Paper Trading Vs The Real Deal

When I was a performing artist, after taking barre, classes and rehearsals (classical ballet), when we had a performance, we would go to the theater map out the key areas on stage and run a DRESS REHEARSAL with full lights and costume BEFORE it was time to perform.

After all that, we would do our performance, and while in truth it wasn't very much anything like the pre-performance experience (lights, cameras ACTION), doing that process gave us what we needed to perform, deal with any unforseen contingencies and basically pull-off a great job, more often than not.

After getting down the basics of your trading instrument(s), trading plan (which ideally has something called positive expectation and consistently wins over weeks/months), stop placement, trade entry, exit, money management, so forth and so on, SIMULATION helps you to develop the proper mind-set to execute when your system delivers your signals. The constant paper trading also helps you to gain "experience" (albeit, "class performers" experience).

Reading all of the great posts here also can give traders without much experience some inkling of what can, may, and will happen when the least expect it!

Sure paper trading is to live trading what shadow boxing, roadwork, ringwork, speedbag work and rope skipping are to a real face busting fight (the commonality is non-contact simulations of the real thing), you definitely can't win the fight without them! :)

Best Regards,

Jimmy

P.S. I also used to work at Showtime during the Mike Tyson era, if you don't believe me, just look what happened to him ...
 
Quote from whitster:

at least in my experience, paper trading doens't have much carryover to real trading

i opened a papertrade account about 3 weeks ago

bought Nikkei Futures, Gold Futures, Silver Futures, Oil Futures, and Natural Gas futures

my 100k is now worth 540k

lol

in 3 weeks.

i've never comes close to that kind of return in real life

just my n=1 experience :)
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Thats pretty aggressive paper trading;/position size
I am figuring since you called it paper trading,
you used paper also:D LOL

Another advantage to paper trading & simulator trading /with trades written on paper = can put on a lower probability trade with NO RISK except ink & paper.:cool:

And to the gentleman who seemed concerned about a limit order not being filled , well it happens occasionaly in sideways trends, like this afternoon. Simply dont like to over pay in sideways trends.
I told a lady @ a broker who let me use a free simulator;
your simulator gave me better fills than i probably could get in real time, but I will take your good fills !!!!!

However Interactive Brokers has another setting where you pre set up a limit order/default ;
ALMOST always fills , simply click it , whatever current price is
almost always what you see is what you click/limit order get,
liquid markets realtime.:cool:
 
It goes in one ear and out the other.

I state my opinion and experience once. If that is not enough, I cut my losses short and move on (I would have moved on from this thread were it not for your plea...)

Most people have to experience the trading process for themselves. That is why there are 20 or 30 pages of these threads on ET. And this is not the first time this subject has come up. The statistics of those threads are similar to this one in the same ratio - probably two or three traders that do this for a living explaining the limitations of paper trading, and 40 or 50 pages of people that don't explaining how useful it is. The subject comes up at least three times a year, with people that don't trade for a living giving advice.

A river stepped in is not the same river.

nitro
Quote from 2manywhiners:

... C'mon, where's all the traders with experience, the ones on here to help keep beginners from making the same mistakes some of us made? Surely I'm not the only one...
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Quote from nitro:

It goes in one ear and out the other.

I state my opinion and experience once. If that is not enough, I cut my losses short and move on (I would have moved on from this thread were it not for your plea...)

Most people have to experience the trading process for themselves. That is why there are 20 or 30 pages of these threads on ET. And this is not the first time this subject has come up. The statistics of those threads are similar to this one in the same ratio - probably two or three traders that do this for a living explaining the limitations of paper trading, and 40 or 50 pages of people that don't explaining how useful it is. The subject comes up at least three times a year, with people that don't trade for a living giving advice.

A river stepped in is not the same river.

nitro
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Unfortunately I am greatly considering giving your approach a try. Share and Split.

In regards to my post on page 14, how many people said anything at all about what I posted being inaccurate? How many people? None. Why? Because at this point in the thread, few of the people still posting have ever entered a Live order. They're all gurus on how to do it right, but what have they done?

As far as diligent's retort, it sounds like he knows what he is doing, right? But did he answer even one question I asked?

I have a suggestion. Someone come right out and say I'm wrong. Tell me I don't know jack shit, then back up your reasoning the same way I have... with depth. Display insight, knowledge, and tell everyone (in a polite fashion) EXACTLY why you're right and I'm wrong. Get in the batters box and take a swing. No? Why not? Scared that you'll go down swinging on three pitches? Afraid you'll sound like an idiot?

NEW TRADERS:
There is an immense amount of valuable knowledge and insight, on just this single thread. What will you do with it?
 
