A New Era in Papertrading
- Thread starter Sonofagun
- Start date
interesting thread...
while I agree that papertrading by itself is not reflective of real trading, and that the emotional part of it is a critical piece of the answer... I also think:
it's absolutely critical to start off that way, so traders can learn:
a) timing skills: improve your reaction time
b) pattern recognition: how often do you see and papertrade quickly, correctly, the best breakout/fade patterns?
c) scanning skills: how fast can you go from scans to getting an order entered and fired off? consistently?
d) also the tech stuff, eg fine tuning and tweaking that multimonitor rig and all the various software programs... best to do on paper money vs when real is on the line..
when I'm papertrading, I cut my paper wins in Half to try and control for, account for, slippage type issues, I'm probably conservative that way.. in figuring out the difference between paper vs likely real results.
I think many of you, tell me if this is true, would say now that you're experienced (assuming you have 4+ years experience), "hey I underestimated the @#$ of a learning curve, and wish I'd papertraded for my first couple of years instead of blowing capital".
Or at least, small share traded 20-50 shares at a time via IB or whatever.. to get the balance of being live in the market with real money (no substitute for that part of the learning curve!) plus the risk mgmt and learning curve involved...
personally, I think traders should Only papertrade their first couple years, look at it like:
- learning piano, you don't go buy a keyboard then try and play in front of a group of people 6 months later, live, do you?
- learning golf: you spend a lot of time on the driving range Before going out there on the course, right (at least I do)
- being a resident/intern in medical school, you watch and observe, read and learn, for years before diagnosing/treating an actual patient..
- any other profession in the world, requires apprenticeship (blue collar/trades) or university degree+ (white collar). why should trading be seen as any different?
unless there's a runaway bull market, and for those that remember, even '99 wasn't all "easy pickings every day"... it's a lot of work.
of course, there's the gamblers out there that want to rush it, and blow out a few times while they learn...
I think the commish structure etc of the industry encourages overtrading, eg "no data fee if you trade at least XXX shares/roundtrips per month". That's bad, particularly for newer traders. The incentives should be set up to help people learn it step by step gradually like a profession.
Most are simply not patient enough for extensive papertrading, and promptly get their heads handed to them by the market.
interesting ertrader... any insights as to Why those that did so well on paper didn't do well transitioning to live? I'd assume that part of it was, they didn't track precision entries carefully? let me know..
it would be good to have everyone pitch in w/their ideas, for the "top list of things to do to help transition successfully from paper to live trading" ..
appreciate it --
Ken
while I agree that papertrading by itself is not reflective of real trading, and that the emotional part of it is a critical piece of the answer... I also think:
it's absolutely critical to start off that way, so traders can learn:
a) timing skills: improve your reaction time
b) pattern recognition: how often do you see and papertrade quickly, correctly, the best breakout/fade patterns?
c) scanning skills: how fast can you go from scans to getting an order entered and fired off? consistently?
d) also the tech stuff, eg fine tuning and tweaking that multimonitor rig and all the various software programs... best to do on paper money vs when real is on the line..
when I'm papertrading, I cut my paper wins in Half to try and control for, account for, slippage type issues, I'm probably conservative that way.. in figuring out the difference between paper vs likely real results.
I think many of you, tell me if this is true, would say now that you're experienced (assuming you have 4+ years experience), "hey I underestimated the @#$ of a learning curve, and wish I'd papertraded for my first couple of years instead of blowing capital".
Or at least, small share traded 20-50 shares at a time via IB or whatever.. to get the balance of being live in the market with real money (no substitute for that part of the learning curve!) plus the risk mgmt and learning curve involved...
personally, I think traders should Only papertrade their first couple years, look at it like:
- learning piano, you don't go buy a keyboard then try and play in front of a group of people 6 months later, live, do you?
- learning golf: you spend a lot of time on the driving range Before going out there on the course, right (at least I do)
- being a resident/intern in medical school, you watch and observe, read and learn, for years before diagnosing/treating an actual patient..
- any other profession in the world, requires apprenticeship (blue collar/trades) or university degree+ (white collar). why should trading be seen as any different?
unless there's a runaway bull market, and for those that remember, even '99 wasn't all "easy pickings every day"... it's a lot of work.
of course, there's the gamblers out there that want to rush it, and blow out a few times while they learn...
I think the commish structure etc of the industry encourages overtrading, eg "no data fee if you trade at least XXX shares/roundtrips per month". That's bad, particularly for newer traders. The incentives should be set up to help people learn it step by step gradually like a profession.
Most are simply not patient enough for extensive papertrading, and promptly get their heads handed to them by the market.
interesting ertrader... any insights as to Why those that did so well on paper didn't do well transitioning to live? I'd assume that part of it was, they didn't track precision entries carefully? let me know..
it would be good to have everyone pitch in w/their ideas, for the "top list of things to do to help transition successfully from paper to live trading" ..
appreciate it --
Ken
The only conclusion i could come to is that "Real Live" specialist and LIVE ECNs dont always work out the way you think.
In a simulator....its hard to simulate the IBM specialist playing games, or getting long with a Nasdaq stock on ISLAND, then allof a sudden have 50,0000 shares smack you on the opposite end.
Also, Suprise News, both economic and individual.
Finally, a real live, in the face losing streak.
