Last Updated on July 26, 2024
There are many ways to practice your trading strategies. The options include paper trading accounts with retail brokers and even funding programs such as Earn2Trade’s Trader Career Path®. On paper, trading on virtual accounts should allow you to perfect your trading skills before moving to a live account. However, pulling that off in practice is easier said than done.
Researching markets
In theory, many trading strategies are applicable across different markets. So whether you are looking to be a futures day trader, hedge against stock positions, or take medium to long-term forex trades, there are plenty of opportunities. However, before you even begin to look at how to practice your trading strategy, you need to research your chosen markets. We guarantee once you begin looking at futures, options, and equity markets in detail, you’ll be hooked. For the purpose of this article, we’ll mainly focus on futures.
You may be itching to open that paper trading account or even take the opportunity to try and secure a funded futures trading account. However, it is crucial to control your enthusiasm and take a disciplined approach to trading. Start doing your research from day one. Benjamin Franklin famously said, “By failing to prepare, you are preparing to fail.” Those words have never been more apt than for the financial markets.
If you’re looking for a good asset to start learning about, consider one of the most popular and most liquid futures markets, the E-mini S&P 500 futures contract.
The psychology of trading
The psychology and the mindset of individual investors may suit specific markets. Just because you don’t have a “feel” for the equities market does not mean that you cannot be a successful futures trader. Over time, you will develop a feel for markets and investment opportunities. However, your feelings should never override your sense of reason. Usually, the choice to place a trade is based on a combination of both cold hard facts and a sharp intuition honed through extensive experience. However, the moment you let yourself get too emotional is when your instincts start interfering with your ability to make sound decisions. It’s an easy way for traders to put themselves into a bad situation.
Finding the right trading strategy
Each trader will have their particular twist on a trading strategy. These amalgams will inevitably involve elements taken from other traders or even completely different approaches to investing. You may even have a favorite futures mentor or several websites that you follow regularly. It is essential to find the right trading strategy for your personal goals and mindset. There are too many different trading strategies and iterations thereof to make any kind of comprehensive list. However, it might help to look at a list of some of the most widespread ones:
- Pullback trading
- Trading the range
- Breakout trading
- Fundamental trading
- Buy and sell interest
- Trend following
- Countertrend trading
Even reading the above trading strategy descriptions gives you an idea of which might best suit your trading psyche.
Discipline is the key
When testing your abilities on a virtual trading account, it is vital that you treat each trade as if you were placing it on a live account with real money. Many people approach virtual trading accounts with a degree of flippancy, often not looking to take it too seriously. However, jumping from approaching trading with relative casualness to being completely serious and putting real money at risk is a huge leap. Practicing strict trading discipline at all times will help you stay consistent when you make that switch.
The Trader Career Path® funding program uses live market data with no delays. Its rules are also based on risk management principles used by professional traders. For all intents and purposes, you are incentivized to behave as if you were in a live market. You should still feel the adrenaline, the fear, and the greed. However, successful futures traders learn to discipline themselves. They can step forward into the market when needed and step back if further consideration is required.
Addressing those blindspots
There are numerous factors to consider when looking to switch between virtual trading and live market accounts. First, you must use the virtual trading platform to identify and address any blind spots. We all have them, the temptation to trade in dull markets, closing a position and then feeling the need to invest immediately, and more.
Trading for the sake of it
When looking to practice your trading strategy, it is essential not to place trades just for the sake of it. Those quiet lackluster moments in a trading day when you are itching to enter a position, but there’s nothing that fits your strategy. These are the moments when your funds are most at risk. When you get complacent, it’s easy to make the wrong move and pay the price.
Losing focus
If you find that you are more alert, clear of mind, and more likely to make sound trading decisions at particular times of the day, focus on these periods. Even though you are trading on a paper trading account, you do not need to trade every hour of every day. If you feel your focus is waning, you are diverging from your preferred trading strategy; take a break, take a nap and re-energize yourself.
Revenge trade
Even the best futures traders in the world can sometimes suffer from the psychological trap known as “revenge trading.” It’s that moment when your ego takes over in place of reason, and you double down on a bad trade. While trying to make up for a trade that went wrong, you diverge from your chosen trading strategy and effectively “go rogue.” One way to avoid this type of incident is to think of each futures trade as simply buying and selling boxes. Don’t get emotionally involved, don’t look for revenge for failed transactions, and don’t lose your head.
Practice is the key
Between researching your chosen markets and signing up for that virtual trading account, you need to test yourself and practice your chosen trading strategy. Many people analyze chart patterns; others look at the fundamentals, while some prefer to react to events in real-time. Even if you decide to choose chart signals as your chosen trading strategy, there is nothing wrong with researching fundamentals and trading events in real-time. The more well-rounded your knowledge of the markets, different techniques, and different approaches, the more grounded your approach will be.
Learn different approaches to risk and return technical and fundamental trading, and use this to your advantage. It is also important to note that genuine traders practice their strategy repeatedly in their minds. Yes, virtual trading platforms with real-time prices are great, but honing your skills and approach to investment requires a focused mindset.
Backtesting
One of the best ways to quantify your trading skills is to analyze your preferred trading strategy against historical market trends. This will help address your approach to risk and return and highlight areas of strength and weakness. You may find that a particular strategy doesn’t fit your trading psyche. If the cap doesn’t fit, don’t wear it!
The subject of backtesting is a fascinating one for so many different reasons. One of which is the tendency for traders to pick and choose “successful” timescales, effectively finding trades to create preferred results. Whether based on live trading or trading on a virtual account, you need to be honest; otherwise, how else will you improve?
The Trader Career Path®
Here at Earn2Trade, we offer would-be traders the opportunity to test their skills on a virtual trading account using real-time data. Our Trader Career Path® has proven to be extremely popular, creating a stepping stone to third-party fully funded trading accounts. Start your futures trading career with an evaluation on a $25,000, $50,000, or $100,000 virtual account. Once you pass and receive your funding offer, your capital can be increased to $200,000–$400,000, depending on the selected plan. Prove your skills over a minimum 10-day trading period, and the world is literally your oyster.
Many candidates who sign up for the Trader Career Path® produce impressive results right away. However, quickly increasing your account balance alone does not necessarily indicate a successful long-term performance. It’s your trading strategy, the perceived risk/reward ratio, and trading discipline that allow you not just to build up your account but also protect your profit. Our proprietary trading partners are looking for traders who will be here today, here next year, not here today, and gone tomorrow.
Have you got the discipline to stick to your trading strategy? Can you keep your mind while all about you lose theirs? If so, you may be on the road to a fully-funded futures trading account.