For expert of trading, they record each step on paper trading if they wanted.

The difference should be minumized as little as possible.

To a newbie, the different is expected very high. The reason is
most responses here mentioned.
 
Even though this topic is raised by a newbie, response is so overwhelming.

It is not unusual to me. The question seems so easy understand and not to mention. But reality is not.

Expert dont want to go further on this topic because it will reveal
all the secret on winning trading.
 
Quote from 2manywhiners:

Unfortunately I am greatly considering giving your approach a try. Share and Split.
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Let me guess, it's all one big conspiracy, right? HA! I almost found this bit of humor amusing... except I've been trying to help new traders by taking a serious approach. Instead of actual responses from those with conflicting views, I get this? No questions from other newbies? (not counting your PMs jho) But conspiracy theories? C'mon.
 
Quote from 2manywhiners:

Unfortunately I am greatly considering giving your approach a try. Share and Split.

In regards to my post on page 14, how many people said anything at all about what I posted being inaccurate? How many people? None. Why? Because at this point in the thread, few of the people still posting have ever entered a Live order. They're all gurus on how to do it right, but what have they done?

As far as diligent's retort, it sounds like he knows what he is doing, right? But did he answer even one question I asked?

I have a suggestion. Someone come right out and say I'm wrong. Tell me I don't know jack shit, then back up your reasoning the same way I have... with depth. Display insight, knowledge, and tell everyone (in a polite fashion) EXACTLY why you're right and I'm wrong. Get in the batters box and take a swing. No? Why not? Scared that you'll go down swinging on three pitches? Afraid you'll sound like an idiot?

NEW TRADERS:
There is an immense amount of valuable knowledge and insight, on just this single thread. What will you do with it?
More...

Your previous post was very good/informative IMO. But let's read the original post:

"Hi,

I am curious how everyone's paper trading compared to live trading. I have traded my strategy on paper and would like to get a feel for what I should expect. Greed, fear, and slippage."

Now you take my system, yours and his - how would our results on paper compare to real trading? What advice can be given here without knowing this guy's strategy? We don't even know WHAT he is about to trade using his 5 minute charts and holding 5-90 minutes. The problem here is that the original question/s is too basic to be given constructive advice. I kept reading things like - paper trading is rubbish, no point in using simulated accounts, etc. Well, that's not advice really, is it? That's just a possible confirmation that the poster writing these responses had little advantage in checking his system on paper and/or using a simulated account when later compared to real traded account. There will always be a difference between virtual and real, the degree of this difference DOES depend on the system to be used.
 
Psychology of a novice trader when trading paper vs real is impossible to predict on a impersonal level.

If you learn how to do a perfect bungee jump and you got it sorted, do 100 simulated jumps and then go for a real one...if everything goes according to plan the chances are you'd do real close to your simulated jumps, BUT what if something goes wrong? Something you did not expect, how would you react to that during the real jump?

Paper/Simulators serve their purposes, I am sure most of us that trade know what these benefits are, I don't think any experienced trader would want to trade new strategy without checking it out first, mostly by backtesting and if results are satisfactory actually trading it.

One thing paper trading/sims will not provide is the ability to foresee how your mind is going to react when some shit happens in the real world, as sims give you a false level of security as indeed there is no real money on the line. But if you treat your virtual account as if it was real money, that would be a BIG benefit to you when making a switch to actual trading.
 
Romik-

I think most of the "For it / Against it" debate is rooted within the original posters question (by the way jho and I have conversed through PMs, so I am pretty sure that the direction this thread has deviated to, is of more value to him than where he was originally going with it.)

jho originally wanted to know what he could expect during the transition from paper to Live trading. But the direction this thread took is much more broad than originally intended. However, both sides of the debate have opened up more questions than "what should I expect when transitioning." Now it's more along the lines of, "Gee, I didn't look at it that way before. How then should I get started trading Live? What have others done? What works best? If it's not the same thing, then what is different? How do I better prepare myself for trading Live, compared to how I traded a Sim?" and these are perhaps questions with more depth and significance. If new traders take the time to find answers to those and many other questions, then they can start to see the many differences between Sim and Live trading.

No one knows exactly how different the transition will be for each trader. It all depends on what/how they have been trading on paper, and how well they know the differences of Live trading and Sim trading. Many Sim traders who thought they were going to be very profitable, will actually lose money when they go live. The direction this thread has taken can help new traders broaden their outlook on how the market truly functions, and if they embrace this reality-kick-in-the-pants, they can start to ask the questions that will really make a difference in how they trade, and whether or not they can find success.
 
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