Risk, Emotions, Paper trading

Papertrading is often smiled at and its effect is greatly underestimated. Trading must be learned and papertrading is an important tool in this process. Why and how? We provide the answer here!

It is incredibly difficult for a newcomer not to be infected by the stock market virus. Apparently, the stock market offers everything that many people want. On the one hand, horrendous incomes can be earned, while on the other hand you seem to have endless freedom. You can decide when and from where you want to work. You have no clients or bosses to whom you are obligated. Simply a “perfect working world”.

Dream and reality!

Without doubt it is possible to make this dream come true. But it is not easy. Relatively quickly you will find that the stock market ticks a little differently than you first thought. After all, all the comforts are only the reward for accepting uncertainty and taking risks. But what is the problem? We are happy to take risks for all these conveniences, aren’t we?

Unfortunately not! It is not in our nature to take risks consciously. On the contrary. In normal life we are constantly striving to eliminate all uncertainties and risks. Unfortunately, this natural mechanism has a negative effect on trading. Instead of dealing rationally with a loss, we react emotionally, and that actually always costs money.

Step by step to a successful professional

As a newcomer to trading, you are of course not aware of these problems and therefore usually start your trading career full of verve – with real money, of course. After all, you want to win and you want to take the risk, you can manage that. However, it usually doesn’t take long before the stock market shows you what it means to take risks and uncertainty, voluntarily and repeatedly. At the latest when the first loss trades in a row occur, the emotional rollercoaster ride begins. Unfortunately, losing is part of successful trading.

As a successful trader you have to learn to lose. Don’t even try to make the stock market “safe”. You will not succeed. I know what I am talking about, because in my early days I spent years deciphering the secret of the stock market. Even Nobel Prize winners have tried and failed in practice.

Successful trading means managing yourself. Of course it requires some basic theoretical knowledge, but this is quickly learned. In the end, however, you will have to trade practically in order to move forward. It is important to get to know your own strengths and weaknesses live on the market and to bring them in line with the possibilities of the stock exchange. If you try to be a calm and patient person in scalptrading, you will fail despite the best theoretical preparation. He is simply not made for this fast and aggressive way of trading.

Papertrading – a powerful tool on the way to success!

Luckily for us, it is easy nowadays to learn how to trade practically and without any risk. The solution lies in demo or papertrading. Although you can hear and read again and again that this is just a gimmick, I think very much of this way of learning. Not only do you have the opportunity to get to know your trading platform and to practise how to use it, but of course you can also work on your discipline and your emotions. The advantage in papertrading is that you are operating in a risk-free environment. So if you make mistakes – and you will not fail to do so – they don’t cost you any money. Nothing would be worse than finally being able to trade after months of practical action, but then finding that you ran out of money during the learning phase.

Paper trading and risk!

But how can you create emotions in papertrading if risks are responsible for them, which do not exist in papertrading?

First of all, it’s purely a matter of attitude. You should take papertrading seriously, as seriously as real money trading. This means that you need a strategy that you want to implement and your goal is to implement it as perfectly as possible in papertrading. If you are already undisciplined in papertrading, how will this look in reality?

Give it a try! Take any strategy you like and face the challenge of implementing it in a demo trading for one or two months – just this one and exactly as the rules demand! I’m sure you’ll be surprised how difficult this is.

However, there is another way to create emotions. The new stock exchange game “Trader 2019”, for example, offers a chance to do this, because here you make your trading public. You are facing a broad audience and this probably generates more emotions than you would like. Of course you can also trade your sample portfolios and co. publicly on Guidants. If you don’t hide behind a nickname, the pressure will increase even more. If you do not believe it, try it out. You get emotions for virtually nothing! Perfect for learning to trade!

It’s worth the effort!

In the end this learning phase will help you to become successful. It will help you to find your trading niche, where you can make perfect use of your strengths and weaknesses. You know yourself and the market and once you have built up enough confidence in papertrading, you can switch to real money trading. This will probably mean another small change for you and maybe the pressure will increase a bit. I don’t want to deny this, but those who have previously done professional papertrading, in which they have tested themselves and their strategies extensively, will have much greater chances of success. Those who then slowly reach for larger sums of money in real money trading and don’t go full throttle right away will further increase their long-term chances of success.

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