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It's Only paperMoney®: How to Practice Trading Without Losing

May 15, 2012

Pilots, product engineers and online gamers agree: computer simulation programs sharpen skills. Join their ranks by practicing trading with paperMoney.

You’ve heard it a thousand times:

“Practice makes perfect.” Reality is, traders (or traders in training) will never be perfect. Does that mean you should toss the idea of practicing out the window? Of course not.

Trading, and all investing for that matter, may hang as much on learning what not to do as what to do. With the thinkorswim platform’s paperMoney simulator, you can practice at your leisure and without putting any money on the line.

Log on to your account at Go to Trading Tools > thinkorswim. Then, download the platform to begin honing your skills and developing your trading mettle. For the most part, paperMoney looks and feels like the live trading experience. You’ll know you’re in a practice session because you’ll seePaper@thinkorswim in the upper left-hand corner of your screen.

Faking It Is Good

  • PAPERMONEY ALLOWS YOU TO TEST NEW STRATEGIES. Maybe you’ve just experienced a disastrous summer grill out and are determined to sell Live Cattle futures contracts after every rainy weekend. Or knock yourself out and buy options straddles on every social networking or biotech stock that crosses your path. Here’s your chance to prove to yourself that these strategies probably won’t work, instead of having your brokerage statement deliver the bad news.

  • PAPERMONEY LEAVES FINGERPRINTS. Grab your best Sherlock Holmes hat and look for evidence of what really happened in your latest black box trading strategy. The platform will allow you to easily retrieve key information for analysis. This isn’t your typical static data entry portfolio that can be found anywhere on the web. This is a living, breathing creature that’ll allow you to check the exact second, minute and day your trade was executed, cancelled, or replaced.

  • PAPERMONEY FIRES YOUR BOOKKEEPER. The idea of tracking your progress by keeping a trading journal certainly isn’t new. But with the old method you would have spent countless hours manually filling out computer spreadsheets or hunched over a spiral notebook with a pen and ruler. paperMoney details all your trades (including paper commissions) and will spit out data in the form of profit and loss analysis over multiple time periods: today, year-to-date, or since the trade was opened, for example. And if you’re having a tough time quitting your old spreadsheets cold turkey, you can even export paperMoney data into your preferred format.

  • PAPERMONEY PUTS INSPECTOR GADGET TO SHAME. As of mid-April 2012, there are 17 gadgets built into the platform. Need a calculator to figure out the return on risk of your credit spread? Check. Need the time and transactions of the stock you’re trading? Check. How about a scratchpad to remind you of your exit rules? Check. Even CNBC video feed to clue you in on the latest market-moving unemployment numbers. “Go Go Gadget” saves the trade again.

  • PAPERMONEY IS APP-TASTIC. Maybe your day job keeps you out in the sunshine. Perhaps you’re constantly out shopping for paper yachts with all the paper profits you’ve made. No worries. Grab your tablet or smart phone and download the app to manage your paper portfolio on the fly. The experience you gain while practicing with paperMoney is directly transferable to the real platform. You’ll build confidence and when you’re ready, you can apply your tested strategies in a live environment. So what are you waiting for? Start practicing.

FIGURE 1 You’ll need to download the thinkorswim platform. At the log in, you’ll connect using the paperMoney option.

Warm Ups

To start practicing, you’ll need to download the thinkorswim platform.

  1. Log on to your account at Then go to trading tools > thinkorswim.

  2. Next, click on the green button to download and install thinkorswim.

  3. At the thinkorswim login box, click on the paperMoney icon, not the Live Trading icon at the Connect prompt.

  4. Once logged on and connected, you’ll see a Home Screen full of familiar features offered on the state-ofthe- art live platform, including: a video tour of this page; news and ticker scrolls; a CNBC feed; buttons to set alerts and create charts; plus ways to share trade ideas with fellow swimmers.

You can also reset your paperMoney account at any time to return to your original settings. Go to Monitor Page, then Position Statement, click the blue dot next to your position and select Reset All Positions.

Even if you’ve already downloaded paperMoney, check back regularly for updates. Remember, paperMoney is a great place for a risk-free try out of new trading platform features and your strategies before going live.

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