I receive questions on how to start live stock market trading stocks online from new traders who have finished their training and have developed their strategies for their stock market system. They have also already tested these strategies by paper trades using some form of simulator or using a classic spreadsheet with trades written by hand.
The move from paper trades to live trading stocks online could be very tough for many traders. They experience huge emotional problems and some of them have real problems being profitable even although their paper trades was profitable.
Here are some tips that could help make this transition from testing to live stock market trading easier. Read them carefully.
Study materials about psychology and emotions
There are many books that describe the psychological aspects of online trading. It is not necessary to read a lot of them, but one good book can help to understand what you fee and think during your first real trades.
Broker account size
I am a big proponent of trading with the biggest account possible. But this does not mean that you have to place the whole amount of your capital into your online trades immediately from the beginning. You can start with the smallest risk possible, much less than the recommended maximum of 1% risk size for every single trade.
You can start with risk that equals to 0.1% of your capital for every single trade just to be able to handle all problems that could arise during your first few live stocks trades.
And when you confirm that your stocks trading style and strategy is profitable and you can trade it with a cool head, then you can start to increase risk size gradually.
Set your mental level for biggest drawdown
If you experience a big draw down during the period of your live stocks trading then you have to stop and take a rest for few days. Do not monitor markets nor do paper trade in this time. Clean your head, think about something different, do something totally different.
Then you can return and start to analyze what happened, what mistakes you made and think about how to correct them. It could be wise to do some virtual trades first, before starting live online trading again.
Do not have big expectations
Yes we trade to make money. But if you start with live online trading activities then you cannot expect that you will be profitable from day one. Your trades and results will evolve from less consistent to more consistent. Your goal in the first phase of live trading is to act in accordance with your rules defined for your stock market system and business plan for stocks.
Evaluate your trades
Write details about every trade a into a journal. You can use some special stock journal software or simply use some spreadsheet program. Collect some data about trades first. Do not expect to see something before you have done 20 or 30 trades. Only with the data of about 30 trades can you expect to see some common pattern in your live trading stocks online.