Effective Techniques For Trading

Three Effective Techniques Preparing You For Trading In the Real World

If you have decided to give trading a try, then like they say, there’s no better time than the present. Go for it! Give it your best shot. And above all do it with utmost sincerity; and chances are that you will end up belonging to the category that is here to stay and find yourself in the trading room as happy and upbeat as you are now for many years to come.

The perfect way to go about trading seems like when you can take a few trial runs before putting your real money at risk. What if you could trade in the real market with imaginary or fake money to begin with? What if you were given an opportunity to trade in the real market environment, where real price action was taking place; what if you were given the freedom to refer to real time charts and make real decisions regarding choice of your trade, its entry and exit without having to risk any real money until you were more at ease?

Well, there is this kind of alternative available with brokers wherein beginners can take advantage of it. Why just beginners, anybody wishing to do it could. Let’s discuss different ways in which a trader can practice trading without putting real money at risk.

First is called Simulation Trading, also known as paper trading; where as the name suggests trades are merely on paper not inside the market. In this style of trading, the trader is in the real market checking out trades but as he places his trades, they are not forwarded to the exchange; instead they are simulated by the trading software. Trading software that your brokers provide mostly comes with simulation option, which means that the trader is using the same trading platform while doing paper trade that he will eventually use while trading live with his real money. Simulation trading besides offering practice in real market conditions also gives you time to get used to the new trading software and learn its various functions.

Second way to prepare for trading is by indulging yourself in small trades. For traders who have learnt it all and done enough paper trading should start with small trades. Here they start with very small money and invest in small stocks. They earn very small profits but the objective here is learning and not profit so small trading should be part of routine of a beginner irrespective of the type of trader he is or his capacity to invest. Investing in penny stocks in real market conditions, placing smallest of orders and analyzing market and making predictions… is by far the safest way to succeed as a trader. Exposure and thrill of the real market, winning or losing is also real albeit in very small amount are all there. In small trades, the trader is trading and investing in live market, learning the trade on the job.

The third way to prepare for trading is with the help of what is called Shadow Trading. Shadow trading is about replicating trades of other fellow traders. Here the trader learns to read and understand charts such as the bar charts and based on highs and lows, opening and closing price of the stock, volume of trade etc, the trader decides to place a trade. While doing this he however has to remember that he can’t do thing haphazardly without having any understanding of his move. Because if he does it, he will end up losing both – money as well as interest in trading; this is not a good sign, especially for a trader who joined with a goal of making a career out of it. Here also trader is advised to start with a small investment. So that even in worst situation he has not lost much. However Shadow trading is a great way to study, understand and thereafter base one’s trade on various stock charts and indicators.