Paper Trading And The Transition To Real Money Trading

Paper Trading And The Transition To Real Money Trading

Author: Barry Lutz

 Paper trading is widely discussed regarding its merits, and whether it is of value to a trader as they try to make the transition to real money trader. One viewpoint is that since paper trading is not real, the profits are meaningless, and are no indication of real money profitability. An opposite viewpoint would state that paper trading is an important step in the trader’s learning progression, and regardless of whether it is real, if the trader cannot ‘properly’ paper trade, then they will not be able to real money trade.

I began trading in early 1995, with the intentions of becoming an options trader; my first trading education was through an oex options teaching service. Besides options training, the service included ‘tape’ reading, trade management AND sp500 index futures trading – also included in the service was the prevalent attitude that paper trading was for ‘sissies’.

So I was a new trader, trying to learn and understand completely new concepts and ideas – what was called a trading method AND I was ‘practicing’ with real money – because paper trading was for ‘sissies’. What did I accomplish, besides a big draw down in my account? I quickly introduced to trading psychology and the related implications – something else I also knew nothing about. Losing money and a trading psychology ‘wreck’, both from the losses and thoughts like I was too ‘stupid’ to ever learn how to trade, became a combination which took me out of futures trading, and then unfortunately carried over into my options trading which I had previously been doing well with. I just couldn’t take it any more – I had to somehow start all over, or just quit for good.

Paper Trading Viewpoints

Consider: simulator fill prices are not real and won’t be attainable with real money. Even if this is correct, is it really an issue unless the trader intends to be a scalper, trading for very small profits, and thus each tick is critical? Granted, but shouldn’t a beginning trader be very selective, focusing on learning their method and the ‘best’ setups that method provides? This would be my viewpoint, and in this capacity paper trading fill prices are not an issue.

Consider: the trades are being done with no risk. No, there isn’t any financial risk in paper trading, but I actually haven’t met nearly as many profitable paper traders as one might expect. Why would this be the case if being able to trade without risk was such an easy thing to do? As well, what about self-esteem risk, and an attitude like – how can I be so bad that I can’t even paper trade? The risk feelings like these are probably greater than that of financial risk, and if they are going to surface, you would want to encounter them before trading real money. As well, even if the issue was only one of financial risk – wouldn’t you want to begin with the confidence of knowing that you were paper trading profitable? It would be hard to imagine a losing paper trading being able to profitably trade real money.

Consider: there is no emotion involved with paper trading. I was in our chat room watching a paper trader post their trades in order for me to give them feedback, and I noticed that one of their specific plan setups wasn’t done. When I asked why, the trader told me that they were ahead for the day and didn’t want to risk those profits. But the profits aren’t real – how can you not take a ‘base’ method setup when paper trading – isn’t that the point? Would you be in agreement, that if paper trading profits could be viewed in this fashion, that it has the ability to become very real and thus emotional to the trader? I would suggest that this is related to paper trading really not being ‘so easy’, and as mentioned above, self-esteem risk can be very emotional.

Click Here To Go To Part 2

This article was added on: April 16, 2006.

About the Author:
Barry Lutz has been trading, as well as teaching others to trade, since 1997 through his firm Tactical Trading, LLC.

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Wedding Loans-Celebrate The Occasion With A Cheaper Loan

