Why Should You Start with a Trading Simulator?

If you're a beginner trader, you might be overwhelmed by the information available to you. You might also be incredibly eager to open your brokerage account and start trading. Doing this without proper preparation is like jumping into shark infested waters without looking though. You're going to lose your money, and even worse, you could end up in debt if you don't knwo what you're doing. You can find a lot of books on various subjects, and there are lessons that can't be learned without trading real money, but in the middle you'll find a trading simulator to be a very useful part of your education.

You must be able to read stock charts in real-time in order to daytrade. This, combined with reading the stock ticker tape will be the basis for most of your trading decisions throughout the day. If you try to learn to read the tape, and recognize patterns while trading real money, this can get real expensive real fast. Your broker provides you with a simulation mode for a reason, use it to learn these two skills.

Learning the charts is important because patterns don't always develop like they do in the books. Sure, you know what these patterns look like after the fact, and after they've been pointed out in the book, but would you recognize it as it is happening? You can't go back after it's formed and make a trade. You're already too late. Learn this skill on your trading simulator.

Tape reading is important because sometimes these patterns develop with no real volume or strength behind them. Learning to read the tape will help you spot false breakouts and other failed patterns before you waste your money trying to trade them. Playing around with these trades with real money will cause you to go broke in no time.

Trading simluators are perfect for teaching these skills, but aren't to be taken as a substitute for real trading. Learn these skills and move onto putting real money in the market.

No comments:

Post a Comment