From sim to real life

H

Hendrik

Hi all,

I need a few questions answered before I can consider moving from sim/paper trading to real life.

Area of interest:
- futures (for now ES, when I 'grow up' I may consider moving to CL, but that's for later).

Planned strategy:
- Day trading (momentum / swing)

I have been working on my trading plan, and trading signals and have been doing 'Paper trade simulations', using single contract market orders (planning on scaling up as soon as experience grows and portfolio allows), with TOS Paper Money for a while (not backtesting as I want to get a feel the action of the moment - minus 20 minutes that is - to get used to the stress of the moment/action).

As far as I can can see now my indicators/signals may need a little more tweaking here and there but give acceptable results, at least by my standards/expectations. Money and risk management seem OK for now.

I'm just left with a few questions:

1) How realistic is doing paper trades on TOS (apart from the delay) in terms of speed/ease of fill, slippage and so on. Does it work in real life with comparable speed and slippage?
If so, I may go to real training in a couple of months; if not, I may have to revisit my trading signals and expected results factoring in different fill speed and consequently other slippage parameters.

2) I'm still not sure whether to use Stop or Trailing Stop orders. Any ideas/suggestions?

Any other tips are also welcome.

Thanks for taking your time to consider answering,

Hendrik
 
"I may go to real training in a couple of months"

should have been

"I may go to real trading in a couple of months"

P.S. As you may have noticed ENglish is not my mother tongue.

Kind regards,

Hendiek
 
"I may go to real training in a couple of months"

should have been

"I may go to real trading in a couple of months"

Regards,

Hendrik
 
Use market orders and you should be okay. If your strategy needs limits you should test in Ninjatrader or use a 1-tick must pass rule...

Simulation trading can be as realistic and worthwhile as you make it or not worth much. It is up to your own self honesty and dilligence.

The rules for successful simulation training, in my mind though are clear:

1. The simulation must be exactly the same as the real money -- that means stops used, account size, instrument traded, etc. Everything!!!! No you can't go trade CL if you trade ES. No you can't trade 5k like you would 100k. No you can't expect the same results adding a tight stop if you weren't trading with a stop.

2. The simulation must be conducted over a reasonably long period of time without resetting it. I recommend a minimum of 3-6 months. 4 weeks is worthless except for learning how to place orders in the system.

3. It is best if the simulation is public. Public performance has its own pressures.

That's about all there is too it really. Be careful if you use mental stops in sim then go to hard stops in real money. You may not realize how much your trades are going against you then get in with real money and get scared and put a stop on and get stopped out.. This has cost me some performance.

You will need to work out the types of rules that work for you... you'll have to think about that one.
 
Quote from Hendrik:

Hi all,

I need a few questions answered before I can consider moving from sim/paper trading to real life.

Area of interest:
- futures (for now ES, when I 'grow up' I may consider moving to CL, but that's for later).

Planned strategy:
- Day trading (momentum / swing)

I have been working on my trading plan, and trading signals and have been doing 'Paper trade simulations', using single contract market orders (planning on scaling up as soon as experience grows and portfolio allows), with TOS Paper Money for a while (not backtesting as I want to get a feel the action of the moment - minus 20 minutes that is - to get used to the stress of the moment/action).

As far as I can can see now my indicators/signals may need a little more tweaking here and there but give acceptable results, at least by my standards/expectations. Money and risk management seem OK for now.

I'm just left with a few questions:

1) How realistic is doing paper trades on TOS (apart from the delay) in terms of speed/ease of fill, slippage and so on. Does it work in real life with comparable speed and slippage?
If so, I may go to real training in a couple of months; if not, I may have to revisit my trading signals and expected results factoring in different fill speed and consequently other slippage parameters.

2) I'm still not sure whether to use Stop or Trailing Stop orders. Any ideas/suggestions?

Any other tips are also welcome.

Thanks for taking your time to consider answering,

Hendrik
More...

Stops depend on strategy so no one will be able to tell you exactly what will work in your situation (it seems average stop used is about 3 points). I'd say what's more important is to know resistance levels, average daily and hourly ranges before you can figure out your stops. In addition your stop will probably determine your places of entry unless you're comfortable being under water before trade turns your way.

Once your strategy and stops are figured out you can move on to live trading to see how you perform under stress (second guessing, revenge trading etc).
 
Assuming you have never traded with real money before, going from sim to live will affect your emotions more, you will see, causing you to second guess yourself more often than you would on sim. The fills are not even close to being realistic on sim as they are in real trading, you will see this too, this will force you to have to tweak your strategy/methodology more than you ever imagined.

Like they say in the military, its one thing to practice shooting at bad guys on a simulator, its a whole other experience shooting at bad guys in real war once their AK47s start pumping bullets at you. Its all about getting accustomed to real time scenario. Experience in live trading will help you to develop thick skin, help you think mechanically, with lil or no emotions involved.
 
it's crazy why anyone would spend weeks or months sim trading

sim trading is for learning the functionality of the platform

Not to learn how to trade !!

You want to learn to trade then trade small size with a real account & use stops to manage your risk

there is no substitute for trading real money

you must have skin in the game if your serious about being a trader
 
trading real money with no clue will burn several small accts,you could learn the motion of the market first, then learn how to sim successfully,then take your chance with real money..if you burn several accts, and then learn to trade,the light will go on...duh.. i should have traded sim til now..why didn't I listen,i could have saved 30 k,as a newb we would love for you to put that cash in our pockets,your an easy mark,don;t listen to us
 
OP,

Ammo nailed it, sim trade, keep it real, and use it till you are consistently profitable


Knowing once you do go live you will make mistakes, so be prepared to pick yourself up, not repeat, and move on


Trading successfully is all about surviving first – make that your priority

RN
 
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