Your Questions About Paper Trading Stocks

James asks…

STOCKS : A real good book on day trading ?

Hi all

I want to get into stocks day trading , can you offer a good book on day trading to novices like me ?

I intend to paper trade on some good simulator based on what that book will tech me , so that book should be practical and less “informative”
Many tanks

EC

John answers:

The Day Trader’s Survival Guide
Written by Christopher A. Farrell
ISBN: 0-06-662085-6

The Compleat Guide To Day Trading Stocks
Written by Jake Bernstein
ISBN: 0-07-136125-1

A good website:
http://www.daytrading.about.com

Robert asks…

Trading NYSE Stocks?

I have been paper trading and using Google Finance charts to see what the prices have been going for.

Regarding the NYSE Stocks…will there always be a buyer if I want to sell my stock at a reasonable price?

For example if I bought a stock around 10 am for $180 and once I know my order got filled and its in my account, I put a limit sell order of $181 (around 10:15 am) most likely will my sell order get filled even if the market is going down?- this is for the NYSE stocks

Thanks.

John answers:

Nope. You are not guaranteed a sale unless you put in a “market” sell order. And that means that you agree to sell it for whatever the price is at that moment. If you put in an order to sell at 181, then the quote you read on your computer must be at that amount, and there have to be enough buyers at that price for yours to go through.

So, in your example, if you buy at 180 and then put in a limit order to sell at 181, but the stock is going down below 181, then your stock won’t sell until the price goes back up to 181. That might happen in a few minutes or a few years.

This holds true for stocks on any exchange.

Paul asks…

how accurate is paper trading to real live trading in the stock market?

So ive been practicing paper trading for over a year now and im willing to invest real money soon. I had a mock account at about $25,000 and was able to make a steady 200ish dollars a day… not bad i’d say… but i KNOW its paper trading and i want to know before i invest real money is how accurate is my paper account to real money? cuz i know that some of the trades that i got on paper trading wont be filled in real money because somebody else could have gotten that stock at that price from that buy/seller instead of me…

so… anyone with experience in the real market and can compare it to paper trading? If i make money consistently in paper trading will i make money consistently in live trading? the more info the better, thanks :]
ok well ive been doing daytrading and not really swing trading or investing… so yes i do ALOT of trades that are a limit order or stop order and not really at market price or at the bid.
ok well ive been doing daytrading and not really swing trading or investing… so yes i do ALOT of trades that are a limit order or stop order and not really at market price.

John answers:

Not very.

Point one: do you have $25,000 to start real trading tomorrow? Although I will give you credit for starting with a relatively small number. Most people try paper trading with completely unrealistic number for themselves (like $1 million).

It is difficult to hold positions large enough to profit from trading unless your account balance is in 6 figures or more. The more trading, the bigger the portfolio you need. The average trader (who fails in the end) often trades enough (several times a week) to need a 7 figure portfolio to justify his habits.

Point two: Did you track realistic trading costs and actual price quotes for the day in question? The costs are part of the reason why a 5 figure trade can be profitable but the same 4 figure trade might not be. The quote problem works this way: did the trade you used to price your buys & sells on paper realistically represent a trade you could have actually hit with real money. Most of the times the answer is no, especially if you are paper trading in small caps, small lots, or aiming a lowest priced buys and highest price sells.

Point three: Real trading is emotionally very different than paper trading, especially when you are looking at it all the time (or several times a day)…even when you are very good at what you do and understand the emotional roller coaster ride.

Personal example. I have a position in a speculative investment that I expect to double within the year. To keep it simple, it is a security that is trading for $10 that can be “exchanged” under a complex set of rules in the near future for assets worth $20. $9 of the exchange is cash, so LOGICALLY the security should never trade below $9…right? Guess what? Shortly after I had purchased nearly $300,000 of the security, it fell below $6…not for a minute or an hour…but days! For a week or so I had a $100,000 loss. The trading made zero logical or financial sense…but I still double checked my numbers and my resources. I didn’t panic and sell, but it took me a day or two to start buying more. People can talk about nerves of steel, but you have to really feel the burn of the fire on your own arms before you can say for sure if you have them. I expected it to bounce around – that’s the kind of investing I’m good at – but that was crazy. (It was euro panic. People were selling everything priced in euros regardless of price)

Point four: Do you really have “a thing?” That is, something you intuitively understand and can execute over and over again. If not, you are unlikely to be a successful investor if you trade. Dirty little secret #1 is that the professionals you see talking about making money from trading all really make money – one way or another – getting other people to trade rather than trading themselves. Dirty little secret #2 is that the vast majority of traders don’t beat the S&P 500 index over time.

My little bit of wisdom is to follow this rule: If you have more than a dozen good ideas in a year or you put your money down on more than three ideas in a quarter, you don’t really know what you are doing. (You don’t have “a thing”)

Nancy asks…

Is it possible to day trade stocks on an iMac?

Also, if you have any thoughts on how to paper trade and then get started in this, that would help.

John answers:

Of course it is possible… Get on the internet and start trading. You do have a brokerage account, right?

Donna asks…

how to select the scrips (stocks and futures ) suitable for day trading?

ok i do stock/futures trading on line . normally i select the scrips as suggested in media say news papers , TV and like that.when there are thousands of scrips only a few are suggested for trading/day trading.it will be help full to me if i know on what basis suitable scrips are selected for trading particularly day trading so that i myself can select the scrips for trading. more over i can make sure that what is suggested by news papers and TV are worth for trading

John answers:

Hi,

You can visit http://stocksguide.checkouttoday.info for some useful tips and info related to your query. Good luck!

Powered by Yahoo! Answers

This entry was posted in Uncategorized. Bookmark the permalink.