When mastering a skill, there's no substitute for practical experience. Trading is no different. As traders, we often need to make quick decisions involving large amounts of money, so we must know what we're doing.
Many novice traders turn to paper trading to build confidence in their trading ability. Unfortunately, while paper trading can improve technical analysis and trade identification skills, it doesn't help with the necessary skills required to place orders on various exchanges or deal with the emotional ups and downs of trading. Navigating an unfamiliar order platform while risking a percentage of your account can be nerve-wracking, and mistakes can be costly.
To gain a more realistic trading experience, we recommend starting with "micro paper trades". With minimal risk, starting at $1, you can place live orders on an exchange, complete trade documentation spreadsheets, track your success and failures, experience the emotions of price movements, and have "skin in the game".
The beauty of the crypto market is that coins are significantly lower in value than traditional markets, allowing for small risks and minimal fees. To calculate the quantity to purchase or sell for long or short positions, use the following formula: Risk of $1 divided by (Entry price - Stop Price) for long positions and Risk of $1 divided by (Stop price - Entry Price) for short positions. This approach will provide a better learning experience, help build trading skills, and increase confidence in making profitable trading decisions.
So, while you are placing your "Micro Paper Trades", an easy calculation to work out the quantity to purchase/sell is:
Long positions = Risk of $1 divided by (Entry price - Stop Price)
Short positions = Risk of $1 divided by (Stop price - Entry Price)