying reasons, some people with little or no | | | | Paper Trading, a way to help learn how to trade |
| previous experience in how to trade stocks would | | | | stocks |
| like to become involved in the stock market if they | | | | Paper trading, as its name suggests, is a simulated |
| can personally make their own buy and sell decisions. | | | | way to assist in learning how to trade in stocks in a |
| Most of those people realize that there is a lot to be | | | | way that faithfully imitates what happens in real |
| learned in order to become successful investors or | | | | trading except that it does not use real money, the |
| speculators and when they do enter the market their | | | | transactions and the results are merely recorded on |
| acquired knowledge will soon be put to the test with | | | | paper. Access is provided to stock quotes and to |
| cash on the line and at risk. For those beginners we | | | | regular market software tools and an online trading |
| provide below a brief explanation of a learning tool | | | | platform with all the other facilities and resources |
| called "Paper Trading", a fictitious form of trading that | | | | used by the regular trader made available free of |
| does not require real money. | | | | charge to the paper trader to simulate a virtual |
| The mechanical process to place stock market trades | | | | trading environment. |
| is not complicated, requiring only the opening of a | | | | Through the use of paper trading, together with |
| brokerage account, the deposit of funds into the | | | | other stock market education and training materials |
| account, and the minimum knowledge of how to | | | | and related information sources that can be consulted |
| place an order to sell or buy a stock or other vehicle | | | | on the internet, the opportunity to develop stock |
| of choice. But obviously, the choice of stocks to | | | | market skills can be enhanced. Paper trading allows |
| trade and how to arrive at decisions to buy or sell | | | | the tryout and testing of many alternative strategies |
| them and make a profit are much more complex, | | | | that are used for choosing stocks to trade and when |
| requiring the consideration of available financial | | | | to buy or sell them. |
| information and subjective assessment and | | | | By making trades on paper and following them as |
| interpretation of essential data that can affect a | | | | they perform over periods of time in the |
| stock's performance in the marketplace, often quite | | | | marketplace, it can be seen whether the methods |
| independently of any real underlying asset value a | | | | being used are producing the expected results or |
| company may have. | | | | failing expectations. In this way, experience is |
| In other words, the stock market is no place for the | | | | accumulated without monetary cost and that should |
| uninformed dabbler but requires knowledge that can | | | | eventually lead to a better performance and |
| only be gained through a learning process and | | | | understanding of what can happen in the real world |
| experience. The learning process will include ample | | | | and what must be done to manage risk and make |
| reading and study of relevant informed advice from | | | | decisions on whether to buy, sell or hold specific |
| authoritative sources while the experience | | | | positions. All of which are part of the learning process. |
| component will probably require a significant amount | | | | Paper trading is available not only in learning how to |
| of actual trading during a time in which practical | | | | trade stocks at the basic level but also at different |
| lessons can be learned. | | | | levels of expertise and allows simulated trading in |
| The computer makes accessible to almost everyone | | | | other products of the market in addition to stocks, |
| a wide range of educational information that can help | | | | such items as ETFs, options, bonds, mutual funds, |
| the would-be trader to learn how to trade stocks. | | | | commodities, futures, and Forex. |
| But first a warning | | | | Paper trading, also called virtual trading is worth |
| The stock market is an expensive arena for those | | | | looking into for traders at many levels of experience, |
| who lack adequate trading knowledge. Emphasis of | | | | there are also very popular games that simulate |
| this can be seen in the advertisements of companies | | | | trading in the market, they too can contribute to the |
| that seek to expand their investor clientele in which it | | | | essential learning process that provides the |
| is customary to include a warning along the following | | | | foundation for successful trading in the future. |
| lines: | | | | The point is to learn everything possible about what |
| "There is a substantial risk of loss when trading in | | | | to buy at what price and when to take a profit, or in |
| equities, commodity futures, options and foreign | | | | the case of a loss, an amount that is tolerable and |
| exchange products! Past performance is not indicative | | | | does not diminish the trading stake significantly. |
| of future results." | | | | |