Paper Trading Vs The Real Deal

[diligent]

just use 5% of your account in any one trade starting out and trust me... you willl shit your pants enough to gain respect...

when you feel confident... 5.1, 5.2, 5.3 % per position until you feel scared again... then wait again....

then, if you are still in the game, 6%, 7% etc slowly

the biggest mistake is to get over-zealous in your first live year - dont do it!

 

[WmWaster]

Quote from whitster:

"To me, the willingness to take loss is also within psychology field"

trading is more about risk management than stock picking, so the distinction between papertrading and real trading is hyooge

hyooge?
Do you mean hype?

so, while it's groovy that i made 500%+ return in 3 weeks in my papertrade account, it does NOT have much relevance to my normal trading.

because a rule of trading is that you CAN'T trade if u lose all your capital

heck, i could give you several trade strategies that could net over 1000% return in a week. EASILY. but the risk of LOSS is too great to make those viable

I agree!

What's the point of testing a strategy which you will not use when trading live? You can't get rich by looking at a 1000% figure.

Sometimes you may hear a penny stock rises crazily (eg 100% one day) and you could have gained 100% if you have bought it.

Don't be envy! Profit is not profit if you can't grasp it. Only catchable profits will enter into your pocket, NOT any fancy % appearing in newspaper. Unless you can time a penny stock when it will explode like mad, the 100% is purely meaningless.

in papertrading, you are not gonna get accurate results unless you use the same systematic methodology that you will use in real trading. i HAVE a systematic methodology for my futures scalping, so i found papertrading relatively useful. but in and of itself, without those caveats - it has little relevance

True.

You should use the same trading methodology as you will use in live trading. It's no point to trade with $1,000,000 in paper trade if you only invest $1,000 only, especially if your strategy works only if you have some large sum of capital.

The same holds true for your psychology. You won't treat your money as nothing when you trade, right? Then don't trade casually when you papertrade. You need to simulate the stress and envirnoment as accurate as possible. I won't make hasty decisions on papertrade simply because the moeny is virtual. Treat the virtual gain/loss as real. Feel the greed and pain.

Papertrade seriously with real-time data in real environment for, say, 6 months to 1 year. If you still gain, then go for real.

When you trade real, remember clearly what your psychology was when you papertrade. Now you do the opposite, try to mock your psychology in papertrade as accurate as possible. Don't let extra emotions get in unless you like to lose money.

Give more ocnfidence to yourself. You trade seriously in papertrading and fnd outyour method does work, so why not just follow strictly what you do in the past, including your psychology in papertrade.

If your EQ is low and can't do what the above say, there's nothing we could help. You are destined to learning only after the lesson. Try to trade small with real money and get some painful experiences, so you can train your psychology.

 

[WmWaster]

Quote from 2manywhiners:

Some people just don't get it...

How many of the people posting on this thread who are AGAINST paper trading are also claiming to be full-time or dual-career traders? How many of the people posting on this thread who are FOR paper trading make the same claim?

More.

Less.

Many of the people claiming that paper trading is a great way to learn all about trading, AREN'T TRADING. They're paper trading. (or sim trading. Whatever you call it, I call it shit.)


Many of you Paper Street Soap Company advocates haven't yet figured out why so many brokers offer FREE simulators. It's because they want you to try their product. The programs always give you fills instantly, and at the best price (a lot of the time it's an even better price). When you want out, guess what? Instant fill. Never a partial. Never. These programs aren't designed to help new traders. They're designed to SELL PRODUCTS meaning, they want their platform to appear perfect, even though the market is not.

Psychology isn't the only problem new traders face when going Live. It's just as much platform function, or better put, dysfunction. When new traders first go live, they find out that: a) fills aren't instant. b) limit buy orders are rarely filled when and how you want them filled. [That is, if they even fill at all] c) market buy orders are never filled at the bid. d) partial orders suck, and they happen frequently. [with mid-to-large orders, or volatility] e) when you want out of a falling stock, people aren't always there to buy the first instant you want out. f) simulators don't charge margin fees. g) simulators don't have margin calls. h) simulators don't charge exchange fees. i) simulators don't charge broker fees. j) FREE simulators don't charge platform fees. k) simulators don't have mysterious charges on the bill. l) on occasion, data feeds go whack for no apparent reason at all. m) simulators don't require calls to the broker because the platform crashed ["Sir, it didn't crash, it's just down right now." Try making that call a polite and courteous one when you can't enter a sell order and your position is still open on a stock that just broke news you haven't read yet because you're STILL on the GD PHONE!] n) simulators rarely require the usage of antacids. o) simulators aren't begging you to wait just a little bit longer... and lastly, p) SIMULATORS DON'T MAKE YOU VOMIT!!!

Paper Traders learn these same things when they go Live. However, they've spent days, weeks, months, or years formulating a trading plan based on a market that doesn't exist (at least not as they know it) and they almost always seem more reluctant to embrace the market's inefficiencies. Even then the ones that eventually "get it" have to unlearn even the basic functions of the market, before they can move forward.

