Paper Trading Vs The Real Deal
- Thread starter jho
- Start date
Amazing responses everyone, thank you, this is more than I expected 
I am a discretionary trader so I expect emotions to play a big part (better reread Mark Douglas' books). I can see there is only one way to find out, open up an account and trade small.
How about personal experience, would anyone else like to share how their paper results compared to live trading.
Thanks again,
jho
I am a discretionary trader so I expect emotions to play a big part (better reread Mark Douglas' books). I can see there is only one way to find out, open up an account and trade small.
How about personal experience, would anyone else like to share how their paper results compared to live trading.
Thanks again,
jho
Quote from jho:
Amazing responses everyone, thank you, this is more than I expected
I am a discretionary trader so I expect emotions to play a big part (better reread Mark Douglas' books). I can see there is only one way to find out, open up an account and trade small.
How about personal experience, would anyone else like to share how their paper results compared to live trading.
Thanks again,
jho
To get down to it in this thread you need to do a few things.
So far you haven't been given much to go on since you haven't inputed the group to any extent.
Your use of the word "discretionary" seals the deal.
Skip simulating entries on paper as a starter.
Get disciplined by doing about 1000 exits and tab your results.
Get a hat and fill it with times of the trading day (use 400 cards). Pull out 20 cards and line them up in order of appearance. At the time when it appears, trade. What trade means is this. The first card is getting in and NOT an exit. That puts you in the market on what you think is the right side. Cards 2 through 20 treat as just times when you specifically ACT to improve your status, discretionarily speaking. For any card, you MUST ACT, either to hold or to exit (to minimize damage). My additional rule is that if you choose to exit (you are saying you are on the wrong side of the market), then you MUST take on a trade, right then, that appears to better your potential profits.
You can have two wild cards at the beginning of any day. Use them any time to ONLY reverse. Each time you have a hat trick (three CONSECUTIVE winning legs), you can have another wild card.
We both know that there are times during the day when the market has no direction. Tough shit.
Let me know when you have a profitable day. That is, let me know what 20 cards worked for you, i. e., 240 to 260 (day 12).
The game plan is to stop kidding yourself.
You paper traded.
You used discretion.
You post these results and you tell us who you are and your personal qualities directly or indirectly.
You give thanks for what you believe you read as contributions.
Now, you are reading this at this line in this post. It is a line in the sand.
Pull 20 cards for 50 days and see if you have a profitable day. Change the fractal you are trading on too.
I'd liken it to reading a military field manual before leaving for war, then arriving in the actual war zone.
Mentally preparing for war by reading a field manual, while sitting in your favorite recliner drinker a beer and grilling brawts, is still probably closer to reality than paper trading is (in order to learn, not testing new strategies or learning new platforms)
Paper trading usually creates a false sense of insight into the market and, shortly after going live, many new traders don't understand why they're losing money. Many also fail to realize that they're trading on emotions that they didn't use on paper.
My solution? Trade very small lots, or less than 10% of your trading capital, for at least your first few weeks or months. Sure, broker fees may eat you up (try per share instead of per trade; and if you plan on starting out with more than 10-20 trades per day, you're probably already in trouble), but at least you can more accurately estimate what your expectations should be, and how viable your strategy is. If your trading 1/10 of what your strategy would have you trade, then multiply all of your losses and gains x10, then calculate the adjustment of your broker fees. Real Money, Real Trading, Real Expectations, Less Risk, Same (or at least similar) Emotions.
You can learn more in two weeks, using this method, than you would in two months of paper trading. Good luck.
Forget greed and fear. Engage your innate intelligence. You have at your command the finest top of the range animal species on Earth .. you!
So yes paper trading is useful for the trainee or novice. Repeated and repeated paper trading to micro manage the gyrations (ups and downs - eg YM) throughout the session gives you important observation practice and re-iterative learning in developing your trading skills.
If you're discretionary, paper-trading isn't going to do you much (any) good. The point of PT is to determine whether or not you have a strategy that MIGHT work in real time. If you have no strategy -- i.e., a fully-tested consistently profitable strategy -- beyond trading what looks good and hoping for the best, then you will fail.
There may be only one way to find out, but it's not the throw a big bunch of it against the wall and see if it sticks way.
Develop a strategy.
Backtest it.
Evaluate it. Go back to the previous step if necessary. If not,
Forward-test it.
Evaluate it. Go back to the previous step if necessary. If not,
Paper-trade it in real time.
Evaluate it.
And so on.
Check DbPhoenix's stuff at t2w.com.
Paper trading is a waste of time. It was real easy for me to look at a chart and say I would have been filled there or there. Just because it shows on the chart, doesn't mean at that moment you could have been filled.
Remember orders are first in first out. The chart could be at a given price, the ladder could be there too, but in real life you may have never gotten filled.
If you are going to day trade, get X Trader or Ninja Trader sim versions and try to make money on those first for a couple of weeks to a month consistently before you ever put your $$$ at risk. Simulate real time, forget the paper trading, it's pretty much garbage.
Dan
Remember orders are first in first out. The chart could be at a given price, the ladder could be there too, but in real life you may have never gotten filled.
If you are going to day trade, get X Trader or Ninja Trader sim versions and try to make money on those first for a couple of weeks to a month consistently before you ever put your $$$ at risk. Simulate real time, forget the paper trading, it's pretty much garbage.
Dan
Quote from Cheese:
Forget greed and fear.
Paper trading is useful for the trainee or novice. Repeated and repeated paper trading to micro manage the gyrations (ups and downs - eg YM) throughout the session gives you important observation practice and re-iterative learning in developing your trading skills.
It's useful for the experienced as well, particularly when the market shifts and adaptations that are more than minor are necessary. When my results begin to differ significantly from what I expect them to be and I make modifications, I always paper-trade them for a day or so before trading them "for real". Otherwise, it's just playing poker without looking at your hand.
Paper trading is to real trading as masturbation is to real sex. If you get really good at paper trading, you may never trade for real. It's all in your head(s).