Many paper traders think they can flip the switch to real money and feel no differently, but when they get there, they find the transition harder than expected.
Why all this talk of emotions, discipline, and mental toughness? In a word: money. Many veteran live traders aim to be emotionally detached, objective scorekeepers. Once you’ve gotten to a level where you’re indifferent about winning trades versus losing trades, you might find yourself ready to take that disciplined approach to the live platform. If you find yourself ecstatic about winning trades and despondent about losing trades, it’s probably fair to say you’ve got a ways to go to understand paper trading versus live trading. In reality, our trading strategy takes a back seat to how we manage ourselves and our trades in the markets. It’s a valid approach-but it’s only half the equation.
Many traders approach paper trading to develop a strategy and test it out. If we drill down on a deeper level, that’s really what paper trading is all about-a psychological study and revelation of who we are and how we react under changing market conditions. Paper trading-aka simulated trading, such as on the paperMoney simulator on the thinkorswim® trading platform-allows us to answer a lot of questions about ourselves before actually committing that hard-earned capital to the markets. Pull and assess a sample of paper trades as a simulation of potential profitability Know that it’s harder to keep emotions in check when you know the money is real
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