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Strategies & Market Trends : The Final Frontier - Online Remote Trading -- Ignore unavailable to you. Want to Upgrade?

To: TraderBoy who wrote (4665)	7/11/1998 11:41:00 AM
From: _aj	Read Replies (1) \| Respond to of 12617

Traderboy, I think your method is the best for paper trading. However, be aware of the following: 1. Twenty seconds is usually enough time to get in or out UNLESS a stock is moving quickly. Consider your paper trade valid unless you are making the decision to buy just as it begins a fast run-up. 2. Are you planning to use market orders to buy? This is (IMO) very risky...something I never do. If you use a limit soes order (for example) to get in, it is not just a question of time. If the ask moves before your order is executed it will be cancelled. You will have to decide whether to increase the price and re-enter. You can end up "chasing" the stock, being too late at each offer and not getting in at all. 3. Do NOT underestimate the hesitation you will feel when actually pulling the trigger vs. making a paper trade....four or five seconds of extra thought could cost you the trade. Do NOT underestimate the effect of having real money on the line when it comes time to decide to stay in or get out of a trade. For example, you may coldly decide to hang on for a bigger move when you are up 1/2 but when that's $500 of real profit you don't want to lose it. 4. In your paper trading do you go through the process of choosing an entry and exit method based on the current LII situation? You must be ready to decide to go with soes, isld, or whatever offers the best chance to get the trade done. For example, you have just bought a stock at 20 and the bid has risen to 20 5/8. You think the momentum is slowing and you choose to exit. However you note that there are only 2 market makers between 20 1/2 and 20 5/8....the rest of the bids are isld, tnto, and inca. You have to choose not only when, but how to move. You must go through this thought process in your paper trading. Therefore, if you enter a simulated isld buy, make sure that the shares are still showing on isld 20 seconds later. If the order was soes make sure there is still a market maker at the price 20 seconds later. 5. Consider partial fills in your paper trading. Isld gives you partials frequently and you can easily get a partial on soes as well. On a market soes sell you will just get the lower price for the balance of the shares, but in other situations you will have to re-enter the trade to complete it. This entails more time, more price movement in the stock, and additional commissions. Don't get me wrong....paper trading is an essential start. Just don't make the mistake of assuming it will work the same way when actually entering trades.