How similar is a sim to live trading?

[Specterx]

Hi all,

My first post here (go easy on me). I'm wrapping up my first month of daytrading stocks on a simulator. I've been basing trades on 3-4 discretionary strategies, long and short, on stocks that have gapped up or down in the premarket. I'm trading basically the first two hours and the last two hours of each day. So far, I'm overtrading, I know. But in spite of that and more than a few stupid losses, my results have been extremely positive. And frankly, I'm skeptical of them.

My background: I've spent the past 18 months swing trading (multi-day, not intraday swing), with varying degrees of success. In spite of dozens of weekly hours studying the markets, charts and swingtrading—both paper and live—I've still found it hard to profit consistently using daily charts.

I am finding it so much easier to trade in live motion while watching the candles form that it's a bit shocking to be honest. I'm trading non-penny stocks with an average volume >1M for moves of about .20-1.00, depending on the stock, whatever the clear space is between support and resistance across multiple timeframes.

At the moment, I'm still not using L2 because I want to get a better sense of the price action before adding another tool/variable to factor into my trading decisions.

Thing is, I'm up more than 20% in the sim account for one month's worth of trades. I haven't been using bracket or limit orders (intentionally, to make it harder for myself and hopefully emulate real volatility). I'm risking .5% of my account on all trades and have a clear SL and target (usually 1:2) before entry. I'm *mostly* diligent about hitting the exit at my stop loss.

So that leads me to some questions:
1. How similar are the results from a simulator compared to live trading? I know there will be more slippage in real life, but how much? Is that the biggest difference, and is the difference a major profit killer?

2. What about position sizing vs. daily volume? If I'm trading 1,000-share blocks of a 1M/day volume stock, am I going to have trouble getting filled at my targets?

3. Is there a good model to follow for journaling a high number of trades/day? I seem to be going round-trip about 30 times/day, and it's a lot to document/remember every single factor I weighed every time I enter or exit.

Thanks in advance for any advice!

Sim fills are going to be better than live fills. Trading more frequently, and with smaller stops/targets will increase the overall effect of the error. It's common for sim or backtested systems trading dozens of times a day to fall apart in live trading due to slippage.

30 RTs a day suggests overtrading; you need to learn to be more selective. A good rule of thumb is that (given average vol) the best 10-15% of days in any given symbol will have 1 or 2 setups worth trading, while 85-90% of days in a given symbol have NO setups worth trading. Focus on stocks which have news, earnings, large gaps, or high relative volume early on, as these signal higher odds of strong directional moves.

 

[Scataphagos]

if you hear traders talk alot about about technical analysis, that person is still on sim.

LOL! Good one.

 

[fan27]

Get off of SIM as quickly as possible. There is value in watching your hard earned money vanish before your eyes. You will either find a way to "figure things out" or go find a new hobby. Also, most people don't crack this nut on the first try.

 

[Scataphagos]

Hi all,

My first post here (go easy on me). I'm wrapping up my first month of daytrading stocks on a simulator. I've been basing trades on 3-4 discretionary strategies, long and short, on stocks that have gapped up or down in the premarket. I'm trading basically the first two hours and the last two hours of each day. So far, I'm overtrading, I know. But in spite of that and more than a few stupid losses, my results have been extremely positive. And frankly, I'm skeptical of them.

My background: I've spent the past 18 months swing trading (multi-day, not intraday swing), with varying degrees of success. In spite of dozens of weekly hours studying the markets, charts and swingtrading—both paper and live—I've still found it hard to profit consistently using daily charts.

I am finding it so much easier to trade in live motion while watching the candles form that it's a bit shocking to be honest. I'm trading non-penny stocks with an average volume >1M for moves of about .20-1.00, depending on the stock, whatever the clear space is between support and resistance across multiple timeframes.

At the moment, I'm still not using L2 because I want to get a better sense of the price action before adding another tool/variable to factor into my trading decisions.

