Do you still paper trade alongside your real account? If not, we really think you should.
Paper Trading
Here’s why: Just because you are trading real money it does not mean you need to stop learning and trying out different strategies. As a portfolio margin trader, you are an experienced trader. We understand that. So we know that the benefits of paper trading may seem marginal. However it’s worth your time to experiment with alternative approaches and even hone in on filling the holes in your existing PM trading plan.
In our opinion, the best way to do that is through paper trading. This is how we recommend using paper trading: The first way is to Learn New Strategies.
Let’s say you are a huge fan of Ratio Spreads. You place ratio spreads in your portfolio day in and day out. Then one day you hit a rough patch in your trading and you realize you need to include additional strategies to keep up with the changing market.
So then you go to paper trading to regain your confidence and to learn about different strategies like SJ Options methods that will work for the current market.
The second way to paper trade is Base Lining.
This is a great technique for all portfolio margin traders that is not so obvious. The idea is simple. When you create a spread trade in your portfolio, create two or more identical trades in your paper trading account at the same time.
With one spread in your paper trading account, never touch it. This spread becomes your baseline.
The other spreads you setup in your paper trading account can be used to make experimental adjustments along the life of the trade which you can compare to your live account.
This is a nifty way you can test different strategies while having a baseline. You would use this approach especially when you are the type of PM trader that is often unsure and constantly second guess yourself. A perfect example would be a trader that isn’t certain what ratio to use for ratio spreads or ratio backspreads.
Learn more about ways you can improve your options trading today at San Jose Options
