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The Wisdom of Paper Trading
By: Rick Thachuk   Thursday, August 9, 2007 12:13 AM

2. Real-time execution of orders. Market orders should be filled at or close to the market price.

3. Current margin requirements. Current margin requirements should be used to calculate excess equity in the account, just as if trades were done for real.

4. Realistic execution of orders. Some orders should be returned as 'unable' and there should be slippage on stop order fills, just as if trading for real.

5. Account statements. Paper traders should be able to see daily account statements that show trades for that day, open positions, margin requirements and excess equity.

6. Cost for trading. It's easy to get carried away when paper trading and buy 25 or 50 contracts at a time. This is unrealistic for most beginners. There should be a real cost associated with paper trading to curb this impulse.

7. Educational support. You will have questions when paper trading and you will make mistakes. For the exercise to be worthwhile, you need to be able to rely on educational support from a knowledgeable staff.

8. Flexibility. Most people can't take time out of their day to paper trade. You should be able to paper trade in the evening and preferably, over the computer. And you should be able to paper trade for as long as you wish.

9. Freedom. There should be no subsequent obligation to trade for real. After all, if the paper trading reveals a significant short-coming, then the last thing you should do is commit hard-earned dollars to the program.

Assuming that the above conditions are met and provided that the trader acts as if the trades are for real, then paper trading can be an excellent learning tool. World Link Futures has perhaps the best paper trading program for beginners within the entire futures industry. In fact, opening a Real Live Paper Trading account is the next step recommended after you finish reading through this Beginner's Guide.


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