Your Questions About Paper Trading Stocks

Nancy asks…

How do I know when quarterly reports for specific stocks will come out?

I’m a finance student who wishes to begin paper trading soon. Although most of my studying has been on technical analysis, I want to be able to keep a close eye on stocks that I am following’s earnings reports. How do I know what date and time the quarterly earnings report of any particular stock that I am interested in will come out?

Also a bonus question for anyone who knows, how can I estimate whether or not a company will meet expected earnings before the data is released?

John answers:

The reports come out reasonably consistently every 3 months….see when the last report came out add 90 days there is when to expect the next report.

Your last question tell me that you have a great deal to learn….I hope your are taking your paper trading seriously…

Estimates are just that analysts predicting what a company might earn in the coming months. Some times they are accurate ….often not…hence the surprise factor.

Now you want a tool to guess the validity of their estimates….as a finance student….you tell me how this can be done when few analysts show exactly how they arrive at their estimates….how can you judge….I submit that is impossible to do.

Robert asks…

How can I start trading stocks? I have limited startup money (practically none)?

I realized I have alot of knowledge about tech companies, because I read about them all the time. I wanted to try trading stocks but don’t know where to start!

John answers:

It’s very easy to trade stocks, just visit the website of any major brokerage firm and complete a new account form or you can visit any local b rokerage firm and/or bank and they can help you.

BUT … The question you should be asking is not how to start trading stocks but rather SHOULD you start trading stocks?
Before you spend $0.01 on any investment make sure you know what you’re doing, wqhy you’re doing it, how to do it and know the rules that govern what you are trying to do. ALSO make sure you have enough money to afford what you are doing.

Before you invest in any security, the first investment you should make is in yourself, and the best investment you can make is by educating yourself. Begin your education by learning why you should invest and the importance of being able to make your own decisions or how the pro’s make theirs. Start your education by reading “Investing or Dummies” by Eric Tyson.

To continue your education select some of the following
Beating the Street by Peter Lynch
How to Make Money in Stocks” by William O’Neil
24 Essential Lessons for Investment Success by William O’Neil
The Intelligent Investor, by Benjamin Graham
Common Stocks, Uncommon Profits, by Philip A. Fisher
One Up on Wall Street by Peter Lynch
Stocks for the Long Run, by Jeremy Siegel
Trading for a Living, by Alexander Elder
Uncover the Secret Hiding Places of Stock Market Profits by Joel Greenblatt.
What Works on Wall Street by James O’Shaunessey
You Can Be a Stock Market Genius by Joel Greenblatt
Your Money and Your Brain by Jason Zweig

Websites that can provide instructions and help with procedures and terminology are Investopedia – http://www.investopedia.com/ http://www.investorshub.com/ and 1 Source for Stocks – http://www.1source4stocks.com/info/stock-analyst-opinion.asp or Smart Money
http://www.smartmoney.com/
Visit some of the more professional websites like Zacks Research – http://www.zacks.com/ Investors Business Daily – http://www.investors.com/default.htm?fromad=1
Some of these web sites will have advertisers who are worth looking into also. And remember, if they offer free information, get it.

And when you think you want to invest/trade, try some paper trading to test your skills without spending you money http://simulatorinvestopedia.com/ http://www.moneyworks4me.com/
and/or http://www.tradingsimulation.com/

You at least have made the right decision to start investing, this is the first big step and it won’t be your last. Keep taking those steps forward and along the way never take the advice from people that are not in the market or try to tell you not to invest.

Good luck on journey, study hard and you’ll invest well. BUT don’t jump into something you know nothing about

Ken asks…

What is the best way to learn how to buy and sell stocks?

I dont know much about business. I’m actually a 3rd computer science student. But I’m very analytical with strong math skills. Anyways back to the question, how to learn to trade stocks? I was thinking of practicing trading stocks through a “stock market simulator” and reading up some basic investing skills on the net. What do you guys think?

John answers:

In my own opinion, I think paper trading doesn’t give you the right skill set of trading stocks.

Pratice using your own money – but only a little bit – and only play with money you can lose. Then you will know how real excitment is when you’re winning, and how down and depressed you can feel if your stocks are down. Emotions play a large part in share trading. Not so much in stock investing.

You need to know your fundamentals but as a trader, charting and technical indicators are much more important.

It is good that you are mathematical and analytical. Gives you a higher chance of succeeding.

What you need next are discipline in your trading and controllin emotions.

Steven asks…

Is there a website that allows you to pratice trading stocks?

Like you can virtually trade stocks like you would in real life except nothing really happens?
Thank you for the really quick answer, maybe I should ask – whats the best one?

John answers:

Yahoo allows you to create portfolios and track transactions. Paper trading is a good way to practice investing.

The virtual stock exchange is another site that allows you to manage a mock portfolio and you can even choose to compete against other people.
Http://virtualstockexchange.com/Game/Homepage.aspx

Lizzie asks…

When you’re not trading penny stocks, How is the Investopedia stock simulator different from real thing?

I am talking about when you’re only trading high-volume stocks. In this case, how would the stock simulator be different from real stock trading?

Thanks.

John answers:

Psychology. No matter how much you believe you’ll act exactly the same….. You won’t.

You can minimize the problem by having a clear (defined) strategy, including;
Position sizing techniques.
Trade entrance & exit rules (with laddering, etc.).
A clear, specific rules for a stop loss.
A clear mode of operation including target & target rules. Know your stats!

There will still be slippage…. But it shouldn’t be catastrophic.

Once you start trading (real money), all the numbers & rules should be exactly the same as what you did in paper trading.

If you’re day trading, win ratios of 40% or more are acceptable. The real key is how much is your max loss vs. Anticipated gains.

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