I thought this might be an interesting discussion. Why is Real Money trading more difficult than Sim? Now when I say Sim, I mean real time, as it occurs trading,, not looking back and saying "I would of____" I speculate that when we are live trading it is much more mental/emotional. But,I have always produced better results in Sim. If I am executing the same strategy, wouldn't it be the same result Sim vs. Real Money? There is of course the execution of price... that's another issue..... Anyway, what are your thoughts and how can we produce close to same results in Real Money trading as we did while in Sim?
With full automation, the emotional factor can be eliminated from the equation. Then, the only difference between simulated and real trading is the slippage, execution quality, and the reliability of the automation.
There are recent threads and discussions on this. Actually every year...same type of answers. In trading with real money...we have more emotional stress. We know we need to have our mental hat on. We know this is the real deal. Many under-perform in situations involving real money trading...real situations...not play. There's absolutely no pressure in simulator trading and the same is true about "back testing"...traders know its not real although they do give you "clues" about your trading...they know they can take chances, make a few tweeks here n there and if wrong...they can start all over again. There's no do overs in real money trading and that in itself puts pressure on the next trade. Here's an analogy that maybe those that's been in the military can easily relate too...in IRAQ or Afghanistan. Go play a game of "Call of Duty" or something similar like and then go on a real battle field. You'll then understand the difference why a real battle is so much more difficult than playing a game called "Call of Duty". Real blood...your blood is a reality check. Simply, many view "their money" as being extremely important. Its real.
%% Exactly; + execution, slippage/skids+ markets dont exactly repeat all the time, that would be predictable. And unless one has a photo memory; paper trading/study is much more helpful than sim....... Its like the [ABC]American Broadcasting Co[American Sportsman] snow ski accident ; thrill of victory-agony of defeat. Much different live ====than watching screen. Its fun to read on paper;shoot 500 times/+....@Argentina doves; even though. live, a shooters shoulder[ mine] gets real time black + blue / super sore . LOL NOT saying any trader/investor should shoot or trade 500 times/+ @ day.LOL [Even though market maker types can do well that way + more. I am more of a turtle trader, than market maker, delayed edit]
I've been trading live for 5 years and still get the nervous shits before each day. That's the difference between live and sim.
This is short sighted. In reality if your fully automated system goes into a long losing streak/ big drawdown, especially one that is bigger than in your back testing, you will be emotionally tempted to turn off your system so as to stop losing more money. And switch it over to some other system which is doing well. You can guess what happens, the system you stopped trading now starts to print money and the new one enters a drawdown. So i would say there are many emotional pitfalls in fully automated trading, almost as many as manual trading. The entry/exit pulling the trigger emotions are reduced compared to manual trading but the higher level emotions are still there and can never be eliminated.
Oh, the things I've done live that I'd previously written off as unfathomably stupid in sim...I could write a book (and I'd leave a lot of blank pages in the back).