The Power of Paper

A paper trade is a trade that is done without taking any real monetary risk. In other words its a trade that you do not physically use real cash on rather you can write what your buying or selling at the price you want and record your gains and losses all on paper. The downfall to this is that you could be missing out on potential big gainers. However, there are more benefits to this method such as learning how to trade if your new to it, not incurring any real losses which puts you in a comfort zone to learn better. You want to make sure you are not just placing one trade after the next without understanding truly why you are placing that trade because then you wont be learning much. Treat each trade as if its a real trade with real money being used so that you can make more realistic decisions and hence you can be more prepared when the time comes you will be trading with real money. 

WEN (0.05 risk, R = $10)

Longed 200 shares @ $7.61.
Covered 100  @ 7.71 

Covered 50  @ 7.81

Covered 50 @ 7.79

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Total R = 3R gain

SGOC (0.10 risk, R = $10)
Longed 100 shares @ 2.35

Covered 50 @ 2.55

Covered 25 @ 2.75

Covered 25 @ 2.75

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Total R = 3R gain

PXLW (0.10 risk, R = $15)

Longed 150 shares @ 4.93

Covered 150 @ 4.83

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Total R = -1R loss

Todays R = 4.5R gain

I reduced my R from 50 to 15 because I felt that by doing so my comfort level would be higher along with my confidence when placing a trade. The last thing you want is losing 50-100 on a single trade. By having my R at 15 I know that even if I take a 1R hit each day I'm only down $75 for the week not including commissions and fees. This strategy of reducing R size is very important as it will allow you to be comfortable letting go of losing stocks without feeling too much of a blow compared to being down 50-100.

I will continue making paper trades for the remainder of the week and make a real trade as I see fit. My goal is to make one R for the week. Im already up 4.5R's.

 

"these are just my opinions and not a buy or sell recommendation. i hold no position in this company nor are they paying me to post this".