Everybody recommends paper trading for beginners. Simply put, means trade with fake money. Dr Alexandra Elder recommends at least a year. Dr Clemen Chiang recommends at least 6 months. The idea is beginners must paper trade. Any new trading systems or strategy should also undergo paper trading and testing.

There is one thing to share though. When I was paper trading, I tend to make better decisions. Perhaps because the money was fake. There was no emotions attached to the amount involved and I am able to analyze and execute my trades better. However, when it comes to the REAL thing:evil:…so there is still some differences to note. Proper money management is also what all traders that I have met with advocate.

I will demonstrate with the OptionsXpress (OX) platform. I find this is a very suitable platform for beginners, especially for those residing in Singapore and wish to trade the US market. OX has opened a branch in Singapore. Beside providing support to the local customers, we are now also able to fund our accounts in Singapore dollars.

1. Register for an OX account of course 8). Now there is a wizard that guides you through the registration process
   
2. To login after registration, click on the “Log in” button
   
3. Enter your username and password and hit the “Secure Log In” button
   
4. Click on the “Toolbox” tab
   
5. Click on the “Virtual Trading” link
   
6. Click on the “Launch Virtual Trade” button
   
7. To place a trade, click on the “Virtual Trade” tab
   
8. Click on the “Option” link
   
9. Enter the stock ticker symbol of the Option you wish to buy and click the “Find Chain” link. I entered “GOOG” which is the stock ticker symbol for Google
   
10. This screen shows the Option chains (list of Option contracts) for Google that will expire on the 3rd Friday of June 07. The current Google share price is $518.84. If I feel that Google share price will rise above $530 before the 3rd Friday of June 07, I will buy a GOOG 530 Call. Do do this, I will click under the ask price for 530 Call ($4.4 in this case). $4.4 is called the Option premium (price of the Call Option contract)
    
11. Select “Buy to Open” from the dropdown list to buy a Call Option
    
12. Enter the quantity to buy (1 x Call Option in my case) and click “Preview Order”
    
13. After previewing your order, click “Place Order”, wait for your order to be filled and you are done! Notice that the total amount to pay is $440 ($4.4 X 100) excluding commissions because each Option contract controls 100 shares
    

This is a good training ground as the real interface is almost identical. Enjoy and have fun.

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