Chapter 21: Paper trading

Paper trading is optional. Once you're already sourcing and placing Test-buys, it can sharpen your judgment: you follow leads you didn't buy and compare what happened with what you expected.

Buying comes first. Your free trial and your first weeks are for finding real deals and placing Test-buys, so you start earning before your first payment (Chapter 25). Paper trading is never a substitute for that, and it isn't a trial activity.

Paper trading is optional extra practice that runs alongside your real buying. You write down decisions on leads you're not buying, mainly your Watch leads and a few Passes, then see what actually happens. Over a month it shows whether you tend to be too cautious or too optimistic, without putting extra money at risk.

Your paper-trading kit

• About 10 to 15 minutes a day for a month.
• Your Sourcing List, with auto refresh turned on (the refresh icon: Enable Auto Refresh; it shows Disable Auto Refresh once it's on) (Chapter 11), so ArbiSource updates the prices for you.
• A simple spreadsheet or notebook, with the columns below. A ready-made paper-trading log is on the Downloads page in the Resources section.
• Keepa or the ArbiSource price graph, to look back at what happened.

Step 1: choose about 20 leads

Alongside the leads you're actually buying, pick about 20 you aren't buying from the Vault, Price Drops and your scans. Run the full Lead Check on each (Chapter 19) and record your decision. Focus on:

• leads you rated Watch;
• a few you'd Pass, to check you aren't being too cautious;
• any Buy or Test-buy leads you couldn't buy this time (sold out, or over budget).

Add each one to your Sourcing List and, where useful, set an alert.

Step 2: record your starting point

For each lead, note:

Column	What to write
Date and product	When you checked it, the product name and ASIN
Source and buy price	Where you'd buy it, the price, and whether you'd pay sales tax
Amazon price	Today's price and the 90-day average
Expected profit and ROI	At the average price, from ArbiSource (adjusted for sales tax if you allow for it)
Ratings	Match, Money, Momentum and Safety: green, amber or red
Decision	Buy, Test-buy, Watch or Pass, and how many units you'd buy
Your reason	One line, in your own words

Step 3: check in on days 7, 14 and 30

For each lead, record:

• the Amazon price and the number of offers;
• whether it's still selling (rank drops on the graph);
• whether the retailer still has it at your buy price;
• for any Buy or Test-buy leads you couldn't buy: would your units have sold? Use your share of the sales (Chapter 8) as a guide.

A look at the Keepa chart on day 30 shows everything that happened during the month.

Step 4: review after 30 days

Sort your leads into three groups:

1. Right call. The lead behaved as you expected.
2. Too optimistic. You'd have bought, but the price fell, competition jumped or it stopped selling.
3. Too cautious. You passed or watched, but it would have done well.

Then look for patterns. They tell you what to adjust:

• Often too optimistic on price? Be stricter about the average price, or raise your minimum profit for products with jumpy prices.
• Your units wouldn't have sold in time? Be more careful with your share of the sales, or buy smaller quantities.
• Often too cautious? Your minimums or filters may be stricter than you need. Try lowering one a little.
• One category keeps going wrong? Leave it for now and focus on the ones that work for you.

Write down what you'll change. Small adjustments to your minimums, filters or deal score weights (Chapter 4.3) can make a big difference.

Hindsight is easy.

You won't be right every time. The log shows you why leads behaved as they did, so your next real decision is better informed.

Step 5: put it next to your real results

Compare your paper log with your purchase log:

• Watch leads that did well? Move similar leads up to Test-buy next time.
• Real buys that disappointed? See whether the paper log shows the same pattern, and adjust your minimums.
• Repeat every month or so, or stop once your real results give you enough feedback. Your notes become your own sourcing playbook.

Checklist

• I'm already placing Test-buys, and I'm using this log alongside them
• I've chosen about 20 leads I'm not buying (mainly Watch and Pass) and saved them to my Sourcing List
• I've recorded my ratings, decision and reason for each
• I've checked in on days 7, 14 and 30
• I've reviewed the results and written down what I'll change