So basically papertrading is...

interesting conversation.

I didn't really mean to start another thread on whether or not papertrading is useful, though. I was more interested in comparing papertrading....i.e. playing the market without any capital risk to you...versus trading for a hedgefund or institution, where a huge percentage of the risk is someone elses. I think there could be some parallels.
 
Quote from John47:

I was more interested in comparing papertrading....i.e. playing the market without any capital risk to you...versus trading for a hedgefund or institution, where a huge percentage of the risk is someone elses. I think there could be some parallels.
More...

If you are trading for an institution, whether it be a prop house or hedge fund, you are at risk. The risk is just slightly different.

If you do poorly you could get fired. The risk of losing your job is slightly less than the risk of losing your own money, but institutional trading is not risk free like paper trading.

Now, risking your job if you don't reach your performance objectives at every quarterly review is hardly risk free or a comfortable proposition for most people.
 
Quote from John Merchant:

My only comment is that I think backtesting of VERY simple ideas is the superior way to approach live trading. IMO you are going to lose money from the start no matter WHAT you do, so you might as well trade small with tight stops on no-brainer setups until you get the rhythm of it.
More...

this guy has the best advise, and the only comment so far that comes close to being advise u can take to the bank.

if i had a dime for every dime ive made on paper in the past.....


so maybe the conversation should progress to 'how can the successful paper trader eliminate the emotions so that the same results will be made for real???'

john has given us a clue here i think in looking at very simple set ups. anyone else have ideas?
 
Useless...............there's nothing at risk. The way you react when it's real versus pretend..........no comparision.
 
The purpose of simulated trading need not be to make simulated money. Paper trading has been very useful in testing out theories of setup and follow-through in real time before committing to clearing that fence at the end of the runway in real time.

Is this a difficult concept?
 
I traded paper futures for a few months and went live and SUCKED! My prop manager would have me make back the ticks i lost in live in paper, one day i lost 10 ticks over a couple hours, made back 13 in 20 minutes and lost 9 in another couple hours and made back 11 in 7 minutes.

It is totally different. Then again my prop firm uses paper trading as trading simulation not a technique plan development tool which i think is a flaw.

As for paper vs. trading with someone elses capital... my take is that there is little difference. I doubt most hedge fund traders are going in to the office for their salaries, and i'm sure that's the case with prop traders. In effect prop taders have to work harder than personal traders because they only get a cut of the profits they make.

The difference in my mind is "live money vs. paper money", the source of the live money doesn't matter assuming your compensation is tied to your performance.

And after all that, the post about paper success not indicitive of live success and paper failure indicitive of live failure is awesome!
 
Quote from NickelScalper:

Nor would I trade a strategy not based on tested principles.
More...

Those 'tested principles' are YOU, the person, the mental/emotional being. They have nothing to do with the system or strategy in use. Any 'system' will be profitable in the right hands just like any 'profitable' system will be a loser in the wrong hands.

Doesn't matter what strategy you use IMO. Paper trading doesn't test you. It tests your observation skills not your trading skills (nor do I think it develops any trading skills).

Mike
 
Quote from Mike805:

Those 'tested principles' are YOU, the person, the mental/emotional being. They have nothing to do with the system or strategy in use. Any 'system' will be profitable in the right hands just like any 'profitable' system will be a loser in the wrong hands.

Doesn't matter what strategy you use IMO. Paper trading doesn't test you. It tests your observation skills not your trading skills (nor do I think it develops any trading skills).

Mike
More...
It appears you trade the market like washing dishes: just bring yourself along and wing it.
 
You must log in or register to reply here.
Back
Top