Use Paper Trading To Test Spread Betting Strategies
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Online paper trading presents a safe way to master successful techniques and strategies before committing real money to them. Imagine if it were possible to develop a product or new line of business, test its practicality and see how profitable it can actually become in a real life environment before actually rolling it out. Wouldn't that me great? Unfortunately, there are not many businesses in which such risk-free testing is possible. However, this is exactly what paper-trading is.
Essentially, paper-trading involves placing simulated orders in much the same way as you would place an order with an online broker. The only difference is that unlike with the real thing, you don't actually risk any money when you paper trade, so you don't stand to lose any of your hard-earned cash if your ideas don't work out as expected. But you get to see your virtual account move up or down in line with the success of your chosen strategy.
In the past, those who wanted to run such simulated trades had to do it all themselves; recording diligently the level at which trades are taken and calculating the gains or loses manually. While that approach still has some merit, such as helping a novice trader to develop the discipline to keep accurate records, the great thing is that the development of internet technology now means that you no longer need to 'paper-trade' in the traditional way. The process can now be done in virtually the same way as the real thing. Many online brokers now allow you to place simulated trades on the sort of platforms used for real online trading.
Paper trading online is suitable for both novice traders and veterans alike. For beginners, it provides a safe environment in which to master essential skills and techniques and to cultivate the appropriate discipline required for success. Likewise, for seasoned traders, it provides a risk-free way to test specific ideas. This can be valuable as it enables the trader to fine-tune new strategies before committing real money to the markets.
This article in the Daily Market Commentary section discusses further benefits of paper trading. [Scroll down on the page to find it].