Welcome to Indian Share Market
Paper trading Practice for successful day trading
Daily we get lots of emails with questions like :- Any techniques for day trading, Any specific calculation for day trading, Any fixed procedures to follow, I am new comer and want to earn in day trading, I want to start the day trading, I made losses in day trading please tell me how to recover and so many questions on day to day basis.
Answer to these questions is paper trading practice.
Broadly speaking there is no any fixed calculation or technique to earn money in day trading.
Also there is no any specific technical indicator or charting to do successful day trading.
For successful day trading you have to combine couple of indicators to analyze the trend and strength of the market and specific stock.
So the bottom line is you need to have experience to do successful (profitable) day trading and earn money in share market and to start with you have to start with paper trading practice.
What is paper trading practice in day trading in Indian share market ?
In paper trading practice, a trader use pen and paper to practice trading in share market without actual using your money. How to do it is explained in following sub sections, So you need to do paper trading practice till you start making profits on paper and then you can plan to do actual day trading by using your money.
Please go through following subsections and understand and practice the day trading.
What is Paper Trading practice?
Paper trading practice is trading with the help of pen and paper without putting your money at risk.
This practice is very important because it makes you to understand yourself that how much you are confident of doing day trading and how much knowledge you have gained before putting your hard earned money at risk.
Important note - day trading without appropriate knowledge is very risky.
• What is paper trading practice and why it is required
• Its requirements
• Example to place Buy trade
• Example to place Sell trade
• Worst enemies of day trading
• Important notes of paper trading practice
Paper trading is very important for all new comers to day trading in share market but in fact it’s for all those who are still making losses in day trading and not earning sufficient money on day to day basis.
Day trading or daily trading or Intraday trading of shares is analyzing the market and specific share movement and buying and selling on daily basis is called as day trading. It is very risky and there are chances that you may lose all your money so do paper trading practice and if you get success in it for complete one month without losses then you can start trading with your actual money.
Day trading is totally based on analyzing specific share in comparison with the whole market (most probably with the nifty or sensex index) and then taking prompt and appropriate action. So day trading also involves your mental ability to act fast and take appropriate decisions.
How to overcome the mental blocks while doing buying and selling of shares especially in day trading then please visit at Important factors for day trading
Paper Trading Requirements
1. You need to open Demat and trading account. Try to get very low brokerage charges account. You can visit recommended
2. A computer with internet connection. Initially working in internet café will also do.
3. A notebook (called as paper trading practice notebook) and a pen.
4. Mind readiness (be patient, get ready to learn, do concentration only on trading).
Now let’s see how to start paper trading practice
Please go through following steps one by one
1. In paper trading practice you should do all those things that you suppose to do in actual day trading in share market.
2. Start your trading terminal, and start analyzing shares and whole market (most probably Nifty Index) and follow the simple
Rule called “Analyze, Wait, Watch and then Trade”
3. Following are few steps you have to work on:-
- How market is going? Like bullish (UP) or bearish(down) or range bound.
- Which are the stocks are in news? We daily publish market direction and stocks in news at this page
- Preparing list of top gainers and losers (yesterday’s and today) - We publish daily yesterdays list at this page
- Keeping close watch on any important announcements like company news, government announcement etc. The best way is to watch business news channel like Zee business channel, CNBC, NDTV etc
- Keeping close watch Asian market opening. These markets open before Indian markets and most of the time they affect Indian markets opening direction.
- Keeping close watch on European markets opening. It is also seen they these markets also affect Indian markets. These markets open around 1:30 PM.
In order to get success in day trading, trader need to keep watch on news because most of the time news affects the share price.
4. Another very important activity is to watch share price movement. What is the share price and how much rupee movement it does in a single trading session. keep watching them and write down what you see like by how many rupees or paisa the share prices move up and down in a single session.
It is very difficult to get idea movement of share prices in single day but as you spend your time in front of the trading terminal you will start realizing them.
