Is paper trading a waste of time or does it yield benefits?

[Turveyd]

I had a week off and went demo, trading improved, also had to master setting up and moving SL's quickly on PC MT4, Ipad MT4 and Andriod MT4 all annoyingly different and very basic, PC version not to bad but other 2, just nasty!

Lets you work on issues, take bad trades without caring to practice exit strategy, normally I only get 1 or 2 losers per week, then I'm useless at handling them, demo let me make loads and practice, but not real money, see if translates to live next week.

 

[SimpleMeLike]

PS: The ones who talk about psychological issues most likely don't have an actual methodology AND/OR they're trading with too high leverage. Also, they don't know how the markets move, so they will freak out when they start trading live prices and experience adverse market movement and don't have a plan.

PPS: This is a long, long journey. No shortcuts.

Very good point. The mindset issues occur with me when I have no clue what I am doing when trading and not confident in what I am doing.

If I knew I how to make money trading and I proved it to myself. I wouldn't have any mind issues cause I know the overall odds of winning.

 

[SunTrader]

Lol, that's analog is like the samurai class never training prior to combat with live swords, a boxer/mma fighter not training before getting into the ring, or a soldier not going through war games with live rounds prior to battle.

There's a point where is makes sense to go live, to do it prematurely is foolish and the motivation to recommend such a thing is suspect.

LOL is right - practice is not live. A hundred years ago or present day.

Like Mike Tyson said everyone has a plan till they get punched in the mouth - literally not figuratively.

 

[Sprout]

LOL is right - practice is not live. A hundred years ago or present day.

Like Mike Tyson said everyone has a plan till they get punched in the mouth - literally not figuratively.

We both agree practice is not live. Going live having an appropriate level of practice is different than live without. It's reasonable as papertrading, backtesting, sim support in developing enough confidence in one's methodology to produce positive expectancy prior to adding the complex mix of emotions that live trading can stimulate.

After getting punched in the mouth a trained fighter will put up their guard from trained habit, an untrained one will be in dazed and confused with their guard down being wide open for the KO.

Papertrading, Sim, etc. are not a substitute for live trading more a compliment of and has it's rightful place as a useful tool.

 

[JSOP]

We both agree practice is not live. Going live having an appropriate level of practice is different than live without. It's reasonable as papertrading, backtesting, sim support in developing enough confidence in one's methodology to produce positive expectancy prior to adding the complex mix of emotions that live trading can stimulate.

After getting punched in the mouth a trained fighter will put up their guard from trained habit, an untrained one will be in dazed and confused with their guard down being wide open for the KO.

Papertrading, Sim, etc. are not a substitute for live trading more a compliment of and has it's rightful place as a useful tool.

But practice does make it perfect so when you do eventually trade live you would be more ready. I mean trading live is a given as all traders would eventually trade live; that's what we trader do, we trade. It's just that we want to trade better when trading live and the OP's question is whether paper trading would help us trade better when we trade live? And I think most of us would agree the answer is yes. Does paper trading replace trading live?

 

[Overnight]

I'm going to go to my bloody grave screaming this I guess...

You wanna' give it a shot? Start with 1 contract on MGC! Why is this such a difficult concept? You have gotten into trading...It is a business.. Some days you lose money, some days you make money.

Don't look at MGC's low volume and think you can 't do anything with meaning.

In what other market can you get in and out with a $1 per tick move, with fair volume? Don't try to arb the thing with the big brother of GC, it will never work. Yer retail. Juts use it to try some stuff. Oi!

 

[qlai]

why would IB spend so much resources building a paper trading platform?

Simplistic simulator is fairly easy to provide. Instead of routing order to venue(nyse, NASDAQ, etc), fake fill the orders internally. Everything else stays the same. Realistic simulator is more difficult and for some instruments impossible (latency, fill rate, market impact, etc). Must have feature though for any respectable platform, imo.

 

[Laissez Faire]

Very good point. The mindset issues occur with me when I have no clue what I am doing when trading and not confident in what I am doing.

If I knew I how to make money trading and I proved it to myself. I wouldn't have any mind issues cause I know the overall odds of winning.

I think the key is to create reliable entry and exit signals which have objective criterias. As a simple example, a MA crossover and stochastic value is objective. There is no interpretation.

You enter and exit on signals as they occur.

A more discretionary approach allows for interpretation and real time analysis, i.e., "The market looks weak. I think it's going down. No wait - maybe it's actually going up."

All thinking should be done prior to market open, IMO.

 

[Laissez Faire]

That is some subjective territory there, for sure.

Maybe.

What if we then define it as a position size where a loss at your pre-determined stop level is nearly meaningless or one where you can take 20 stops in a row and still suffer no consequences?

Contrast this with very high leverage where you're risking huge amounts on any one single trade and you'll blow up with 3 losses in a row. I think this is also more likely to have people adjust their stops since any one single trade is hugely important and they simply 'can't afford to lose'.

 

[Bekim]

I find for my type of trading that it is useless. If you are trading something highly liquid you might get some benefit from it. I believe the best way to learn is to trade as small a possible with real money until you become consistently profitable and then up the size.