Paper Trading Practice

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What You’ll Learn

• What paper trading is and why it’s essential
• How to set up paper trading on Ape AI
• Practice exercises for beginners
• Common mistakes to make in paper trading (so you don’t make them with real money)
• How long to paper trade before going live
• Transitioning from paper to real money

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Why This Matters

• 😰 You’re nervous about losing real money
• 🎓 You want to learn without financial risk
• 🔍 You want to test strategies before committing cash
• 🎯 You’re smart enough to practice first
• 💪 You want to build confidence

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What Is Paper Trading?

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The Simple Definition

• You get virtual money (usually $100,000 starting balance)
• You buy and sell real stocks at real prices
• Track real gains and losses (but with fake money)
• Learn how everything works without risk
• Make mistakes without consequences

• Starting balance: $100,000 (virtual)
• You “buy” 100 shares of Apple at $175 =$17,500 invested
• Apple goes to $180
• Your paper account shows: $18,000 (+$500 gain)
• You learned how stock ownership and gains work
• No real money was at risk

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Why Paper Trading Matters

• How to place orders
• Market vs limit orders
• How stocks move
• How to read charts
• Portfolio management

• Try different investing approaches
• See what works for you
• Learn from mistakes without losing money

• Feel the fear of losses (but money is fake)
• Experience greed of gains (but can’t actually spend it)
• Learn to control emotions before they cost you real money

• By the time you go live, you’ve done it dozens of times
• Confident in process, confident in decisions
• Smooth transition to real money

• Bought the wrong stock? No problem
• Panic sold at the bottom? Learn from it
• Used wrong order type? Now you know

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What Paper Trading Is NOT

• Emotions are different (easier to take risks with fake money)
• Slippage might be slightly different
• Can’t experience true fear of loss

• Success in paper trading doesn’t guarantee success with real money
• Emotions are stronger with real money
• But it’s still the best way to learn

• Eventually you must use real money to build wealth
• Paper trading forever = no real gains
• Use it as stepping stone, not permanent state

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How to Set Up Paper Trading on Ape AI

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Step 1: Sign Up for Ape AI

1. Go to askape.com
2. Click “Sign Up” or “Get Started”
3. Create account with email and password
4. Verify your email address
5. Download iOS app (if on iPhone) or use web dashboard

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Step 2: Activate Paper Trading

1. Open Ape AI app or web dashboard
2. Navigate to “Paper Trading” section
3. Click “Start Paper Trading”
4. You’ll receive $100,000 virtual money
5. Start trading immediately!

• $100,000 starting virtual cash
• Real-time market data
• Ability to buy/sell any stock or ETF
• Portfolio tracking
• Performance analytics
• All Ape AI companions to guide you

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Step 3: Make Your First Paper Trade

I just activated paper trading with $100k. This is my first
time. What should I buy first as a beginner? Walk me through
placing the order step by step.

• Recommend a beginner-friendly first investment (likely an index ETF like VOO or VTI)
• Explain why it’s a good choice
• Walk you through the order process step-by-step
• Help you understand what happened after you buy

• Buy $10,000 worth of VOO (S&P 500 ETF)
• Use limit order
• Experience the purchase process
• See it appear in your paper portfolio

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Paper Trading on Broker Platforms

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Alternative: Broker Paper Trading

• Full paper trading platform
• $100,000 virtual money
• Professional-level tools (might be overwhelming for beginners)
• Download thinkorswim app
• Choose “Paper Money” account

• Paper trading account available
• Very realistic simulation
• Professional tools (complex for beginners)
• Sign up specifically for paper trading

• Built-in paper trading
• $1,000,000 virtual money (very generous)
• Same interface as real trading
• Great for beginners
• Click “Paper Trading” in bottom menu

• Dedicated paper trading platform
• Paid subscription ($99/month)
• Can replay historical market days
• Good for day traders practicing
• Overkill for long-term investors

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Ape AI vs Broker Paper Trading

• ✅ AI companions guide your learning
• ✅ Ask questions and get instant answers
• ✅ Simple interface designed for beginners
• ✅ No complex tools to overwhelm you
• ✅ Portfolio analysis with AI insights

• ✅ Exact same interface you’ll use for real trading
• ✅ More advanced tools (if you want complexity)
• ✅ Can transition to real money in same platform

• Start with Ape AI (learn fundamentals with AI guidance)
• Then try your broker’s paper trading (learn their specific interface)
• Then go live with real money (smooth transition)

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Practice Exercises for Beginners

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Exercise 1: Buy Your First Index ETF (Easy)

1. Research SPY, VOO, or VTI (S&P 500 ETFs)
2. Ask Sage:
   Copy

   Ask AI

   Explain the difference between SPY, VOO, and VTI.
   Which should I buy first with my paper trading account?
   
