Tame The Paper Tiger First
Posted on: September 23, 2016, by : fadmin

I think new investors in the stock market should be required to spend 3-6 months just trading on paper, or pretend trading before actually using real money. Someone has said that they didn’t think it was the same thing and that people are going to act differently once real money is on the line, I don’t doubt that is true, but it can’t hurt to get experience in a safe environment before putting yourself in danger.

It’s like navigating a dangerous river. The have many things to worry about such as rocks, hippos, crocodiles, angry natives, pirates, large snakes that drop out of trees, and 1,001 hungry insects that want a meal and then a place to lay their eggs.

Trading in a practice environment can give you the time to learn as much as possible and avoid common mistakes like buying high and selling low, buying stocks at a 52 week low because “It’s got to go up, right?”, and so on.

Beginners may want to play a little with ETF funds. These buy and sell like stocks, but they are mutual funds with all the diversity that goes along with that. You can want the prices, wait for a dip in prices and then buy in. After that you can just ignore it or you can watch for two things: 1) Depending on what you buy you can get dividends. a few of weeks ago I bought 100 shares of  Vanguard REIT ETF. Right now it’s up 2% or $176 so if I sold I could make that much. But just a few days ago I got a dividend of $59.80 which I did not expect. If the price should go down you can just hold on to it since it should go up again at some point a single stock which may have less chance for recovery.

The nice thing about the ETFs is that you don’t have to worry about timing as much as you do with mutual funds. You can buy or sell at any point when the markets are open.

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