Paper trading Practice for successful day trading
Daily we get lots emails asking for any technique for day trading, any specific calculation for day trading, any fixed procedures to follow, I am new comer and want to earn in day trading, I want to start the day trading, I made losses in day trading please tell me how to recover and so many questions we get on day to day basis.
Broadly speaking there is no any fixed calculation or technique to earn money in day trading.
Also there is no any specific technical indicator or charting with the help of which you can do successful day trading.
For successful day trading you have to combine couple of indicators to analyze the trend and strength of the market and specific stock.
So the bottom line is you need to have experience to do successful (profitable) day trading and earn money in share market.
But how it is possible to practice day trading without using actual money?
YES, it is possible using a method called “Paper Trading Practice”.
By doing paper trading practice you will get experience of doing day trading without actual using your money.
So do paper trading practice and continue doing it till you start making profits and then you can plan to do actual day trading by using your money.
Please go through following subsections and understand and practice the day trading.
Paper trading topics
What is paper trading practice and why it is required
Short Sell example
Worst enemies of day trading
Keep doing paper trading practice unless you get success.
Important notes of paper trading practice
What is Paper Trading practice?
Paper trading is trading with the help of pen and paper without putting your money at risk.
Paper is very important to understand yourself that how much you are confident of doing day trading and how much knowledge you have gained before putting your hard earned money at risk.
Important note - day trading without appropriate knowledge is very risky.
Paper trading is very important for all new comers to day trading/share market but in fact it’s for all those who are still making losses in day trading and not earning sufficient money on day to day basis.
Buying and Selling of shares on daily basis by analyzing the market and specific share movement is called day trading.
Once you decided to start day trading then initially you should start doing paper trading instead of actual day trading this will help you to safeguard from losses.
Day trading is totally based on analyzing specific share in comparison with the whole market (most probably with the nifty or sensex index) and then taking prompt and appropriate action.
So day trading also involves your mental ability to act fast and take appropriate decisions.
It is true that, it is very difficult to take full control on your mind but if you fail to do so then your day trading may not be as successful as it has to be.
Please note to know the how to overcome the mental blocks while doing buying and selling of shares especially in day trading then please visit at
Paper Trading Requirements
1.You need to open the demat and trading account. Try to get very low brokerage charges account.
2. A computer with internet connection. Initially working in internet café will also do.
3. A notebook (called as paper trading practice notebook) and a pen.
4. Mind readiness ( be patient , get ready to learn, do concentration only on trading).
Now let’s see how to start paper trading practice.
Please go through following steps one by one
1. In paper trading you should do all those things that you suppose to do while doing your actual day trading.
2. Start your trading terminal, and start analyzing shares and whole market (most probably Nifty Index) and follow the simple Rule called “Analyze, Wait, Watch and then Trade”.
3. Following are few steps you have to work on
- Today, how market is going to be? Like bullish or bearish or range bound or not getting the direction.
- Which are the stocks are in news?
- Preparing list of top gainers and losers (yesterday’s).
- Keeping close watch on any important announcements like inflations etc
- Keeping close watch on European markets opening at 1:30 pm
- And finally you have to concentrate on stocks.
In order to get success you must able to gauge the market direction and trade in accordance with the
(We daily update above all information on our website and may more factors which are useful for day traders)
4. Your task is to watch which share moves by how much rupees in a single trading session(a session can be a few seconds, a single minute or couple of minutes)
Before analyzing a specific share you must be aware of the market direction/status (mostly probably nifty or sensex index).
5. Prepare the list of shares like below Rs 100, Rs 200, Rs 300 and so on and keep watching them and write down what you see like by how many rupees or paisa the share prices move up and down in a single session.
This is very important session so please concentrate on this and spend your enough time in this activity.
It is very difficult to get idea movement of share prices in single day but as you spend your time in front of the trading terminal you will start realizing them.
