Is there a benefit to paper trading?

[rin4et]

I agree with what Robert said. I would like to add that one needs to focus hard on the original problem. Why do people not stick to thier trading plans. Do they put them down in writing? Is it emotions getting the best of them? Perhaps its distractions in the room during trading? These are potential factors in addition to possinly being freaked out by position size.

I disagree trade size should be based on the losses you can stomach or the dollar level that will set you over the edge and make you emotional.
@lescor stated it nicely here :
IMO, the number one trait that makes a good trader a great trader is the ability to let go of a mental attachment to money. It is very hard to do, and takes time. You have to be able to make rational, almost mechanical decisions based on what is the right way to execute your plan. Proper risk control relative to your account size is part of that plan, but you have to be able to think without letting where your p/l is affect you.

Everyone will have a dollar level, good and bad, for a trade or for the day, that is going to set them over the edge where they start to make poor decisions. It might be 50 dollars, it might be 50,000, but it's a curve that you try to work your way up as you grow your account.

 

[Grantx]

Just clarify something for me, you're asking for advice from 'other experienced discretionary traders' and when they point something out, you disagree and proceed to tell them what makes a good trader.

I agree with @Traderjohnsblog . If you are unable to stick to your plan then you are making poor decisions. Your poor decisions might stem from the fact that your position sizing is incorrect. Go over what you have written:

"Everyone will have a dollar level, good and bad, for a trade or for the day, that is going to set them over the edge where they start to make poor decisions."

 

[rin4et]

Just clarify something for me, you're asking for advice from 'other experienced discretionary traders' and when they point something out, you disagree and proceed to tell them what makes a good trader.

I agree with @Traderjohnsblog . If you are unable to stick to your plan then you are making poor decisions. Your poor decisions might stem from the fact that your position sizing is incorrect. Go over what you have written:

"Everyone will have a dollar level, good and bad, for a trade or for the day, that is going to set them over the edge where they start to make poor decisions."

This thread has already been resolved. I don't know why you are still responding. I already posted that my solution is to reduce my position size from 3k to 1k. That is my dollar level threshold and I am happy with that.
Cheers.

 

[schweiz]

Paper Trading has value to learn software, not to practice trading.

i don't agree with this. paper trading gives you the opportunity to first develop a profitable system and test it on historical data. as long as you have not completed this first step you should papertrade instead of blowing up real accounts. the next step is the psychological part of trading. for that you need to trade in real.

first learn to walk and then learn to run.

 

[qxr1011]

I am having trouble sticking to my strategy /plan.

imho that means that your strategy/plan does not work, and you know (or strongly suspect ) it does not ... , hence the tendency to avoid the signals or requirements of the something that does not work ,and substitute it with whatever comes to mind at the moment , and then called it discretionary trading

Someone told me paper trading will help.

someone was right, but should off clarified how paper helps: the newbie only has two options learn on his open valet or on paper... paper is cheaper... especially if one is limited in the size of one's wallet

Currently I use a position size of $3k.

it does not mater

Do you think reducing my position size would help to take emotion out of the equation so I can learn to trust my strategy and stick to it?

nope, reducing size will not help, even on paper you will be nervous and keep abandoning your strategy, because switching on paper will note make the strategy better.. you still will know for many years that what you have on hand does not work

Or is paper trading a better option to get over this hurdle?

the nature of the hurdle is a nonworking method at hand !

and the trouble sticking with a non working method is just a result of it, not the cause

solution? you know - develop the working method

one does not have money devolving the working method trading live money, regardless of how much money one has

so switch to paper

I am a discretionary trader that trades stocks.

imho you not a trader you are wanna-be trader...

why ?

because there are no traders without working method, and you have none (if you would you would not be starting this thread)

so stop fooling yourself, stop any activity in real , and go back to the drawing board to develop the method on paper,

when you will think that you have one, switch on to real money, until you will stop following your own method again, (an indication that it is still not working), and then another iteration like that, and another , and another....

the biggest probability is that one will not listen to the advise above and will continue whatever one is doing...until one will hit the wall,... and then another time, and then another...

life is the best teacher... only very expensive and her lessons are extremely painful (but effective)

 

[Simples]

This thread has already been resolved. I don't know why you are still responding. I already posted that my solution is to reduce my position size from 3k to 1k. That is my dollar level threshold and I am happy with that.
Cheers.

Maybe you haven't considered all perspectives yet? Earlier in this thread you stated "I disagree trade size should be based on the losses you can stomach or the dollar level that will set you over the edge and make you emotional."

My response to that:
Papertrading can mathematically prove to you that this is wrong => That account/position risks are part of any strategy exploiting uncertain edges. If your edge is certain, along with zero costs (commissions), then please proceed. Though, for us mere mortals, keeping emotional levels in check are just a tiny part of the equation.

I resisted papertrading for a long time, but now I swear on making it as realistic as possible, avoiding risking real currency amounts when unnecessary. There's learning value in doing some small-time trades with insignificant money though.

 

[qxr1011]

when you will think that you have one, switch on to real money, until you will stop following your own method again, (an indication that it is still not working), and then another iteration like that, and another , and another....

the day will come and you will not be needing to switch to real money to catch yourself that you not following your own method on paper, that is the day when you will stop lying to yourself when trading on paper

 

[DeltaRisk]

I am having trouble sticking to my strategy /plan. Someone told me paper trading will help.
Currently I use a position size of $3k. Do you think reducing my position size would help to take emotion out of the equation so I can learn to trust my strategy and stick to it? Or is paper trading a better option to get over this hurdle?
I am a discretionary trader that trades stocks. Would love to hear from other experienced discretionary traders. Was paper trading useful or is it better to use small position size instead?


Thanks!

With real time quotes it is, you can change and simulate as you see fit.

 

[lovethetrade]

I am having trouble sticking to my strategy /plan. Someone told me paper trading will help.
Currently I use a position size of $3k. Do you think reducing my position size would help to take emotion out of the equation so I can learn to trust my strategy and stick to it? Or is paper trading a better option to get over this hurdle?
I am a discretionary trader that trades stocks. Would love to hear from other experienced discretionary traders. Was paper trading useful or is it better to use small position size instead?


Thanks!

To respond to the title of the thread, of course there's benefit, there's benefit to doing almost anything. Whether it's an optimal allocation of your time is another question.

It depends what stage you're at with trading. If you're just starting out and lack clarity of what you see on a chart and the speed of price movement is unnerving, then paper trading might be the way to go.

From what you've described, you're better off reducing your position size, maintain some skin the game and try and improve your win/loss ratio.

Achieving success while paper trading won't feel like success when it comes to live trading.

 

[volpri]

Is there a benefit to football practice? Tennis practice? Singing practice? If you can answer yes then there are benefits for you to receive from trading practice via a sim or otherwise. However that said trading with real money quickly measures the psychological performance and the skills one has developed through practice trading. It is akin to practicing for a football championship over and over and then actually playing in the champioship on game day.