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Why You Should Have a Paper Trading Account First

By Shaun Rosenberg

It is very important to have some sort of a paper trading account before you start to invest with real money. Why is this? It is because you are going to have to learn how to trade and you do not really want to lose your own hard earned money to do this.

1. You Don’t Risk Actual Money

Of course the biggest advantage/disadvantage of a paper trading account is that it is not real money. If you trade on your paper trading account and lose it all on one bad mistake or make a series of bad mistakes and end up losing real money it will not be as bad because you did not actually lose anything. The only thing that you actually lost is fake money.

In other words you gained a learning experience without risking real money to do so.

2. Test New Ideas

A second reason why you would want to open up a paper trading account is to simply test new strategies. Even if you have experience in the market you still need to test new ideas here and there and figure out new things. Opening a paper trading account allows you to experiment with new ideas without risking real money on “experiments”.

3. Gain Experience

The third reason why you would want to open up a paper trading account before you open up a real money account is to get some experience and understanding of the market. You may very well find out that the market is not what you expected it to be.

Unless you have somewhat of an understanding of how then stock market works and what it takes to be a good trader you will probably not fair too well. You will be better off paper trading beforehand.

For more on Practice Trading Accounts or other stock market information visit Shaun’s site on the stock market basics

categories: paper trading,stock trading,trading,stock market trading,stock market investing,stocks,stock market,investing,investments,invest,wealth building,finance,personal finance

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Article Citation
MLA Style Citation:
Rosenberg, Shaun "Why You Should Have a Paper Trading Account First." Why You Should Have a Paper Trading Account First. 14 May. 2010. 21 Jul 2014 <>.

APA Style Citation:
Rosenberg, S (2010, May 14). Why You Should Have a Paper Trading Account First. Retrieved July 21, 2014, from

Chicago Style Citation:
Rosenberg, Shaun "Why You Should Have a Paper Trading Account First"

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