In reality, it’s not like that. Like many traders, I found it infinitely difficult, because trading is:
Work and a continuous buttle with yourself.
You have to detach yourself from your passions and become a creature that absorbs all possible and available information about markets.
One must cope with a multitude of incompatible and mind-breaking emotions.
You need to stop treating trading as a game and consider it as a job. The chart itself should be regarded as a real business.
It’s a difficult road, not an easy one. Most people lose money on this route. They get picked up by the people who follow them, they lose too, and it happens time after time, in a continuous line.
Along the road of trading, you will encounter a lot of obstacles:
A desire to solve your problems by investing a capital and making a large sum of money quickly.
You will be very afraid and hurt to lose money and you will lose it, inevitably, there’s no way around it.
You will constantly lose faith in yourself and your predictions; the market has broken a lot of traders.
Trading abounds in traps.
How to avoid many of them? Well, you can do it the old-fashioned way by trading on paper.
Paper and market prices
Trading on paper. What does it mean? It means you and just a piece of paper. Yes, it’s the old way. Of course, you can use spreadsheets and there are different prediction tools on trading platforms now, like forecast on Tradingview, for instance.
Get a notepad, a pen, sit down in front of the chart and watch how the price moves. When your strategy indicates an opportunity for a good entry, write down all the details of the potential trade, such as:
The current price of the asset;
Open and close time;
The size of the trade;
and of course, whether it is a buy or sell trade.
All you have to do next is keep looking at the chart, or you can leave it alone. When it’s time to analyze the past, just write down the current price and the new size of your balance, and if the forecast was right or wrong.
That’s what trading on paper is all about: you write down the data on a trade instead of risking your money. So why rush in and lose it.
I understand if you don’t like paper. I’m a fan of smartphones and laptops myself. So, keep records in Excel or in the trader’s diary.
Pros of trading on paper
The pros are obvious no money is lost, you can open a chart at any time and assess the results of your efforts. Similarly, you can analyze successful predictions and learn to repeat them on the chart.
Yes, of course, many brokers give demo accounts, but do not forget that they often give you the demo only for the purpose of “hooking” you on their platform. Some brokers even open a demo after depositing with real money.
Paper trading doesn’t require you to do anything at all. You just need to record your entries from time to time, it can’t be easier, can it? And when you start getting good at it, you can try the demo or go straight to the real one, to work on a small capital.
The disadvantages of trading on paper
The disadvantages are obvious, this is not real trading and one can get too carried away with paper testing. Sometimes everything turns out great on paper and you diligently build up capital every single day.
And then you know what happens? You’ll have a very interesting thought in your head, like: “Isn’t it time for me to invest more money and earn real money?” If you get greedy, you’re in trouble.
What a way out of this is not to think that paper successes will immediately translate into real successes. You shouldn’t get greedy. Theory is theory, and practice is practice.
With paper trading you certainly can’t lose money. When it comes to working with real capital, it also helps to eliminate the emotional factor—the continuous stress we experience, and which we struggle so hard to tear from our hearts.
Trade on paper
Paper trading is the most elementary way to test strategies and educate traders’ discipline. This method is old, one might say, grandpa’s way. For decades, Wall Street traders have been writing their notes on paper, before the computer age.
Work on paper as close to reality as possible. If you can’t afford to work with more than $100 on your account in reality, work with the same amount while trading on paper. Do not draw millions for yourself. The simulation should be as close to reality as possible.
In the end, the main thing that distinguishes real trading from demo or paper trading is only emotions of the trader. After all the charts and prices remain exactly the same.