3. Place a limit order for $10,000 worth
4. Watch the order fill
5. See it appear in your portfolio
6. Track for 1 week

• How to search for stocks
• How to place limit orders
• How long orders take to fill
• How to see your holdings
• How portfolio value changes daily

• You now own VOO (or similar) in paper account
• Experience daily price fluctuations
• Understand this is normal volatility

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Exercise 2: Buy an Individual Stock (Medium)

1. Choose a company you know (Apple, Disney, Nike, Starbucks)
2. Ask Money Monty:
   Copy

   Ask AI

   I want to buy [Company Name] stock in my paper account.
   Is now a good time? Should I use a market or limit order?
   
3. Research the stock (check price, P/E ratio, recent news)
4. Place a limit order for $5,000 worth
5. Monitor for 1 week

• Individual stocks are more volatile than ETFs
• Importance of research
• How to read stock charts
• Difference between owning one company vs 500 (ETF)

• Stock might go up or down 2-5% in a week (normal)
• You realize ETFs are less stressful
• Understand why diversification matters

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Exercise 3: Practice Selling (Medium)

1. You own VOO from Exercise 1
2. It’s up 2% ($200 gain on$10,000)
3. Practice selling half your position
4. Place limit order to sell 50% of shares
5. See cash return to your account
6. Understand realized vs unrealized gains

• How to sell (not just buy)
• How gains are “realized” when you sell
• How to partially close position
• Cash management

• You sold half at a profit
• Realized $100 gain (on paper)
• Still own half the position

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Exercise 4: Experience a Loss (Medium)

1. Buy a volatile stock (Tesla, Nvidia, Netflix)
2. Invest $5,000
3. Intentionally set a tight stop-loss at 5% below purchase price
4. Watch it get triggered on normal volatility
5. Sell at 5% loss
6. Learn lesson about stop-losses and volatility

• Losses hurt emotionally (even fake ones)
• Stop-losses can backfire on volatile stocks
• Importance of holding through short-term dips
• Not every trade is a winner

• Lost $250 (5$5,000)
• Paper money, so no real harm
• Learned valuable lesson about patience

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Exercise 5: Build a Diversified Portfolio (Advanced)

1. Ask Money Monty:
   Copy

   Ask AI

   I have $50,000 in paper money. Help me build a diversified
   portfolio with stocks, bonds, and cash. Give me a complete
   allocation.
   
2. Money Monty will recommend something like:
   • 60% stocks (VOO): $30,000
   • 30% bonds (BND): $15,000
   • 10% cash: $5,000
3. Place orders for each
4. Track portfolio for 1 month
5. See how different assets move differently

• Asset allocation principles
• How bonds move opposite to stocks (sometimes)
• Why diversification reduces volatility
• Portfolio rebalancing concepts

• Balanced portfolio that’s less volatile than 100% stocks
• Understanding of modern portfolio theory
• Confidence in diversification

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Exercise 6: React to Market Drop (Advanced)

1. You have $50,000 invested
2. Market drops 5% in one day (this happens 2-3 times per year)
3. Your portfolio is now worth $47,500 (-$2,500)
4. Ask yourself: Do I sell? Hold? Buy more?
5. Ask Sage:
   Copy

   Ask AI

   The market just dropped 5% and I'm down $2,500 (paper money).
   What should I do? I'm planning to hold for 10+ years.
   
