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Mastering Stock Paper Trading: Tips and Strategies

Moomoo is currently hosting a stock paper trading activity in Malaysia that targets local users🔥🔥. Participants can gain a better understanding of the overall market, including stock prices, trading volumes, and other indicators by engaging in paper trades. This method effectively improves trading skills and knowledge, as it allows investors to validate their trading strategies and test their reliability.
In addition to enhancing trading abilities, winners of the competition can also receive attractive prizes.
Tap to join
Tap to join
📌Competition Period: October 23-December 1
🤑Link: MY Stocks Paper Trading Competition —— moomoo

This article will discuss the knowledge and tools needed to select trades, and offer tips and strategy for paper trading.
Let's start with how to choose stocks!
Most investors tend to pick companies they are familiar with because they have a better understanding of the company's business operations, thereby reducing investment risks. However, this practice can also limit potential opportunities due to a narrow range of familiarity. Therefore, it is important to know how to identify potentially lucrative stocks.

I. Identifying Potential Stocks
One way to identify potential stocks is based on market capitalization. Typically, larger companies are considered more stable and reliable, making them safer investments. They generally possess greater resources and capabilities, which give them the confidence to expand business operations and launch new projects. Moreover, they are more likely to receive support from banks, investors, and other partners, allowing them to secure financing and loans at more favorable terms.
Trading volume is a crucial factor to consider as well. High trading volume means that stocks can be bought or sold more easily, which increases their liquidity. Increased liquidity results in more accurate trading prices, making it easier for investors to analyze using technical indicators and charts.
Volatility is also an important consideration for investors. Highly volatile stocks may experience significant price changes over short periods, which provides more trading opportunities and potential for high returns. On the other hand, less volatile stocks are better suited for risk management purposes.
All of this data is readily available on moomoo.
PC Version
PC Version
App Version
App Version
Alternatively, investors can use stock screeners to filter stocks based on specific parameters without manually searching through a list.
Stock Screener
Stock Screener
However, it is key to note that for stocks being considered for long-term investments, the company's operational capabilities are of utmost importance.
Investors can access a company's financial reports through the "Stock - Company" feature, which provides information on revenue and profit, enabling investors to assess the company's current performance and potential for future growth.
Mastering Stock Paper Trading: Tips and Strategies

II. Position Management
After identifying potential stocks, managing positions is a crucial step. Many investors diversify their portfolios by allocating assets across different markets, sectors, regions, or asset classes to achieve better risk control and return optimization. Diversification allows investors to gain exposure to more opportunities because various markets, sectors, and asset classes possess differences and complementarities. For example:
➤ 30% of the funds to choose some large-cap ETFs, such as $FBMKLCI-EA(0820EA.MY)$ tracking the largest 30 listed companies in Malaysia, $MY-MOMETF(0836EA.MY)$ has high momentum in pricing Malaysian stocks.
➤ 50% choose some leading companies with large market cap and relatively stable volatility;
➤ 20% to select some companies that are more volatile but perhaps have greater upside potential.
And investing in other countries’ equity assets through ETFs on the Malaysian stock market maybe not a bod choice.
Mastering Stock Paper Trading: Tips and Strategies
$PAM-A40M(0822EA.MY)$ tracks the largest companies listed on the Southeast Asian stock exchanges, $PAM-C50(0823EA.MY)$ tracks the 50 largest companies listed in China, $EQ8US50(0827EA.MY)$ tracks the 50 largest companies listed on the New York Stock Exchange and NASDAQ in the US. There is also $GOLDETF(0828EA.MY)$ which tracks gold.

III. Maximizing Returns with Strategies
After establishing positions, how can investors maximize their returns? One effective approach is to implement stop-loss and take-profit strategies. Here are two common and practical strategies:
William O'Neil, a noted investor and stockbroker, recommends selling stocks when prices rise by 20%-25% from the ideal buy point. This strategy applies primarily to growth stocks, which tend to experience significant price increases after chart pattern breakouts before potentially entering periods of consolidation.
Another recommended strategy is to set stop-loss orders at 7%-8% below the purchase price to minimize emotional influence and control overall investment risk. Investors may adjust the percentage based on market conditions, for example, setting it as low as 3%-5% in bear markets or highly volatile markets.
Note that these methods are based on William O'Neil's analysis of the US stock market's 130-year history and may not apply to other markets.
Mastering Stock Paper Trading: Tips and Strategies
Once you have set your stop-loss and take-profit prices, you can use moomoo' alert feature to receive notifications when prices reach those levels, enabling you to sell without constantly monitoring the trading activity.
And in real trading environments, the system will operate stop-loss and take-profit orders automatically.
Mastering Stock Paper Trading: Tips and Strategies

Q&A Updating…
Q: Orders placed in paper trading cannot be filled immediately and need to wait.
A: The main reason are: Some stocks have lower liquidity and fewer buy and sell orders, and the quantity of orders placed is large. Trading is to match the price and quantity of orders placed by buyers and sellers, so you need to wait for the corresponding order you want to buy/sell to appear in the market before it can be filled.
Based on this, if you place large quantity, you can place orders in a timely manner, with the same price and quantity priority.
Or separate multiple orders to place to ensure that some of them can be filled quickly.
Besides, you can place a market order which will be traded at market price, not always at the price of the order you place.
Also you can slightly increase the price when buying to increase the competitiveness of the order (the opposite when selling). Of course, provided that you have your own take-profit and stop-loss plan.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only. Read more