Doing paper trade before and after you become a trader is completely different. Before you become a trader, you dont know about fear, greed and maximum draw down for your trading strategy( Draw down is the loss of your capital after a series of losing trades). You have a trade set up and you test it by paper trading. After becoming a trader you know how you feel after profit/loss. You know how powerful fear and greed is. And you know that you have not tested your trading strategy's maximum draw down. Doing paper trade after becoming a trader may be because of not following your trading plan properly. You may think your trading plan is wrong and you want to find some other suitable trading plan. The real thing is your mind dont know how to handle fear or greed. You should feel confident to overcome fear and greed. You have to find you strength and weakness in trading. You are the only one who can find it. Nobody can find it for you. Some people will be good in trade using pivot levels, fibonacci levels or in finding divergence in indicators or pattern finding etc. You cant become master in all. But once when you are clear about your strength you can control your fear and greed. It wont happen in a single day. And the whole process takes time depending on your hard work.
PS : I am always fascinated in oberserving human behaviour and mind. And share market reflects human mind set.
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Dear traders, please read my ideas to learn trading. I cant answer for everybody in PM and I dont encourage people who send PM. I publish charts with clear explanation and writing about trading psychology. Read and learn!
paper trading can establish if a given strategy has a net positive outcome over a number of trials - what it does not prepare the trader is to face the challenge of risking money- even after the trader becomes confident about the higher probability of success of a given strategy the ability to pull the trigger depends on his ability to handle the loss that he has to suffer if the trade were to hit the stop - even if he musters the courage to overcome that fear for the first trade how many losses in a row can he sustain before he loses confidence - or enter the next trade without hesitation - you do not gain such confidence from paper trading - overcoming that fear is possible only by setting money management rules like how much maximum loss to take in a trade as a percentage of ones trading capital - how much maximum loss allowed in a day /week before suspending trades for the rest of the day /week etc - the confidence to trade and pull the trigger comes from the ability to adhere to these rules - that brings us to the question of discipline - once you develop the discipline to adhere to the set rules by repetition it leads to consistency in your actions and therefore your trade outcomes and that in turn gives you the confidence to pull the trigger without fear
one more point i would like to mention is that a trader has to deal with not just fear and greed - but ego as well - this comes generally when you are successful to some extent - that you begin to believe that you have figured out how the market is going to behave and tend to ignore the rules that gave you the success in the first place - often resulting self-sabotage
vanathi
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@ananth1960, Market is dynamic. It always change. So I never had this ego problem. Every second market tells me to learn. Yes money management rules are important and also its tough to learn. Thank you for sharing your view in detail.
nalinakshi
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@ananth1960, I Agree with you. Paper trading will never build courage, Unless you venture in real swim you will never swimming. About psychology part aside,mastering the technique of trading is very essential. we read hundreds of ideas published about buy sell, channel break, triangle break , different candle stick patterns , but still a trader need to know at what time frame what he has to do? Intraday trading is totally different. while trading intra day, price will all over the place. To build confidence, you must know where and when you are trading? psychology will be hit if you are not clear. You are right one has to control greed , fear and ego as well. One can build confidence by analysing their own weakness and mistakes, analysis and rectifying mistakes is utmost important at the end of the day. Introspecting oneself is basic thing to get over all the barriers. And ofcourse Above all Knowledge is power. Applying it in the right sense is very important, Keep everything simple while trading. concentrating leading indicators than lagging is very important. intra day trading needs lot of testing and back testing methods to master . Psychology is a broad emotion, it can be controlled by mastering , knowing oneself thoroughly , success will follow, then everything take care of itself. As going to personal, I keep on introspecting myself, learn and relearn from others, i have learnt few patterns for day trading, I wait till my patterns are in place, otherwise let go. I learnt by my mistakes. yes next comes managing your money. stoplosses. You feel this pattern is good , yo u enter the trade, but what if the trade goes against you, you must be ready to cut your losses. I Have seen people sitting on losses and praying God. And some people averaging the losses. Averaging works in investing not in day trading. I always try to share my knowledge to the people who are interested. Thanks everyone. I request Traders when they post buy cal , they must mention the time frame.
ananth1960
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@nalinakshi, - Thank you for your response - I can absolutely identify with the sentiments you have expressed about intraday trading - number one you have to do actual trading and sustain losses to get that right attitude to be fearless about losses - once you are absolutely sure of yourself that you are going to cut the trade if it hits the stop no matter what , you can confidently take a trade when you identify a pattern emerging in real time - number two is another point you mentioned - get set on some pattern to look for and enter only those trades - but make sure that you enter those trades when they appear without hesitation and second thoughts - make it a habit like driving where once you get the hang of it you do the things without actually thinking through- then keep on doing the same thing over and over again - most people who have succeeded in this game would keep quite because whenever you try to share the things that you think contributed to your success in general people take it with skepticism thinking that you are trying to sell something etc and you get dejected and think that why bother -that is why i am hardly active on the social media