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Page 49
that theoretical trades are made on a sheet of paper and graded to see how they would have worked out in real time in the market. The more seriously one paper-trades, the more one will benefit from the experience.
Paper trading should continue for at least two or three weeks and be conducted as if it were real. Some people need to spend more time paper trading, than others. You should allow for at least one week of supervised simulated trading. Accounting for profit and loss should be performed in the same way you would for real trades. Do not fool yourself. If you cannot paper-trade successfully, you are not ready to give up your daytime job or your money in order to become a trader. If you cannot shave balloons in barber school, you are not ready to use a razor on real people and spill real blood. A higher skill level and better results should come with practice and time. Paper trading, however, is a far cry from real trading because the emotions do not kick in. It is an excellent training vehicle, but not totally realistic because real money is not on the line.
The Start-Up Room
The next phase of your training should be a "start-up" room where inexperienced traders start trading with real money under the aegis of an experienced instructor. It is suggested that the callow trader be limited to a 200-share ticket (instead of 1000 shares) and receive a proportionately reduced transaction fee. We used to call our start-up room the "incubation room," the ''halfway house," and the "hatchery," but whatever the name, the key was to stimulate the sixth sense by trading with live ammunition. This sixth sense is extrasensory confidence and situational awareness relating to the market. Newborn traders, however enthusiastic, should not self-destruct when they trade with real money. You should be allowed to remain in the start-up mode until you feel you are ready to tradeas long as you remember that a trader's education is never over. A trader learns something new every day.

 
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