Has the idea of paper trading excited you recently? Do you want to start paper trading but are confused as to when and where to start? Are you trying to understand how paper trading works? Well, we got it all covered for you. Let’s begin with understanding what paper trading is.
What is Paper Trading?
A trader can purchase or sell stocks in the market in real-time using paper trading, which is a simulated trading platform. All prospective traders should use it as their preferred practice platform.
Briefly put, paper trading enables a trader to transact without putting real money at risk. The market allows for simple observation of a stock’s price movement, selection of suitable trading candidates, application of tactics, and evaluation of results. With virtual money, there will be gains and losses. It is because of these features, that this form of trading is also known as virtual trading.
Set Yourself Up for Paper Trading
Let’s get the basics right first. It is essential to set yourself up to start paper trading. And here is a simple and easy way to prep yourself for paper trading.
Open a Paper Trading Account
There are innumerable paper trading platforms in India. You can set up your account in any of the well-established paper trading platforms with your verifies email address. You can use your desktop or your mobile phone to set up the account.
Choose an account that provides enough learning resources and that has good technical tools to support your learning.
How to Start Paper Trading?
Just as you would in live trading, you will be expected how to start paper trading, to choose a strategy, place your orders and exercise your orders to make profits or losses with virtual money.
1. Choose Stocks to Trade
You will have to pick the stocks that will potentially give you huge returns. In order to do this, you will need to conduct a fundamental or technical analysis to understand the performance of a stock. You can learn these analytical techniques on paper trading platforms to study a stock. Post this, pick a few stocks to start trading.
2. Choose Your Strategy
You will find varied strategies online, or you could come up with your own strategy and apply it to your chosen tasks. Do not be disheartened if the strategy chosen does not work well the first time. Experiment with different strategies in paper trading and try them in different market situations to understand the potential of a strategy. Stolo option strategy builder can also help you make customized options trading strategy to execute winning trades
3. Place Your Orders
Explore the paper trading platform and understand how orders are placed. The steps in placing an order may be different for different platforms. However, they are usually similar. Understanding this in one platform can help you manage the placement of orders on any platform.
4. Analyse Your Trade
The post-trade analysis is as significant as the pre-trade analysis. Analyse your profits or loss after each trade. Look at how things could have been different with different strategies. Constantly work on your strategies to enhance your profits. Start making educated guesses with the data available. Make sure you know your data well. There are several charts, indicators, and other indices that will help you analyse a stock’s price movements, which can help you make wise decisions in the stock market.
It is significant to know to respond to certain market situations. Experiment with your methods, and experiment with your choice of stocks. Paper trading is one place where a wrong move will not lead you to a financial disaster rather it will teach you crisis management. Use this opportunity to study every trade you make so that you will be ready to enter live trading.
Also, it is essential to remember that exposing oneself to paper trading will not guarantee profits every time you make an actual trade. The real market scenario is dynamic. You will make both profit and loss in the real market. Understating how to start paper trading would reduce the risk of your loss by providing you with the proper foundation.
5. Start Live Trading
Once you feel confident enough to practice trading in the real market with real money, you can consider live trading. There would be some key differences when it comes to live trading. So before you enter with real money, ensure you are well-versed with the system in place. Practice and be patient. Learn before you head to make your daily trades. You can start by registering yourself into a brokerage account. There are several options to consider. You would need basic verification documents that you may keep handy during the process. Explore Stolo Options Trading Platform for more
