How to practice trading with a real time simulator?

Like becoming any sort of professional, you as a beginner trader need to get trained and practice before you actually start your trading. Many traders suffer a big loss by directly rushing into the trading room with no knowledge, no skills, and no experience, simply hoping to make big money quickly. It is almost certain that traders with these three nos will lose money big time.

while trading paper money with a simulator can be helpful, many beginner traders do not know what to do to help themselves best. In many cases, these student traders only have their mind set on how to make money or make big money quickly. The problem is that they often forget the main purpose of this type of fake trading.

Here is something a beginner trader needs to be aware of when he practices trading with a simulator.

1) You need to focus on testing out your strategies not how much you win. Once you master your profitable trading strategies, you can increase your net profit simply by increasing the number of shares for each trade.

2) Practice to understand how many shares of a stock you need to trade. many beginner traders randomly decide how much to buy and when exiting how much to sell. That is not a strategy. It is very important to know how much you should buy and to sell because this is to determine your risk and your potential profit. Also there is a liquidity issue about how many shares to buy. With a simulator, you may buy and sell 500,000 shares easily. But in real stock market, the liquidity is fairly limited. You may buy a lot, but you may not be able to sell it. this case can lead to a huge loss!

3) Learn not to overtrade. In your paper money account, once you sell your stocks, you can use that amount of money immediately. In reality, you will need to wait one day or two for your broker to collect the payments for you which takes some time. this can lead to over trade. Like if your paper money account has $25,000, you might actually use $100,000. This is not the best practice Because it does not mirror your real life. Of course, you may use a margin loan which itself is a risk factor. Learn to understand when is the time period you should trade and you trade only during that period. Learn to understand how many trades you should perform. Overtrade is one reason to lose profit or lose money.

4) Train your mentality. Learn to control your behavior. Do not try to be profitable every day. Learn not to fight with the market trend of the stock you choose to trade. The fighting mentality can put you in a losing position. Learn to be a gracious loser and know how much you can lose or plan to lose. Before you start trading, the very first thing you need to do is decide how much you could lose or you want to lose. Stick to your own rule and when you find you are in a losing position, cut loss quickly without any hesitation.

5) Start with a small amount. Never try to give yourself one million dollars to start with in your paper money account. Try to be realistic. If you can pump $25k into your real cash account, try to start with $25k in your paper money account. Then get familiar with this amount and build your confidence from there. The starting amount of paper money can decide what experience you will have. There is a difference!

6) Reflect on your trading activities for the day. What you did right and what you did wrong. Why? Did you pick the right stock to trade? What does this stock rise 400% today? Did I enter at the right time? Etc. and etc. this is an important part of your practice and learning.