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From the rec.guns FAQ:
(my comments in red)

9. Wax Loads

by Norm Johnson [removed]
A rec.guns reader wrote:

How do you go about making wax bullets for indoor practice with a handgun?

For home practice, to stay familiar with your gun, trigger control, point shooting fun, etc.

Wax loads. To load for revolvers:
(This also works for autos, but you'll need to single feed the rounds unless you've got a wadcutter gun that will chamber empty cases. If you have a 1911 or clone that uses the 1911 style extractor, you'll want to remove your extractor or buy a spare to use for this purpose, since you'll be closing the slide on a chambered round (the 1911 is actually a CRF action, not a push-feed, so the extractor is not designed to bend that much on a regular basis))

1.Set aside a lot of specially marked cases. Make sure that the marking is clear and easily seen so that these cases do not get mixed in with those used for regular cartridges.

2.Fire these cases with regular loads in the revolver to be used/carried. DO NOT RESIZE.

3.Punch out the old primer with a Lee type primer punch or one of those on the market that fits into a reloading press (it looks like a regular sizing die but is a universal primer punch used by people like me that prefer to clean the cases before resizing but want the primer pocket cleaned also).

4.Clean the cases in your normal fashion. Do not reprime at this point.

5.Drill out the primer pockets to about .100" for small primers and about .120" for large primers. This is a necessary step to avoid primer set-back when the wax rounds are fired. Primer set- back will tie up the cylinder.
(I used a 1/8" (.125") drill bit for the .45 ACP cases, after verifying that normal sized primer holes were causing setback; don't try this without drilling in a revolver!)

6.Melt and pour about 1/2" of household paraffin into a flat cake pan and allow to harden.

7.When ready to make your wax "bullets", set the pan of wax in a pan of warm water (not hot) for 15 minutes or so. The wax is of an ideal consistency when one can imprint it slightly by firm application of finger or thumb to its surface. The hardness is not critical as long as the paraffin does not crumble when the cases are pushed into it.

8.Push each unprimed case through the wax, mouth first, keeping the case as close to vertical as possible to assure that the wax bullet has squared ends.
(I had some problems getting the wax to unstick from the bottom of the pan when I was doing this; it might be worthwhile to pry the wax out and set it onto a lightly oiled cookie sheet before doing this)

9.Using a dowel of appropriate size, push the wax bullet into the case as far as it will go without using excessive pressure. This will not kill the primer.
(This is not strictly neccessary, but it will result in higher velocities and more consistent accuracy. You might want to keep a primer pocket cleaner handy to scrape out any wax that extrudes through the flash hole)

10.Prime the case in the normal manner. DO NOT USE ANY POWDER!!! That's it!

Priming is done last because, if not, the pneumatic pressure that is built up when the "bullet" is pushed into a primed case will slowly push the bullet back out.
(This looks cool, but really destroys any hope of consistency...)

This load will usually shoot about 4 inches low at 20 feet. I am interested only in group size but if one wants to he can make a target with two bulls once the aim/hit relationship is estab- lished, one for aiming and the other for scoring.
(It is a great way to practice drawing a firing from a concealed holster, since a big bruise on your leg is far better than severe arterial bleeding)

Do not use these cases for regular shooting - it is purported to be hazardous to use cases with oversize flash holes for regular loads.

Again, mark the cases clearly (Birchwood Casey's Brass Black works well) so that they will not be accidentally used for regular loads and so that it would be readily apparent if a regular cartridge got mixed with the wax loads - an occasion that might prove to be rather spirited!

Wax build-up in the rifling will need to be cleaned out occasionally but has not seemed to hurt accuracy at the 20 feet or so distances at which I use this load.
(After the first couple of rounds, the wax buildup seemed to level off, as the amount of wax being scraped out was equal to the amount being left behind. Don't shoot over carpet, because little sheets of wax (with rifling impressions cast into them) are blown out the muzzle during firing.)

This load will hurt if it hits a person. My .45 ACP wax loads will dent plywood about 1/16" deep at 10 feet.
(My wax bullets were fired while still a bit warm, and flattend out into 1" circles upon impact; they didn't noticably dent plywood, but I still wouldn't want to get hit with one)

The wax can be remelted to use again.
(The energy of impact is converted to heat, so the wax is somewhat pliable when recovered; I was just putting the fired wax into another case, using a dowel rod to ram it in and flatten the front, priming and firing again. The wax will get black with primer residue, but you can use it nearly a dozen times before it becomes too contaminated to hold together and disintegrates upon firing. Don't try to recover the bits that land on the ground, though; shooting a sand impregnated wax plug through your barrel is not the prefferred method of firelapping...)

It is remarkable how fast one can learn to point-and-shoot using wax loads. I had scarcely fired 50 rounds across my garage by the time I could hit a paint can every time without use of sights.

Do not use this load in an enclosed space if you are lead poisoning conscious. A back yard, an open garage, a family room with open windows or other spaces that can be well ventilated can be used to make an effective range. The report sounds like a cap pistol.
(I was shooting in my parent's garage, and afer about 30 rounds had a headache from the sound; outdoors it's probably not bad, but indoors I'd reccommend ear plugs)

There are plastic cases/bullets on the market to do this but wax is inexpensive.
(I've shot the Speer plastic bullets, and while they're less trouble (and quite reusable, if you use a soft backstop), they will ricochet if you hit a hard object. Loading procedures are the same if you use brass cases (the plastic cases are easier to load, since the primers seat with finger pressure, but the cases crack with use). I've never tried the rubber bullets, but you can find info by searching on "x-ring rubber bullets".)

Have fun!