Thing is, I'm up more than 20% in the sim account for one month's worth of trades. I haven't been using bracket or limit orders (intentionally, to make it harder for myself and hopefully emulate real volatility). I'm risking .5% of my account on all trades and have a clear SL and target (usually 1:2) before entry. I'm *mostly* diligent about hitting the exit at my stop loss.

So that leads me to some questions:
1. How similar are the results from a simulator compared to live trading? I know there will be more slippage in real life, but how much? Is that the biggest difference, and is the difference a major profit killer?

2. What about position sizing vs. daily volume? If I'm trading 1,000-share blocks of a 1M/day volume stock, am I going to have trouble getting filled at my targets?

3. Is there a good model to follow for journaling a high number of trades/day? I seem to be going round-trip about 30 times/day, and it's a lot to document/remember every single factor I weighed every time I enter or exit.

Thanks in advance for any advice!

Bottom Line on sim....

1. Use sim to explore your conceived "process" to trading and making money.

2. Sim is most useful at revealing what DOESN'T work.

3. If you have a process that appears to work on sim, you can trade live with real money but you should start SMALL. (Real-money trading will reveal "things" to you that sim did not.)

4. After you've traded small money successfully, scale up... SLOWLY. The more money you trade, the higher the leverage, the more psychological stress you feel. You need to become conditioned to that.

5. Don't be in a big hurry to get rich. Develop a solid "process" first and work it as your confidence grows. Capital preservation is the most important. The market will still be there tomorrow.

FWIW...

 

[TommyR]

exponential capital growth should be a prority. depending on how they deal with sim versus live the differences can be variable in my experience.

 

[easymon1]

my first month of daytrading stocks on a sim

mr quickbread,
Write down for your own info your worst trade? worst day of trades? worst week of trades?
Consider the cash money cost of those events. Now, by what multiple can you weather similar events in the future, financially? Twice as bad, five times, ten times? How many crappy trades in a row, crappy days in a row, crappy weeks in a row? Now that you got all that under your hat, close the door, turn off the lights, plug your ears, and think about it.
Still wanna trade?
Now, if you have a comfortable position sizing process then here is my free advice to you, specifically, and in particular. Start Trading Live. Monday.
Spend 2x amount of time reviewing your performance vs time spent trading. Add to that any research into planning trades to make later.
You're ready. Keep your results to yourself for at least 6 months. No specific status updates to et until you have doubled your account size at least, if ever. This is your ass, not ours. Be your own expert. You are ready.
Don't look down.
cheers!

 

[easymon1]

some code takes a screenshot

mr mcnoob
from "some code takes a screenshot"

Currently I select the chart window and do an alt-prtscrn.
Then I gotta paste that into paint.
Then I gotta save-as.
Then I gotta enter a filename.

Much Better Would Be to have a method for capturing chart window images to a .png file which is auto-named by year mo day hour second using minimal keystrokes.
any tips, tricks?
thanks

 

[nooby_mcnoob]

mr mcnoob
from "some code takes a screenshot"

Currently I select the chart window and do an alt-prtscrn.
Then I gotta paste that into paint.
Then I gotta save-as.
Then I gotta enter a filename.

Much Better Would Be to have a method for capturing chart window images to a .png file which is auto-named by year mo day hour second using minimal keystrokes.
any tips, tricks?
thanks

Yup use Python. I use the browser API's to take a screenshot but I'm a nerd

 

[Real Money]

Sim is most useful at revealing what DOESN'T work.

This is one of the best reasons to sim trade. I will give you an example of lessons learned from this.

1) Don't go to full margin on the first trade / beginning of trading.
2) It's almost always better to start with a hedged position.
3) What is my trade assuming about volatility? Is it right?
4) Am I trading the right product?
5) Did I make sure to look at the monthly, weekly, daily charts for context before I trade this?
6) Size the position(s) based on my risk allowance and profit target.
7) Make sure I use my edge.

This is just a few of the things that good traders need to do.

 

[easymon1]

take a screenshot

mr mcnoob, thanks for the response.
by what means do you name the file when it is saved?
thx