Simulated Futures Trading

Written by Jacey Harmon
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Golfers are always working on their swing. In fact, there are countless books dedicated to teaching the golf swing. Golf courses dedicate a portion of their property to practice facilities. This allows golfers to practice sound swing techniques and become better golfers. Unfortunately, the futures market does not offer any such practice facility. One can not place a "practice" trade with a futures exchange to test an approach.

Practicing Futures Trading

There is a way traders can practice futures trading, and it is called "paper trading." Paper trading allows traders to test theories and strategies without risking capital. You approach a paper trade just as you would a real trade. In order to benefit from such practice, you must make it as realistic as possible.

To accomplish this you need to take into consideration everything that you would consider if it was a real trade. You need to take into account your financial resources, risk tolerance, and amount of time you are willing to dedicate to trading. It wouldn't make a whole lot of sense to practice a trading strategy that didn't fit your resources and risk tolerance. That would be like a golfer practicing a slap shot.

You will need a spreadsheet or other recording device to track your trades. You need to have a source of pricing information as well. Delayed quotes can be easily obtained through futures exchange websites. If you are planning on using real-time quotes when you trade for real, use them when you practice. Practicing gives you valuable risk-free experience. It also lets you test the validity of a trading strategy you are interested in.

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