A. It sounds like you’re well on your way to going live and becoming a great and successful trader.
As I’m not sure how your paper-trading portfolio has performed overall, I can only share what I do before trading with a real account.
Before I go live with any trading strategy, I have a three-step checklist I follow.
Checklist #1: Back-test 20 trades
First, I make sure I have a list of markets to follow.
As a South African stock trader, I’ll look at the top 20 stocks on the JSE.
If you’re a Forex trader, then it’s best to look at the top nine major currency pairs.
Next, I’ll have the strategy ready, with my entry and exit criteria.
Also, at this point, I’ll need to have strict money management rules on how much money I am prepared to risk in each trade and how much money I can potentially make.
After all is checked, I’m then ready to start paper trading.
This is where, I’ll go onto my charting platform and back-test 20 trades that lined up in the past.
I’ll then jot these trades down in a journal. If the end result shows I would’ve banked a decent profit I then move onto the next checklist item.
Checklist #2: Forward-test 20 trades
They say it’s easy to trade and profit in hindsight.
That’s why back-testing won’t suffice for placing real money into trades.
Once you have done your back-testing, you’ll then follow the strategy exactly but going forward in time.
In this testing phase, we are still using a paper account.
This is where you’ll jot down your trades that line up, follow the rules and strategy in real time – but not risk any money yet.
And if all is successful and profitable then, I move onto the next item.
Checklist #3: Real trade 20 trades
Here’s the big one.
This is where I deposit a fraction of money into my account, to test the strategy with a live account.
This way, I can take the real-life factors and hidden costs into account.
After 20 real-trades and jotting them down into a journal, if all ends up successful and profitable – I then deposit more money to get the income flowing.
The testing period might seem like a bit time consuming – but it will be all worth it when you end up banking a consistent and easy income over time.
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Q. “Hi Timon, in one of your crypto-currency articles you mentioned that a whale is someone who holds the most Bitcoin… Could you quickly summarize all of the Bitcoin holder ranking by animals to understand what they’re saying in the news and in articles.”
A. Yes, it seems like they are using animal names more and more on Bloomberg and in crypto-currency websites as Bitcoin becomes more popular.
I’ll be happy to categorise the Bitcoin holder ranking from the lowest to the highest.
1 BTC = Shrimp
1 to 10 BTC = Crab
10 to 50 BTC = Octopus
50 to 100 BTC = Fish
100 to 500 BTC = Dolphin
500 – 1,000 BTC = Shark
1000 BTC = Whale
5000 BTC = Humpback
Analyst, Red Hot Storm Trader
Take a guess what successful traders want
Money? Cars? First Class plane tickets?
No… This is NOT what successful traders want.
You can achieve this through a normal 9-5 job…
You can achieve this through saving money for years on end.
You can achieve this from starting your own business and working your way up…
Successful traders want something far deeper and MUCH more meaningful…