Our experience - Prefer shares of high prices so that it becomes easy to book profits at faster rate as compared to share with low prices.
6. The above step will make you to understand the share prices movement based on their price ranges which will help you to enter and exit and in day trading which is very important to book profits.
7. If you land up any specific conclusion like whether market is moving up(bullish) or moving down(bearish) or just trading (up and down and neither making any new high’s nor new low’s) then decide your trade based on market movement.
Please note- If possible keeping writing all your experiences.
Once you decided to act(either buying or short selling) on any one specific share then take your pen and paper and write down whether you want to buy or short sell? and at what price and what quantity, also stop loss trigger price.
If market is bullish then buy bullish stocks
If market is bearish then short sell bearish stocks.
How to write the Buy trading call?
Bought Kotak Mahindra Bank at Rs. 315,
Qty - 300
Selling at Rs. 316 (you may feel Rs. 1 is very less but you will come to know how it adds to thousands in our next training session)
stop loss trigger price Rs. 310.
Now the task is Wait and Watch that how your trade will behave.
(If you have done proper market direction study and picked bullish stocks then definitely your target will hit.)
Now you can make out yourself that if you win, you will get Rs. 1 as profit and if you loose you will loose Rs. 5+ brokerage.
Important note - your profit and loss depends on your trading decision. Don’t hurry or rush in doing trades.
Fear and Greed
Fear and Greed emotions are the two worst enemies for day traders, but in fact for all types of traders and investors and in our general lives too they play very important roles. So stay away from these worst emotions.
This is where your mental decision control comes into picture.
Please go at How to deal with emotions in day trading to read how to reduce the impact of emotions on your trading activity.
“It is not possible for common man to overcome them fully but reducing some impact will prove miracles in life”.
And finally check out where your trade goes and whether you make profit or loss.
8. Try doing paper trading practice and keep doing it unless and until you become full confident and you feel that “yes, I can do it” then you can think of doing actual day trading where you can risk your money.
Important notes of paper trading practice -
1. It is not possible to get success (profit) in single attempt or even in multiple attempts or even in multiple days or even in multiple weeks and so on. So keep doing paper trading practice unless you get success and then start your actual day trading.
2. Success is all depends on your ability, how fast you learn to analyze the market and specific share, how fast you learn to reduce the impact of emotions like greed and fear and avoid panic in your trading activities.
3. Don’t start doing actual day trading unless you get success in paper trading. Otherwise, you will end up in making losses
4. Keep doing paper trading unless and until you start getting profits on and an average one month. If you are not confident then keep practicing until you get confidence and profit.
5. Check by analyzing different shares like low price shares, high price shares and check how fast and easy is to enter and exit from the trade. Everyone has their own abilities and qualities. It is very important for fast entry and exiting in day trading.
6. If possible make notes of your experience and try to get as much as experience of the market and specific shares.
7. Do whatever you want to do on paper trading, feel all type of experience, do hundreds of thousands of trade, this is your learning phase and you are not risking your money so feel the experience of both profits and losses because once you start trading with your actual money then you have to do only specific and selected trade which is explained in our session of “practical ways of day trading”.
8. To get sure successes strictly follow “Analyze, Wait, Watch and Trade” strategy.
How to write the short selling trading call?
Short sell Maruti Suzuki India at Rs 512
Qty - 200
Buy order at Rs 510.5 (please don’t feel that Rs.1.50 is very less but you will come to know later how it adds to thousands in our next training session)
stop loss trigger price Rs. 518
Now the task is Wait and Watch that how your trade will behave.
Now you can make out yourself that if you win, you will get Rs.1.50 as profit and if you loose you will loose Rs. 6+ brokerage as loss.
Very important note - if you do loss in your trade then don’t hurry up to cover that loss. Give some time and wait for right trade and then act. Please don’t ignore this.
At the same time check out your mental state like whether you are fearful (when price starts going down) or greedy (when price starts moving up).
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