Ally Invest Paper Trading

If you are new to investing and are considering opening a paper trading or practice account you may be wondering if Ally Invest offers practice accounts. These accounts are a great way for beginners and even experienced investors to test out their trading skills and self-control in the marketplace without risking real capital. While Ally is a solid brokerage, they do not currently offer paper trading accounts. For this, we would recommend opening a TD Ameritrade practice account, and will explain why in this article.

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What is TD Ameritrade’s “Paper Money”?

TD Ameritrade’s practice account is called “Paper Money” and can be accessed through Ameritrade’s award-winning thinkorswim trading platform. When you go to login to thinkorswim (see below) just make sure you toggle the switch over to “Paper Money” and not “Live Trading”. Ameritrade’s paper money account has all the same features and functions as your live Ameritrade account, except that it’s using fake money. You can place equity trades, setup complex options trades, and research companies just like you would in your real account.

As you start to place paper trades you will see the account will start tracking your simulated gains (or losses) for you to study, including the costs of simulated commissions to make the experience as real as possible. If you make enough mistakes in your paper account and feel like you want to start over, you can “reset” your paper money account at any time and start fresh.

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Why Use a Paper Money Account?

There are two main reasons why investors, both beginners and experienced investors alike, choose to use a paper account. Getting as close as possible to real world trading experience (without risking money) is an invaluable opportunity for beginners and those who don’t yet have the funds to invest, while testing out a new asset type or strategy is a popular use of paper accounts for experienced traders. We’ll take a look at both of these reasons next.

Paper Money for Beginners

For anyone who hasn’t traded in the markets before but would like to begin, it’s certainly important to read up as much as you can on the different types of markets, assets, security types, and investing styles. But there's one critical ingredient to market success that you cannot get from reading – that’s real world experience. It’s one thing to write out your strategy and investment thesis on paper with detailed rules, but being able to stick to your plan in the heat of the moment when your money is at risk is a completely different animal.

When your wealth is on the line and its value is instantly changing, sometimes rapidly so, many of us can let our emotions cloud our better judgement, making it more difficult than imagined to stick to the plan. Paper money lets you experience this rush of adrenaline and clouding of judgement in a “safe environment” where regardless of how well or poorly you react, your wealth is safe.

Paper Money for Experienced Traders

You may be wondering why an experienced trader would be using a paper account, but the reality is that practice accounts have lots of value even for those already pulling in consistent profits. Many experienced traders like to use paper accounts to test drive a new asset type or strategy to make sure they fully understand it before risking real money. For example, someone who has been investing in their own stock picks for a decade may decide they want to try adding forex to their portfolio. They understand how currency futures work but just want to thoroughly test their understanding by paper trading them first to make sure they don’t run into any surprises that could cost them.

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Even a seasoned trader who has experience trading in all major security types may find a paper account to be helpful in testing out a new strategy. For example, maybe you created a nice screen that identifies companies with upside earnings surprises and you’ve used the screening logic to create a rules-based trading strategy. You think it’s fool-proof but want to see if it you can actually implement it as planned without any problems using a paper account to safeguard your capital.

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