Taking Off the Training Wheels


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Time comes when you’ll want to trade live rather than in simulated mode. Here are some things to consider as you contemplate this transition:

  • Don’t begin trading live until you become consistently successful trading paper.
  • Before applying any successful trading strategy in live trading, understand how and why it is successful. Being lucky is not a good strategy.
  • Use a live trading platform that is as close a match as possible to your simulated platform.
  • Learn all you can about differences between the simulated platform and the live trading platform. For instance, paper options trades on Thinkorswim are never subject to early assignment.
  • Do thorough tax planning. Understand how a standard margin investment account is different from a Roth IRA. Choose an account type that will be consistent with your best interests.
  • Don’t hesitate to return to the paper platform whenever your profits fall or turn into losses. Market behavior is dynamic. What worked last year may not work this work this year.
  • Don’t change your trading approach without returning to paper trading to test it thoroughly.
  • Start slow. Test the waters before you dive in.
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