Wedding Loans-Celebrate The Occasion With A Cheaper Loan

By Andrew Baker

 A wedding is always a very special occasion in any family. It’s a celebration of joy that brings many relationships together. To make the tying of knot memorable, however, the financial aspect of the big event becomes all the more important, as otherwise things may not go in accordance of the festivities. This is where wedding loans come to the fore. Weddings involve a number of items such as reception, hotel, photography, wedding cars, honeymoon to spend on and one never knows where the expenditure is going to last. If taken wisely, a wedding loan takes care of all the financial needs. One common feature of almost all wedding occasions is the urgency of money. You may think there is enough money to meet the requirements but when you sit down to chalk out a plan, you find that expenses will go way above then were thought to be initially. This is because cost of everything including services has escalated by the time wedding is finally planned. But all the financial requirements, big or small, for a wedding are easily met through availing wedding loans. There are two ways one can get a wedding loan—secured and unsecured wedding loan. Generally it is the secured loan that is given preference due to its many advantages. If you have a property such as home, car or even savings account and willing to put any of these as a collateral to the lender, getting wedding loan becomes easy. The collateral assures the lender that his money is safe and the borrower will make the repayments in time. Once the lender’s collateral requirement is satisfied, the borrower is in a stronger position of not only asking for a larger amount but also for lower interest rate. The loan amount for wedding usually ranges from £1000 to £25000, which caters to most of the needs. If the loan is required in excess to this range then the lender would like to go for evaluation of the property placed with him as collateral. A higher value of the property may ensure greater amount of loan. Interest rate on secured wedding loan normally remains lower and at reasonable level because of the social aspect of the occasion. The borrower, however, is in a better position to demand a lowered interest rate when his collateral is of higher value. Wedding loan can be availed for a period of 15 to 30 years and the installments are paid on a monthly or quarterly basis. Lenders approve wedding loans quickly due to the urgency involved in it. In most of the cases the borrower gets the loan within 24 hours. However, the lender may take his time in approving the loan in case the borrower offers no collateral. Such unsecured wedding loan is normally asked by tenants or partly employed people. They too have an access to the loan but with a likely disadvantage. With no collateral offered by the borrower, the lender may offer only a smaller amount and that too at a higher interest. These people can avail desired amount at lower interest rate if their credit record is fine and have financial capacity to repay. You may require the money immediately; still instead of rushing for the loan it would be beneficial if you compare the interest rate of different lenders online. This enables you in choosing the interest rate that suits the budget. Wedding loan is perhaps the easiest to avail; still it is a big money. The loan must not turn into a burden. Borrower should search around for better terms of repayments, as the cost involved may be quite high.

This article was added on: April 16, 2006.

About the Author:
Andrew baker has done his masters in finance from CPIT.He is engaged in providing free,professional,and independent advice to the residents of the UK.He works for the Secured loan web site loans fiesta for any type of loans in uk,secured loans,unsecured loans,wedding loans.

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Do You Own Bonds?

Do You Own Bonds?

By Thomas Mullooly

 The better question might be: Why do you own bonds today?
Lately we’ve seen more damage done to bond accounts than any time in the past few years. I’m warning friends and foes alike, if they own bonds in their accounts here in the spring of 2006, be prepared to see some serious deterioration in their monthly statements.

So, what’s a girl to do? Well, in our practice, we’ve been avoiding bonds for two years now. That was when bonds gave a relative strength sell signal. We moved a great deal of money that WAS in bonds into laddered Certificates of Deposit (CD’s). We knew from our experience that when bonds gave a relative strength sell signal versus the overall market, bonds in general would not do well.

And bonds would likely be a lousy place to have money invested.

Keep in mind that relative strength means “how is your investment performing compared to the rest of the market?” When an investment gives a relative strength buy signal, it is typically rising faster than the overall market.

But when an investment gives a relative strength SELL signal, this usually means this group can fall farther…and faster…than the market overall. Bonds gave a relative strength sell signal two years ago.

Now, let’s get clear on something! A relative strength sell signal implies market UNDER performance. That doesn’t mean the investment will lose money! It doesn’t even mean the investment will go down in value. Relative strength sell signals mean the investment will not perform as well as the rest of the stock market.

So what has been happening these last few weeks with bonds just confirms what the relative strength charts have been telling us for two years. That message has been: do your very best to avoid investments where there are relative strength sell signals. Your performance could improve significantly by just taking a pro-active step like that!

Now here is why so many will lose money

I keep harping on this because there are literally hundreds of thousands of investors in programs like 401k plans with money in bonds. Every week, these folks mindlessly invest a portion of their paycheck into some asset allocation model, geared for the day they retire.

In fact, those investors ages 50 and over that have money in “Lifestyle Funds” in their retirement plan may really be in for a surprise. You know these funds…available today in so many retirement plans…all you need to do is pick the fund that is closest to your approximate retirement date, and the fund manages the asset allocation itself! Sort of a “set it and forget it” plan.