Our experience - Prefer shares of high prices (above Rs 200) so that it becomes easy to book profits at faster rate as compared to share with low prices.
After following above steps for couple of weeks you can get idea to picks shares for trading.
You should few shares to buy and few shares for short sell.
Now let’s see how to place buy trade in paper trading practice?
Bought Bharati Airtel at Rs. 315,
Qty - 300
Selling at Rs. 317 (you may feel Rs. 2 is very less but you will come to know how it adds to thousands in our next training session)
stop loss trigger price Rs. 310.
Now the task is Wait and Watch that how your trade will behave.
(If you have done proper market direction study and picked bullish stocks then definitely your target will hit.)
Now you can make out yourself that if you win, you will get Rs. 2 as profit and if you lose you will lose Rs. 5.
Important note - your profit and loss depends on your trading decision. Don’t hurry or rush in doing trades.
You have to keep doing such trades on paper and keep watch trading terminal. The success will be considered when you will do profits every day for atleast one month without any losses then you are ready to start trading with actual money in your trading terminal.
How to place short selling trading in paper trading practice?
In short selling, first you have to sell and after the stock price goes down you have to buy it
Short sell Tata Motors at Rs 417
Qty - 200
Buy order at Rs 415 (please don’t feel that Rs.2 is very less but you will come to know later how it adds to thousands in our next training session)
stop loss trigger price Rs. 410.
Now the task is Wait and Watch that how your trade will behave.
Now you can make out yourself that if you win, you will get Rs. 2 as profit and if you lose you will lose Rs.7.
Very important note - If you do loss in your trade then don’t hurry up to cover the loss. Give some time and wait for right trade and then act. Please don’t ignore this.
At the same time check out your mental state like whether you are fearful (when price starts going down) or greedy (when price starts moving up). No need to panic but panic comes this is what you have to observe in paper trading practice.
Fear and Greed
Fear and Greed emotions are the two worst enemies for day traders. So stay away from these worst emotions.
This is where your mental decision control comes into picture and this is what you have to learn in paper trading practice.
Please go at How to deal with emotions in day trading to read how to reduce the impact of emotions on your trading activity.
“It is not possible for common man to overcome them fully but reducing some impact will prove miracles in life”.
And finally check out how your trade goes, whether you make profit or loss, how stock price fluctuates, how news affected the share price, which news affects which stocks, how any news impacts share price in which direction and lot more.
Try doing paper trading practice and keep doing it unless and until you become full confident and you feel that “yes, I can do it with actual money” then you can think of doing actual day trading.
Important notes of paper trading practice -
i. It is not possible to get success (profit) in single attempt, trader need to try for few months and if you get success then start trading with actual money or less try more and even if you don’t get then trading is not for you. Read why day trading is not for everyone.
ii. Success is all depends on your ability, how fast you learn to analyze the market and specific share, how fast you learn to reduce the impact of emotions like greed and fear and avoid panic in your trading activities.
iii. Don’t start doing actual day trading unless you get success in paper trading. Otherwise, you will end up in making losses
iv. Keep doing paper trading unless and until you start getting profits for one month without losses. If you are not confident then keep practicing until you get confidence and profit.
v. Check by analyzing different shares like low price shares, high price shares and check how fast and easy is to enter and exit from the trade. Everyone has their own trading qualities. It is very important for fast entry and exiting in day trading.
vi. If possible make notes of your experience and try to get as much as experience of the market and specific shares in paper trading practice.
vii. Do whatever you want to do on paper trading, feel all type of experience, do hundreds of thousands of trade, this is your learning phase and you are not risking your money so feel the experience of both profits and losses because once you start trading with your actual money then you have to do only specific and selected trade to generate profits.
viii. To get sure successes strictly follow “Analyze, Wait, Watch and Trade” strategy
The information provided on this website is for educational purpose and not to be considered as investing or trading advice.
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