Fletch Guest
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Posted: Sat Feb 17, 2007 10:01 pm Post subject: |
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Cosmo
I have read "experts" who advocate paper trading; and I have read "experts" that think it is useless, because, as you say, you don't feel the pleasure or pain.
I have been trading for over a year. I paper traded for a short time, but nothing was like the real thing. I don't know whether my experience fits other people, but I kept my position sizes pretty small, and made a big deal out of setting logical stop losses (I use a number of strategies)
What has really saved my bacon is:
a) Always determine a logical (minor low) stop loss price before making a trade, and if the stock looks like might run away, place a limit order to make sure a gap up doesn't increase your downside more than you plan.
b) Don't trade within a couple of weeks of an earnings announcement. I use earningswhispers.com for this.
c) Plan how to trail your stops and how to exit before you buy, or immediately after. I am not good at this yet, and have lots and lots of questions to get answered.
The times I didn't place a stop loss after a trade were the times the market seemed to know that, and took my money. It has taken me months to get to a point where my error rate is very low. Every couple of days I list my open orders from the broker (Schwab) and check that all my positions have stops in. I am getting anal. That is a good thing.
My biggest problem ... on the days when the market is going South, I "don't have time" to look at my watch list. Then when the market perks up, I take a look and see all the wonderful buys from two days ago.
Fletch |
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