Well, they got the “forget it” part right! See, as you get closer to retirement, these plans automatically move more and more of your money into bonds. It’s done automatically, based on your age and how close you are to retirement. Folks as young as 50 years of age are seeing more than 50% of their money moved into bonds. They could truly get crushed if rates continue to rise. Because as interest rates rise, bonds usually drop in value.

And like they say on late-night TV “but wait, there’s more!” If you have money set aside in a 529 plan, so Junior can attend college in the future, watch what happens to the asset allocation as Junior starts approaching college age. These funds often downshift…”for safety and less volatility” into bonds.

Oh! Don’t forget that there are many, many, MANY investors who use a computerized asset allocation program to “balance” the rest of their investments. They place a portion into stocks, a portion into bonds and bond funds and some into cash. When the markets are unstable, many investment firms will recommend clients shift a portion out of stocks and…into…you guessed it…bonds!

So while you may not own any individual bonds, you (or someone you love) may have a TON of money invested in bonds. Or they may have money invested in stocks that are sensitive to changes in interest rates.

This article was added on: April 16, 2006.

About the Author:
More Details about Investing for retirement here. Thomas Mullooly, President of Mullooly Asset Management, works one on one with individuals so they can regain control of their investments. Tom’s popular email alerts help folks to reduce the risks in their portfolios. To learn how to stop making simple investing mistakes and to sign up for Tom’s email alerts, visit, today!

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Loans Can Help You Make Money

Loans Can Help You Make Money

By Bob Benson

 Did you read this title and thought to yourself, “Is it a trick? Is it a scam?” Let me assure you that it is not a trick and it is not a scam.

It is very real. What is it, you’re asking? What crucial knowledge am I lacking to help me borrow money to make money? Here it is:

It’s an age-old investing strategy called leverage. Leverage is using a little force to generate a big motion. Investment gurus have been doing it successfully for years in margin accounts to borrow stocks, make money on them, then sell them. The difference in price is their income.

But this is not a crazy investment scheme. It’s a tried and true method of investing that you’ll feel completely at ease with. And if you own a home, you’re already doing it!

When you bought your home, you paid a certain amount for it and although you have been enjoying it over the years, you (like many other people) probably hope that your home will increase in value so when you sell it you’ll make money. Who doesn’t want to do that?

So here’s where a secured loan comes in. A loan, when used to improve your home, can help you increase the value of it. And often, the overall value of your home increases at a greater rate than the amount of the loan! That’s great news. And that’s leverage!

So you should get a secured loan and build that addition, put on a roof, get new windows, or give your house a paint job. Whatever you decide to do, you’ll be helping to increase the value of your home, which is an investment you can enjoy until you decide to sell.

And a secured loan lets you do that inexpensively. This is because a secured loan is a loan that uses the guarantee of an asset to help you secure a loan. When a lending institution is deciding whether or not to give you money, they look at the potential risk they will take. If you have nothing to offer them but your credit rating, the risk is higher than if you have a home, a car, some stock certificates, or some art. Anything of value will help them reduce the perceived risk they feel because they can potentially take the asset and earn back their money by selling it should you not be able to make payments.

So if you want to make money on your home, and most people do, you should consider getting a UK secured loan to help you leverage. Get the loan, improve your house, and sell it for a greater amount.

This article was added on: April 16, 2006.

About the Author:
Jeff Lakie provides Uk homeowners with a free loan quote service.

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IRA Distribution Mistakes-How to Blow your Retirement Money

IRA Distribution Mistakes-How to Blow your Retirement Money

By Larry Klein

 With the population aging and over 4000 people a day being forced to take IRA distributions (such distributions are mandatory by April 1 after reaching age 70 1/2), mistakes in taking IRA distributions can total in the billions. Yet, because people have had no prior experience, mistakes are rampant. Here are 4 common IRA distribution mistakes to avoid.

IRA Distribution Mistake #1
Every IRA owner can name a beneficiary and “stretch” the IRA for maximum tax deferral over the next generation.

Informed IRA owners believe that the following will occur with retirement assets they do not use during their lifetime. Say they leave $500,000 of retirement assets to heirs. They believe junior will make small withdrawals each year (required by IRS) and at 6%, the account with a 42-year-old beneficiary, will generate $2.5 million during junior’s lifetime (IRA distributions plus ending balance at life expectancy). This sounds great but it may never happen.