6. Sage will likely say: “Hold. This is normal volatility. If anything, buy more at discount.”
7. Practice holding (or buying more)
8. Watch market recover over next weeks

• Market drops are normal and temporary
• Selling during drops locks in losses
• Best investors buy during drops
• Emotional control is critical

• You held (or bought more)
• Market recovered to new highs
• Your paper account is now worth $52,000 (+$2,000 from original)
• Lesson learned: Don’t panic sell

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Exercise 7: Test Dollar-Cost Averaging (Advanced)

1. Set aside $20,000 in paper cash
2. Instead of investing all at once, invest $5,000 every week for 4 weeks
3. Buy VOO every Monday regardless of price:
   • Week 1: Buy $5,000 at$425
   • Week 2: Buy $5,000 at$420 (market dipped)
   • Week 3: Buy $5,000 at$430 (market rose)
   • Week 4: Buy $5,000 at$428
4. Calculate your average cost: ~$425.75
5. Compare to if you invested all $20,000 at once at$425

• Dollar-cost averaging smooths entry price
• Removes emotion and timing from equation
• Can be superior to lump sum (or inferior, depends on market)
• Systematic approach is sustainable

• You invested over time, not all at once
• Reduced timing risk
• Built good habit for real money investing

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Common Mistakes to Make in Paper Trading

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Why Make Mistakes Now?

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Mistake Exercise 1: Panic Selling

1. Buy stock
2. It drops 10% over 2 days
3. Panic sell at the bottom
4. Watch it recover to your original purchase price next week
5. Calculate how much you “lost” by selling

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Mistake Exercise 2: FOMO Buying

1. See stock up 20% in one day
2. Feel FOMO (fear of missing out)
3. Buy at the top
4. Watch it fall back down next day
5. Calculate loss

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Mistake Exercise 3: Over-Trading

1. Make 20 trades in one week
2. Buy, sell, buy, sell constantly
3. Track your performance
4. Compare to simple “buy and hold” strategy

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Mistake Exercise 4: No Diversification

1. Put all $100,000 in ONE stock (like Tesla)
2. Watch insane volatility (up 10%, down 8%, up 15%, down 12%)
3. Feel the emotional roller coaster
4. Compare to diversified ETF volatility

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Mistake Exercise 5: Ignoring Research

1. Buy a stock you know nothing about (just picked randomly)
2. Don’t research it at all
3. Watch it (probably doesn’t go well)
4. Learn lesson

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How Long Should You Paper Trade?

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The Minimum: 30 Days

• Experience at least 2-4 weeks of market action
• See how stocks move day-to-day
• Make 5-10 practice trades
• Experience both up days and down days
• Build basic confidence

• Make at least 5 paper trades
• Buy an index ETF
• Buy an individual stock
• Practice selling
• Experience a loss
• Experience a gain
• Track portfolio daily

• You understand basics
• Ready to transition to small real money position
• Start with $100-500 real money while continuing paper trading

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The Comfortable: 60-90 Days

• Experience full range of market conditions
• Live through earnings season
• See how your portfolio performs over time
• Make 15-25 practice trades
• Build solid habits

• Build complete diversified paper portfolio
• Test dollar-cost averaging
• Experience market pullback (happens regularly)
• Practice portfolio rebalancing
• Make (and learn from) several mistakes
• Achieve consistent decision-making

• You’re confident in your process
• Ready for meaningful real money investing ($1,000+)
• Understand what to expect

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The Thorough: 6 Months

• Experience 2 full quarters
• Multiple earnings seasons
• Various market conditions (bull, bear, sideways)
• Build deeply ingrained habits
• Test multiple strategies

• Manage $100k paper portfolio like it’s real
• Track and analyze performance
• Build watchlist and research process
• Experience full market cycle
• Make 50+ paper trades
• Refine your investing philosophy

• You’re a confident investor
• Ready for substantial real money investing
• Have proven track record (even if paper)
• Know your strengths and weaknesses

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The Warning: Don’t Paper Trade Forever

• Fake money = fake emotions
• Can’t truly learn without real stakes
• Analysis paralysis (waiting for “perfect” knowledge)
• Missing compound interest on real money

• Paper trade: 30-90 days (learn mechanics)
• Transition: Start with small real money ($100-500)
• Continue paper trading for new strategies
• Gradually increase real money as confidence grows

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Transitioning from Paper to Real Money

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The Hybrid Approach (Recommended)

• Paper trading only
• $100,000 virtual money
• Make 10+ paper trades
• Learn basics

• Continue paper trading ($90,000 remaining paper money)
• Start real money with $100-500
• Buy one index ETF with real money
• Compare emotions: paper vs real

