Paper Trading Stocks and Option

Introduction

A lot of people want to learn how to trade stocks and options but don’t necessarily know where to start. For this, I recommend starting a program called Think or Swim. It’s managed by TDAmeritrade and is an excellent place to start. You will have to create an account which actually will give you two accounts, a paper account and a live account. The live account will only work once you place money in your account but the paper account is where to start.

Now, you will be tempted to say, hey, let’s just start right off the bat and start trading real money but I suggest to not do that. It takes time to learn how to do anything including trading stocks, options, ETF’s, commodities, or foreign currencies. I actually paper traded for half a year before I started trading real money. It’s like learning how to drive; some people can hop in a car and it’s natural while other’s take awhile. Now, the thing is, if you were not trained how to trade or have practice trading, you may actually pick up some very bad habits. It’s frustrating to trade paper (fake) money but the thing is, it’s a lot easier to lose fake money than real money.

Setup

Now head over to thinkorswim.com, create an account and install ThinkOrSwim (TOS). The trick here is when you get your account, place a reasonable amount of starting money in the account. It never made sense to me to start with a $100,000 account if realistically, you can only trade $1,000 to $10,000 when you actually start. The idea here is of course, start with what you expect you’ll be able to commit to trading.

As with all other things, YouTube is a great option to learn the in’s and out’s of TOS. Unfortunately, there’s so much behind it that I can’t cover it all in a blog post. It’s just a good place to start trading, learning how to add indicators, oscillators, and seeing how your trades pan out.

Ready to Trade

Now, once you are ready to trade, here’s the thing. You have to consider fees, fees make up the trading world. It can make you or break you. If you have read my cryptocurrency blog, I did mention about how Coinbase charges huge fees in comparison to their pro accounts which was much less. So on to TOS, don’t get me wrong, I trade on here too but… again, fees are always on the back of my mind. Now, you question, who actually build TOS? Well, interestingly enough, the man who built TOS sold it to TDAmeritrade and went to build his own brokerage named TastyWorks. He has a channel called TastyTrade which teaches people how to trade. Now if you head over to TastyTrade, you can create an account and you can trade off their platform. The difference in fees can be seen here: https://investorjunkie.com/stock-brokers/compare/tastyworks-vs-tdameritrade/.

Use One For The Other

Now, truth be told, I actually use both platforms. I like to use TOS to chart and analyze and then hop over to TastyWorks to place the trade. TOS has some very neat tools like the Risk Profile to analyze trades or to do thinks like option synthetics.

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