Over a period of differing market conditions, you will develop a feel for how your system will function. Some traders have different trading systems for different market conditions. As you can see, it is up to the trader to constantly monitor, test and tweak the system and there is no “Trading Plan for Dummies” workbook-at least not yet. Being a successful trader is just about as dynamic as the markets themselves and a trader must be ready to change what might have worked in the past.
Because of this, paper trading is can be viewed as indispensable tool.
Pros and Cons of Paper Trading
According to Chuck Kowalski, a widely read financial journalist, there is a difference of opinion among many experienced traders on whether paper trading is useful or not. Some will say that it is not completely realistic since you don’t have any money at risk. And once your money is at risk it is a different ball game. Emotions cloud judgment, as fear and greed become your enemies. These points are valid, but the benefits of paper trading outweigh these issues.
Paper trading offers you the opportunity to get familiar with trading and to see if you are on the right track. It also allows you the opportunity to make adjustments to your trading plan before you put money at risk. Many traders often go back to paper trading when they are struggling as a way to get back on track. Overall, it is not the complete experience, but it is an excellent training tool and almost a necessity before you put your money at risk.
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Norman Hallett is the CEO of Subconscious Training Corporation, best known for their work with helping traders with their mental and emotional discipline. SOMETHING SPECIAL: Download these 4 FREE Special Reports ...
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