Want to know one of the unwritten rules of trading? ALL new traders lose money. Some lose dollars, some lose accounts. But ALL new traders lose money. period. If you're too afraid of taking losses, especially the ones that are just a natural part of the growing pains of trading, then you are in trouble no matter how well you "plan" to trade.

OK, so you are a person who need to get some real lessons. Then go trade live unprepared and get some painful losses. For me, I know how to learn from other lessons. I don't feel the need to experience them personally, and save the losses.

By the way, not ALL new trades lose money. How the heck do I know? Because I know there's at least 1 person who gain as a starter. the market appears to pay tuition fees for that person to learn things in the market. What a great deal!

 

[WmWaster]

Quote from romik:
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. [/B]

Is it just too hard to do or have you never thought of doing it or is it me just so special?

I could simulate how my mind would possibly react provided that most major elements are simulated (eg simulated account with real-time data, simulated order fill [NOT just what you click (at current market price) is what you fill. The quatity matters!]). I don't need to lose real money to feel pain. I will feel pain when I see -$1000 in my virtual account on one day.

 

[WmWaster]

OK, a post to pinpoint what I have said.

First, a well-simulated trading practice can give you 90-95% of what you want. Only the rest 5-10% is from real trade.

What is considered as a good simulated trading. 4 top things you need to notice: realistic tradng strategies, order fill (& slippage), psychology, Your attitude towards simulated trade.

Your trading strategies have to work and you would use it in real. A gamble-minded trade like 100%-capital bet on one trade is not. It's no wonder why people who quote they could win 500% in a few weeks claim they can't in real and so siimulated trading is useless). They practice nothing but rubbish trading thoughts in simulated trade.

Order fill. It's very important, especially if you intraday trade. Order fill and slippage will affect your real profit. yo should take a more conservative way to treat these factors. Always assume a worse case when doubt eg if the price suddenly rises and you can't see clearly that your fill could be filled, then treat them as unfilled. And ready for the next opportunity). If you still gain, then you must gain in real trade.

Psychology. This may be the toughest part in simulated trade. Most, if not all, believe psychology can only be trained with real money. They are wrong. To see if you are failed to practice your psychology, answer me the following questions:
- have you ever trade seriously even if it is virtual?
- have you set punishment/reward so to make it more real?
- have you tried to feel the greed & pain when you simluate your trade?
- will you make casual trades/decisions simply because the money is virtual?
- will you eager to try your new-thought trading methods out when you are in simulated trade, as it costs nothing to try out new ideas?
- will you feel nothing when you see a -$1000 loss because you feel the loss is not real or you are lucky?
- have you tried to put yourself into real trading shoe?

When I do a sim trade I will ask myself, if I were to trade real, will I put my money at risk in this situation?
If so, how much? How about 100%? It's no hurt! No, I won't do so when I trade real, so I just insert 5% and sned my order.
If I decide not to place my order and the trade turns out to be very rewarding, then I ask myself, if I were to see an opportunity of $1000 is missed, what will I feel? OK, now I miss the trade. Should I try to comfort myself that I would have made the trade & gained when I traded real? No, Missed is missed, no matter what reason. So what I can think now? Think whether you should get in now, or wait for another opportunity?

OK, how should you react when you DO trade real? Get overworried or overgreedy? Let emotions to control you? No! There's only one thing you should do. Follow what your mindset completely is when you sim trade. When you could place an order when 2 criteria are satisifed, trade when these 2 criteria are met. No extra worry! When you see the price rises so fast but you only opened 1 contract, what should you do? Get greedy and open 10 contracts now? No! Do what you did when you sim trade. Did you add more posiitons in this case, or just wait for a good opportunity to add position?

That's how I train my psychology!


Your attitude towards simulated trade. Last but not least, this is very very important and I think most traders miss that. Very often, people just practice leisurely, without any care to their virtual account.
Simulated trade is as serous as real trade. If you practice everything thoroughly (including your psychology which many people miss) in simulated trade, I don't see why you will lose money in real trade.

Will you try to record some hindsight trades as you feel you should have made that trade in real?

Will you try to delete some losing trades because you missend the order, or it's siply a blunder?

You do well in mock exams when you do with your books, and finish it in extra time. But you found out you can't do well in real exams. Then you blame mock exams are useless.

This is meant to be a serious practice before the real one. It's not for enjoyment. No wonder why they feel simulated trade doesn't work for them.

I'm very confident to tell you you can barely lose when you follow my steps strictly (there're 2 posts about that) do your simulated trade in my new approach, you chance to lose as a starter dramatically decrease. It is not surprising you may even win big in your first go.

Clarification:
- I'm not saying simulated can replace real trade completely. But if you simulate well, I could say over 95% of things can be learnt just from it. You don't need the rest 5% to bring you into the winners' list.

 

[JimmyJam]

Thanks for all the above WmWaster (where did you come up with a name like that from? )

Your posts have made this thread worth a continued reading and following (I'm glad I didn't unsubscribe, like I had planned to). You've pretty much touched on the correct way to think about and use simulation.

