Crypto,  Trading Lessons

Paper Trading is Extremely [Redacted]

Paper trading is some of the dumbest shit you can do.

Extreme stance? Perhaps. But I have good reason for holding this belief.

It’s a piece of advice I always see peddled to aspiring newbie traders, especially in tradfi.

You should start with paper trading! It’s a great way to learn how to trade without risking any of your hard-earned money!” 

And that last bit is where it all falls apart, “without risking your money”.

It is IMPOSSIBLE to learn how to trade without slapping your money down on the table, and getting some actual skin in the game.

Any dipshit can buy support and sell resistance when there’s no real money on the line.

Do you know why?

It’s because there’s no emotional weight involved.

When you’re paper trading, you don’t have to deal with the emotional turmoil of watching a position move against you, because it’s all fake money. If it goes to zero, it means nothing.

It doesn’t matter how “seriously you take it”, you’ll never truly convince your subconscious that you actually have something to lose… because you don’t. 

Your subconscious isn’t stupid. 

You also won’t deal with extreme fomo when a coin blasts off and everyone on twitter is hyping it. You know deep down that catching that move wouldn’t have actually put any money in your pocket, because you’re trading with some funky Candy Land money.

Not once will you be presented with the internal struggle between caution and greed after you’re up huge in a position. “Should I lock in these profits or let it ride? What if it just keeps going up? I’d have so much more money!”.

Those emotional battles with the self are what trading is all about. 

You can learn basic technical analysis over the course of a few weeks in your spare time. What differentiates those who can actually trade from the 95% who lose money, is the ability to navigate that roller coaster of emotion.

Paper trading, by its nature, simply CANNOT give you the opportunity to develop the skillset necessary to manage those heightened emotions and make the right decision in the face of them.

So, what’s the alternative?

Start with $500-$1000 and fully expect to lose it. Once you send it to your account, just assume it’s gone. 

This is your tuition payment.

By trading smaller positions with actual capital, you’ll still have to contend with those whirlwind emotions because your brain KNOWS this is YOUR money on the line. 

Fear, greed, uncertainty, doubt, desperation, arrogance; they’ll all come boiling to the surface when you trade with your own hard-earned money, even if the dollar figure isn’t anything crazy.

Putting money on the line and testing their hypothesis in the markets is the only way a trader can truly learn how to trade in any sort of effective manner. 

Will you make mistakes? Yes.

Will you blow up your initial account? Likely.

And if you do… start over with a fresh $1000. You learn this game by doing.

Read a few books on technical analysis and market psychology, and then get to work putting them into practice. (A few suggestions are The Candlestick Course, Psychology of the Stock Market, and Reminiscences of a Stock Operator)

I promise you, there’s no gold waiting for you at the end of the “educational courses” treadmill. The only person you’ll be enriching is the guy selling the course who probably isn’t even that great of a trader himself.

Get a solid understanding of the basics, and then start taking trades. As you find yourself with new questions along your journey, seek out the answers and add that newfound knowledge to your library of understanding.

Now go get some skin in the game.

Until next time, 


Leave a Reply

Your email address will not be published. Required fields are marked *