• Paper trading for testing new ideas
• Real money for core holdings ($500-2,000)
• Build real portfolio gradually
• Use paper account for risky experiments

• Real money is primary (growing to $5,000+)
• Paper trading for testing only
• Established routine and confidence

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How to Know You’re Ready for Real Money

• Continue paper trading
• Ask Sage to help you understand that concept
• Practice more before risking real money

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Your First Real Trade After Paper Trading

1. Keep it simple: Buy VOO, VTI, or another broad index ETF
2. Keep it small: $100-500 to start
3. Use what you learned: Limit order, reasonable price, during normal market hours
4. Don’t expect perfection: It might drop 2% next day - that’s normal
5. Hold long-term: This is a buy-and-hold investment, not a trade

I've been paper trading for [X] days. I'm ready for my first
real trade with $[amount]. I want to buy [Stock/ETF]. Is this
a good choice? What price should I set for my limit order?

• Validate your choice (or suggest alternatives)
• Help you set appropriate limit price
• Calm your nerves
• Walk you through the process
• Remind you this is long-term

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Tracking Your Paper Trading Performance

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Metrics to Track

• Total account value (started at $100,000)
• Total gain/loss ($)
• Total gain/loss (%)
• Number of trades made
• Win rate (% of profitable trades)

• Compare performance to S&P 500 (VOO benchmark)
• Best performing stock
• Worst performing stock
• Biggest lesson learned

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Weekly Review Habit

1. Review paper portfolio performance
2. Ask Sage:
   Copy

   Ask AI

   Review my paper portfolio. What did I do well this week?
   What mistakes did I make? What should I learn from this?
   
3. Sage analyzes your trades and provides insights
4. Take notes on lessons learned
5. Plan next week’s trades

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Monthly Report

1. Calculate total return
2. Compare to VOO (S&P 500) return
3. Identify patterns:
   • Do you panic sell?
   • Do you chase hot stocks?
   • Do you hold winners too long or sell too early?
4. Ask Money Monty:
   Copy

   Ask AI

   I've been paper trading for 30 days. My performance is
   [X% gain/loss]. What can I improve?
   
5. Adjust strategy based on feedback

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Success Checklist

• ✅ I activated paper trading on Ape AI (or broker platform)
• ✅ I have $100,000 virtual money
• ✅ I understand it’s risk-free practice
• ✅ I’m treating it seriously (not just randomly clicking)

• ✅ I made my first paper trade (bought index ETF)
• ✅ I bought an individual stock
• ✅ I practiced selling a position
• ✅ I’m tracking my portfolio daily
• ✅ I’m asking Sage questions when confused

• ✅ I’ve made 10+ paper trades
• ✅ I’ve experienced both gains and losses
• ✅ I understand order types and market hours
• ✅ I’ve built a diversified paper portfolio
• ✅ I’m ready to start with small real money ($100-500)

• ✅ I have consistent strategy (not random trading)
• ✅ I’ve learned from mistakes (made them in paper account!)
• ✅ I’m confident in my decision-making process
• ✅ I’m ready for meaningful real money investing ($1,000+)
• ✅ I’ll continue using paper trading for testing new ideas

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What’s Next?

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After You’re Comfortable with Paper Trading

• Your First $100 in ETFs →
• Your First $100 in Stocks →
• Build a Diversified Portfolio →

• Investing vs Trading vs Gambling →
• Risk Management 101 →
• Power of Compound Interest →

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Ask Sage to Review Your Paper Trading

I've been paper trading for [X days/weeks]. My current
performance is [up/down X%]. Can you review my trades and
tell me what I'm doing well and what I should improve?

• Analyze your paper trading history
• Identify strengths and weaknesses
• Provide specific actionable feedback
• Recommend next steps
• Tell you if you’re ready for real money

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The Bottom Line

• ✅ Risk-free way to learn investing
• ✅ Perfect for making expensive mistakes with fake money
• ✅ Essential for building confidence
• ✅ How professionals test new strategies

• ❌ Exactly like real money (emotions are different)
• ❌ A guarantee of future success
• ❌ Something you should do forever

1. Paper trade for 30-90 days (learn mechanics)
2. Start with small real money ($100-500) while continuing paper trading
3. Gradually shift to mostly real money over 3-6 months
4. Use paper trading forever for testing new strategies