There are at least 2 ways that the stretch IRA can fail. The first way is because of a custodian with rules that do not permit lifetime IRA distribution payments. This is particularly common in qualified plans where the rule may be that “all IRA distributions to beneficiaries are to be completed within 5 years.” Since no one ever reads that fine print for their qualified plan, they have no idea that a fast IRA distribution will be forced to non-spouse beneficiaries.

The other problem is the beneficiary. Just because mom and dad have the good sense to understand tax deferral does not mean that junior will comply with this wisdom. The minute junior finds out that he can close the IRA, distribute all the money and buy a Ferrari and Lamborghini at the same time, he does so, pays a fortune in taxes and blows the money to have fun.

The way to control this is to have leave retirement assets in an IRA trust. In a trust, mom and dad can control how the heir gets paid.

IRA Distribution Mistake #2
I am leaving my IRA to my wife. I only have one son and he can do with the IRA what he wants when we are both gone. My situation is simple. When most people select beneficiaries for their IRAs, they select their spouse or their children. As simple as this seems, it can create problems. Consider these two scenarios.

When a plan owner leaves an IRA account to the spouse, it inflates the spousal assets. And when the spouse later dies with an estate exceeding $2 million (the estate exemptions limit in 2006), they pay estate tax. By leaving the IRA to the spouse, the deceased spouse has created unnecessary estate taxes by making the survivor’s estate larger.

So instead, they leave the IRA to the son. But as indicated before, this leaves the son total control over the asset. He may withdraw the funds immediately and decide to buy a mansion jointly with his spouse (who was despised by mom and dad). To complete the misery, let’s say that the following week, the daughter-in-law files for divorce and gets to keep the mansion in the settlement. Mom and dad just gave the despicable daughter-in-law a mansion with their IRA money. Even in death they have money problems.

To avoid the above two scenarios, they decide to leave the IRA to their “estate.” Many attorneys advise that you never leave a retirement plan to your estate. Because at death, the IRS requires the account to be rapidly distributed rather than enjoy the potential stretch over the lifetimes of beneficiaries. Additionally, the IRA will now be a probate asset and subject to claims of creditors.

So what do rich people do to avoid the three gloomy scenarios above? They leave their IRA in a trust and appoint a trustee like an accountant, financial advisor, attorney, etc., a person that has good common sense and tax knowledge. Within the boundaries of mom’s and dad’s wishes and IRS-required minimum distributions, the trustee will determine who among the beneficiaries will get the IRA and how much they get. The trustee will determine how quickly this IRA money gets distributed over and above the annual minimum amount of required IRS IRA distributions. Mom and dad can even give very detailed instructions. For example, they could dictate no IRA distributions for purchases of homes with the despicable spouse. Or if the money is to be used for education they may stipulate that up to $15,000 a year can be distributed, or to start a business up to $25,000 can be distributed, and they can go on and on with such instructions.

IRA Distribution Mistake #3
The IRA owner has checked with the custodian and yes, they do allow lifetime distributions to non-spouse beneficiaries. Additionally, their two unmarried sons understand tax deferral and there is no need for a trust. Everything is okay.

Many plan owners don’t consider what happens if their beneficiary pre-deceases them.

Let’s say you have two sons, Jack and Tom. Your name them as primary beneficiaries for the IRA distributions by completing an “IRA Beneficiary Designation Form” at the bank or securities firm.

Jack and Tom each have a son. Jack’s son is Bob. Tom’s son is Dan. So you write the grandson’s names on the line of the beneficiary designation form that says “secondary beneficiaries.”

If Jack dies before his parents who own the plan assets, they probably think Jack’s share goes to his son, Bob. Wrong.

It goes to Tom, because on the beneficiary designation form, there is no place to specify how the primary beneficiaries and secondary beneficiaries are related. There is no place for you to explain your intentions or write “per stirpes” to clarify intentions with respect to those beneficiaries. Those beneficiary designation forms with the bank or the securities firm are not sufficiently detailed to carry out your wishes.

At minimum, you should replace those forms with your own forms, called an “IRA Asset Will.” This can be inexpensively prepared by any attorney. And if the custodian won’t accept it, move your account to another custodian.