This is why simulation is used in:

Police Forces
Armed Forces
Airplane Piloting
Car Driving
Theater
Dancing
Boxing
Martial Arts, etc.

and everything else that requires making split-second decisions under duress and pressure.

***

Ultimately, hey, these threads are frequented by the small (or medium sized) retail trader for the most part, so you can pretty much do what you want and nobody is going to tell you different, or judge you, or anything (uh, that's part of the reason why we trade).

If you think SIM trading helps you in your process, do it.

If you don't think SIM trading helps you in your process, don't do it.

As in all things in this world, both positions can be true, at the same time, for all the reasons pointed out above.

Best Regards,

Jimmy

 

[WmWaster]

Quote from JimmyJam:
Thanks for all the above WmWaster (where did you come up with a name like that from? )

Hehe...
But don't you think it's a nice name?

Try to interpret it as W. M. Waster &
And WmW is my face! LOL

Your posts have made this thread worth a continued reading and following (I'm glad I didn't unsubscribe, like I had planned to). You've pretty much touched on the correct way to think about and use simulation.

Happy to hear that.
This make my long typing time rewarding.
You know, a trader doesn't like to waste much time as every minute is important to them. They may turn into money if you use them in correct way.

This is why simulation is used in:

Police Forces
Armed Forces
Airplane Piloting
Car Driving
Theater
Dancing
Boxing
Martial Arts, etc.

and everything else that requires making split-second decisions under duress and pressure.

Well-said.

***

Ultimately, hey, these threads are frequented by the small (or medium sized) retail trader for the most part, so you can pretty much do what you want and nobody is going to tell you different, or judge you, or anything (uh, that's part of the reason why we trade).

But the market will judge you finally.

Sim trading is a double-edged sword. If used correctly, it's a very powerful weapon. However if you don't know how to use this weapon, you're going to hurt yourself badly.

You should also train well before you fight! Your chance of winning consistently is slight if you do otherwise. The market is full of the best fighters. You can't beat them without good practices and training.

If you think SIM trading helps you in your process, do it.

If you don't think SIM trading helps you in your process, don't do it.

I like to self-study. I don't need hire an expensive tutor to teach me. But there're always people who can't learn without paying expensive tuition fees.

Good luck!

 

[2manywhiners]

WmWaster


STRIKE THREE!!! You're Out!


Still no one that will even make an attempt to call out my a) through p) list of differences? Nope. WmWaster = career paper trader. How much experience do you have trading Live? Apparently not much. You said, and I...

...quote:

By the way, not ALL new trades lose money. How the heck do I know? Because I know there's at least 1 person who gain as a starter. the market appears to pay tuition fees for that person to learn things in the market. What a great deal!

Are you illiterate? You sound like it. But not all the time, just when typeing yu arr. derr. You make ill-fated attempts to sound like an expert, but you admit you know one person who had a successful transition to Live trading? Beginners: take note. He didn't say it was him.


By the Way... You're Mom still naggin at you while you're in those extremely important paper trades? How do you punish yourself when you lose? By asking your Mom to give you a spankin? You've been a bad little boy snookums...

Do yourself a favor, move out of your parents basement, start TRADING LIVE, and then decide where you stand.

Like I've...

...already said:

I trade for a living. It's what I do. This is my job, this is my paycheck. When I enter an order into the market, I know that that trade is the reason why I'm either eating an 18 oz Prime Rib at an upscale restaurant, or a $4 Prime Rib SUB at Quizno's. You don't (and can't) get that from paper trading. period.

You want to simulate losing $1000? How about this, next time you lose $1000 on paper, go take $1000 out of the bank and donate it to the Red Cross. Close enough to simulate losing $1000? No, because you still wouldn't be losing it to the market, you'd be donating it to charity. Donating $1000 to charity still isn't the same, psychologically speaking, as losing $1000.

 

[Spydertrader]

I agree Simulated Trading provides zero feedback towards experiencing the psychological aspects of trading. One simply cannot experience the "pucker factor" often evident when new traders enter with size beyond their experience level.

However, rules based traders (or systems traders, if you will) enter and exit based on various (and often extremely diverse) sets of criteria. A new trader often experiences difficulty keeping the rules straight in their mind - especially when market conditions often provide exceptions to those rules. Simulated Trading provides a new trader an opportunity to thoroughly learn the mechanics of their system - separate from the psychological aspects of trading real money.

A time and a place exists when trading with real money outweigh the benefits of Simulated Trading. For a new trader, that time comes after they have spent time on a Simulator (learning the mechanics of their new system). One must first learn to crawl before learning to walk, run or fly. Simulated Trading permits the new trader to crawl (learn the system), before walking (trading live with small size), running (scaling up) or flying (trading maximum size based on one's risk parameters).

I trade full time as my only source of income, and I give the above recommendation to every new trader starting out.

- Spydertrader

 

[rols]

PAPER TRADING IS STILL PANTS!

That's why it's called paper trading because it's worthless.

Worse still it's an art form for some people. An excuse for procrastination. As long as they are paper trading they can still fantasize about success. That's why they all shout so hard to justify its value.

Just do it!!

"The biggest risk in life is to never take one."