Since pre-historic times, trading has been a very popular activity and a convenient form of earning. In 3000 BC, trading was only restricted to the barter of grains, heavy metals, and jewelry. Over a while, the trading activity evolved and today, it has become one of the largest investment industries. While trading is mostly based on future speculation, yet some rules define this activity. Today with online trading, investors can get in-depth information about stocks and their movement. Here, you will learn about the basic principles that define trading, i.e. research, plan, invest, minimize losses and most importantly have patience.  

While these guiding principles are useful, yet until you indulge in the trading activity, it is difficult to perform a successful trade. Therefore for beginners, paper trading is the best and an interesting way to learn, the art of becoming an expert trader.

What Is Paper Trading?

Paper trading is a virtual stock trading, which allows the new budding investors to practice investing, without putting any real money. This method is quite helpful and it allows the would-be investors to apply new trading strategies and test them without putting anything at stack. The best part about this stimulated trading process is that it functions like a real trading setup and thus provides a wide canvas for investors to apply their ideas with some imaginary money.

Let’s Look At Some Of The Benefits Of Stimulated Trading:-

Zero Risk: 

Since Paper trading does not involve the investment of real money, therefore there is no risk of losing your money. Technically, it costs nothing and here you get to apply strategies, make mistakes and learn from them. It is the best training platform for new traders and prepares them for the real big-time real trading.

Practice Fearless: 

Although traders do experience anxiety even during paper trading, unlike real trading it allows them to play freely. The emotions of greed and fear are eliminated in this process. The traders can analyze their stocks and play with calculations, without having to worry about financial losses. 

Builds Confidence: 

The simulated trading process prepares you for the real trading game. It teaches how to apply math into your investments, it makes you aware of patterns and most importantly it equips you to make complex decisions, based on calculations and not just speculation. Through this platform, eventually, the would-be-traders gain confidence and are more trained to put their real money. 

Reality Check:

Trading is not everyone’s cup of tea; it requires judgment, patience and the strength to face losses without getting overwhelmed. Paper trading is an introduction to the entire trading activity, it orients traders about the real trading scenarios and how the fluctuations happen. Thus, when you enter the trading industry to stake your money, you know what you are getting into. There have been a lot of would-be-traders who gave up the idea of real trading after practicing paper trading.

Bottom Line:

To summarize things, let’s looks at the key takeaways of Paper trading:

  1. It is a great tool to test your investing and financial analysis skills.
  2. It orients traders with all the trading terms and features.
  3. It allows investors to experience the trading journey, without investing any real money.
  4. You can test a strategy on the stimulator, before applying it in the real trading scenario.
  5. It helps a fresher to understand if he is cut out to handle real emotions, involved in trading.

There are rules to every game, and paper trading is the best way to learn the game, without investing even a penny. Although, there are limitations and many may argue that it does not completely carry the emotions of real trading, yet it is the best platform to learn about the art of trading.