IRA Distribution Mistake #4
Failing to use IRA funds for charitable intent
If you want to leave even $1 to charity, do it from your IRA money. You can specify one or more charities to receive portions of the IRA and the heirs will thank you. When taxpayers leave heirs a dollar of IRA funds, the heirs will pay, for example, 35 cents to tax and have 65 cents left to spend. If the estate is over $2 million, heirs will also pay estate tax on this money and may have only 30 cents left from each dollar. However, when mom and dad leave heirs a dollar that is non-retirement money, heirs can spend it with no income tax. Therefore, heirs would much rather have “regular” money and not IRA money.

This article was added on: April 16, 2006.

About the Author:

Gain more knoweldge about managing your IRA from Larry Klein, CPA/PFS, CFP at and financial advisors can download an entire library of artricles at

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Forex, An Alternative Investment Vehicle, Part 2

Forex, An Alternative Investment Vehicle, Part 2

By Ference Kish

 In the first part of this article I have outlined 10 good reasons why Forex (Foreign Currency Exchange Market) is an excellent investment opportunity for anyone to make money, online, even with very little start-up money available. In this part I will explain how to get started.

If you want to make money with Forex, online, you have to think of it as a business and treat it as such. You have to get serious about it and you need to get organized. Initially, you have to ‘go to work’ just like you would in a conventional business. Set aside some quite, work hours for yourself, in a quite corner of your house so you can concentrate on your business without any interruptions.

Also, as with any other business or trade, you have to train yourself and hone your skills, continuously. The Forex offers an amazing opportunity to make money, with little effort in record time, however, you have to know what you are doing and you do have to put in some work. Just as you would not allow your 10 year old kid to drive your fancy, expensive car, it would not be a good idea for you to jump into trading the Forex without learning how to drive this ‘vehicle’.

If you are a beginner spend some time on reading up on the Forex and perhaps find someone who is already trading successfully. Ask them to mentor you or allow you to look over their shoulder. Once you have some idea on what makes Forex tick, you should open a demo account with one of the many reputable online brokers. This is the best way to learn what happens to your money and your account in the real world without actually risking any of it. You also have to develop good record keeping habits. It’s not a hard job to do it, you just have to be disciplined enough to keep up with it. Again, it’s no different from a normal business except that the rewards can be much, much higher in relation to the work you have to put in and of course you can do it from anywhere as long as you have access to the Internet.

So, here is a simple list of how to get started:
1) Setup a quite corner for yourself as a work-area,
2) You must have a reliable computer and reliable connection to the Internet, if you can afford a second connection to the Internet with a different service provider than it’s even better (I’ll explain why in a future article). Also make sure you are comfortable and have plenty of light, a dingy, dark corner will soon dampen you enthusiasm,
3) Set aside some ‘quality’ time for you business the same time, every day in the beginning, you can spend less time as you get more experienced,
4) Find out more about how the Forex works, train yourself and find a mentor who is already trading successfully,
5) Open a demo account with a reputable online broker,
6) Start keeping a record of everything that you do and why you do it. The easiest way I found to do this is with a simple Excel Sheet or something similar,
7) Analyze the results of your actions and see how they affect the balance of your demo account,
8) Make backups of all your records, I can’t emphasis this enough, it’s really, really important,
9) Revise your actions and record keeping methods then go back to step 4.

It may sound a lot, however, most of it is common sense and applicable to any and all businesses. It is critical that you keep a record of everything that you do, whether it’s changing your chair or the lighting, a new trading platform. Whatever you do make sure you have a record for it and an indication of how, if at all, it has affected your trading ability. I have records of everything I do, not just for Forex, but for all of my other businesses going back 7 years! Now, that’s a lot of record keeping but with computers it’s real easy.

I think we have covered a lot in this second part. I’ll go into more details in future articles. Meanwhile, go through this article and start putting my suggestion in to action. If you have any questions about what I’ve said above or need information on anything related, just refer to the resources and links at the end of this article.

Wishing you success,

This article was added on: April 16, 2006.

About the Author:
Ference is fanatic about currency trading. When not gazing currency charts he spends his time searching for new investment opportunities. Visit one Ference’s sites at:

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