If you want to get better at anything, you have to practice. Playing the market is no different. If you want to make money in the stock market, you have to practice stock trading. It always amazes me when I hear people who don't understand why they aren't making a killing investing in the stock market. I always ask them "Are you practicing?" Almost invariably these people look at me like I've lost my mind. It's just like anything else, people... if you don't work on your skills, you won't get any better. There are many ways to get better information about stocks you want to invest in: reading newsletters, following expert picks, watching the financial channel 24 hours a day, and so on. There is only one way to put that knowledge to use. Practice.
Even seasoned traders can benefit from running practice stock trading sessions every once in awhile. Every time you pick up a new buy signal technique, or a new options strategy, it is imperative that you put these new theories and ideas to the test. You may be able to see that a certain strategy has worked in the past without testing it, but it is a whole different animal to actually pull the trigger. My favorite technique when I learn something new in the market is to take that idea and plug it in to my paper trading account. I will try out a couple weeks worth of trades and analyze exactly what worked and what didn't. If I like the results I'm having on paper trading, I will try it out at a smaller amount in my real money account. If it's still working, I will add that trading idea to my repertoire. If you continue to practice you will develop a working stock trading system.
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