The psyc element of getting hit with a losing streak and trying to come back can not be represent by "simulator trading:.
So, I call bullshit on the "simulator trading" as truly preparing you for the real market. It will allow you to test your Technical system to a point. However, the key element is absent...the true Feeling of actually being in the trade with RISK.
There is no element of RISK in a simulator. You can try and pretend your live , but deep down, in the subconscience you know if you lose on PAPER....your not really losing.
So, if your not "really" losing on paper, (no true/physical loss of money), then you are not truly wining on a simulator either.
I would have to say, if anything.....it will give you a sense of FALSE HOPE if you think by having profits on paper will equate to you actually making a living as a trader.
If the PAPER trading method was such a good deal, "with my amazing system" everyone would become a trader.....
I would have to say, its a small % of preparing for the market.
In a simulator....its hard to simulate the IBM specialist playing games, or getting long with a Nasdaq stock on ISLAND, then allof a sudden have 50,0000 shares smack you on the opposite end.
Also, Suprise News, both economic and individual.
Finally, a real live, in the face losing streak.
The psyc element of getting hit with a losing streak and trying to come back can not be represent by "simulator trading:.
So, I call bullshit on the "simulator trading" as truly preparing you for the real market. It will allow you to test your Technical system to a point. However, the key element is absent...the true Feeling of actually being in the trade with RISK.
There is no element of RISK in a simulator. You can try and pretend your live , but deep down, in the subconscience you know if you lose on PAPER....your not really losing.
So, if your not "really" losing on paper, (no true/physical loss of money), then you are not truly wining on a simulator either.
I would have to say, if anything.....it will give you a sense of FALSE HOPE if you think by having profits on paper will equate to you actually making a living as a trader.
If the PAPER trading method was such a good deal, "with my amazing system" everyone would become a trader.....
I would have to say, its a small % of preparing for the market.
and yes, OJT is part of the process in trading. However, trading is far diffrent than being a Doctor or a White Collar moron. For those who trade for a living, i dont have to get into the diffrences.
Mentorship is key in trading. However.......From my experience, those who are mentored 'LIVE', actually trading small shares and taking the good with the bad, feeling the emotion, learning to deal with the emtion, have had better results. The latter combined with a end of the day follow up review of the trades you made, why you made them, and what are the basic fundementals and key indicators to your "system"
Yes people...IT TAKES MONEY TO MAKE MONEY......and you need some expendable capital to play with during ur learning curve.
Read any of the Market Wizards, PIT BULL, etc....they did very little PAPER TRADING and many all most lost all of what they had before "it" clicked for them. THEY ALL TRADED LIVE WITH SMALL POSTIONS in the begining.
I know the suite and tie mentality is "there must be a shortcut, a faster, brainless way to do the job, cut corners....Fast Fast Fast."
Good luck to those who subscribe to that theory, because, there is no fast track to trading......period.
Mentorship is key in trading. However.......From my experience, those who are mentored 'LIVE', actually trading small shares and taking the good with the bad, feeling the emotion, learning to deal with the emtion, have had better results. The latter combined with a end of the day follow up review of the trades you made, why you made them, and what are the basic fundementals and key indicators to your "system"
Yes people...IT TAKES MONEY TO MAKE MONEY......and you need some expendable capital to play with during ur learning curve.
Read any of the Market Wizards, PIT BULL, etc....they did very little PAPER TRADING and many all most lost all of what they had before "it" clicked for them. THEY ALL TRADED LIVE WITH SMALL POSTIONS in the begining.
I know the suite and tie mentality is "there must be a shortcut, a faster, brainless way to do the job, cut corners....Fast Fast Fast."
Good luck to those who subscribe to that theory, because, there is no fast track to trading......period.
Here's how to get the emotional and psychological side of a simulator.
Trade knowing that you will show your spouse the P & L on the simulator at the end of each day to show him/her your results to let them know how close/far you are from doing this for a living.
Trade knowing that you will show your spouse the P & L on the simulator at the end of each day to show him/her your results to let them know how close/far you are from doing this for a living.
- interesting viewpoints.. it's a good debate, eg the use of papertrading, or how to integrate... doesn't need to be all or none of course..
it's probably all very trader-dependent (and trading style-dependent), like many things, that papertrading could be a big benefit to many traders, but not for others ...
eg could do some paper, some live, develop a process to integrate the two...
there's probably an answer there, hybrid, of paper + live trading, a combination that would be effective for many .. ideas?
ken
it's probably all very trader-dependent (and trading style-dependent), like many things, that papertrading could be a big benefit to many traders, but not for others ...
eg could do some paper, some live, develop a process to integrate the two...
there's probably an answer there, hybrid, of paper + live trading, a combination that would be effective for many .. ideas?
ken
my first three accounts I paper traded (realistically) for a year. In that year I handily beat larry Williams record. The following year I went live and made 42%, not exactly the same result. While it took me 6 years to blow out that account, and while I feel that that year of following the markets without actually having the distraction of live trading was beneficial my paper trading results obviously did not transfer.
I haven't tried it yet, (couldn't get it to work with my metaserver software) but, it sounds like the developer has gone out of his
way to make the simulator as realistic as possible.
Here's a quote from his website..."NinjaTrader includes a state of the art order simulator. The NinjaTrader FILL engine considers several factors (including time) to determine when orders are filled."
www.ninjatrader.com