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Why paper trades mean nothing - only the real thing with real money equates success

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  • Why paper trades mean nothing - only the real thing with real money equates success

    Been doing extremely well this week trading (I do both trading and maintain long term holds on stocks). Today was my "worst" day – made only six hundred dollars today on trades.

    Why did I make so little today? Because of the difference between a REAL trade and a paper one.

    Today shorted a 1000 shares of CMG @ 688. I put in the buy to cover at 687.5 but it went all the way to 689, so I changed it to 687.8 Then after a while as it kept rising I panicked and put it in at 687.9 figured get the hell out at least with a profit, which at that point I wasn't looking at any profit at all, just a big loss.

    Buuut…later in the day CMG collapsed to as low as 685ish.

    Today shorted 1000 TSLA at 198.6 covered at 198.45 Was looking iffy. But, later in the day, TSLA plummeted to as low as 195ish.

    A trading partner of mine, who lately has been trading nothing but paper (imaginary) trades, shorted 1000 shares of NFLX on February 13, 2015. Well, NFLX rocketed after that, getting as high as 486 on February 26, 2015.

    Well, to quote Fat Albert (and the Cosby Kids) Nobody (except nohhhhh-body) would have held that short for weeks like that. One would have had to bail on it, if one had held it even overnight at all. But BECAUSE it was a “Rich Uncle” stock game
    Rich Uncle | Board Game | BoardGameGeek
    trade, my friend didn’t care and just kept holding it until it finally went under (NFLX started to go down after March 3, 2015, and got as low as 418ish on March 8, 2015). Never would have happened like that in the real world, if one had dared to enter a trade like that at all, with real money.

    Similarly, my above trades – if I had been trading on paper, I would have just held them until the end of the day looking for, as my friend would call it, “tankage.” But BECAUSE real money was involved - and a lot of real money (at 1000 shares, a movement of a few bucks means thousands of dollars), I got nervous and took a small profit right after the stock came back after it had been moving against me.

    I recall that my friend once shorted AAPL and covered for like ten cents or something like that. That’s the real world. Only in the paper trade world would anyone (other than perhaps me) have the gumption to keep holding a loser until it came back, or violate the “Golden Rule” of taking a small profit once a losing position came back to a plus (even I follow that one rigorously, as noted above).

    As well, imaginary casino betting means - nada. With an imaginary infinite bankroll a person may keep doubling and placing absurdly high bets until finally back in the green. Try that in the real world!

    Learn it, live it, ACCEPT IT! Papers trades – mean nada.
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