Trading on a sim account is not helpful other than learning the different market orders and logistics of how to trade. One of the ways to learn how to win is to lose real money in the real market. Once you've done that, it will become apparent that if you limit those losses when wrong, and let the winners run to maturity, you will win in the end. Learn to be wrong and be ok with it in the real market.
You'll notice that the trade management forum here is one of the least posted to and least viewed. You'll also notice that most traders lose. There is a distinct correlation between the interest in trade management and the low percentage of winning traders.
Given that this guy trades the ES in the wrong direction with 40pt stops, he knows all about losing real money in the real market.
Been doing trading so long, I have mindset I will be profitable on every trade, though markets make this a false statement. When I first start day trading I saw keeping money in the account three months later a win, I was so horrible, swear someone set up cameras to make market go other way, second year I was so happy I found someone worse than me, I was paying $1000 a month phone bill in late 1980s to listen to "Chuck" what trade he was putting on and not take it, Chuck said he was experienced and good/at first I followed and he lose 90% trades, that kept my crappy trading going for nine months that year till Chuck busted out. But I learned a lot by him trading- no trading plan nor back tested meant losing, but still didn't help enough for few more years. Once I learned how to trade, I opened an account for Chuck and loaned him bucks and traded it to twice what he lost, he said thank you and never heard from him again. I agree and it is so tough to do that each day.
Maybe we are getting back on track here I have some comments in relation to "let the winners run to maturity", for this is the real hard bit for most traders. I think it is very easy to get out when you are losing (by making sure you have identified the level where you exit, and execute either automatically or manually) but when one is winning it is very hard to let winning trades run as you are in profit (most do not like to see the P&L giving back, which it will do as the price moves up and down). So, maybe the question should be, how does one maximize on winning trades so as to not lose out on a good bit of profit. Is this really not the "key" to successful trading, in that the profit on your winning trades must be a multiple of the loss on your losing trades, and the bigger the multiple the better! Loss = PDR (Predetermined Risk) Profit = O x S x D Even though trading is the simplest thing in the world to do, making money when trading is very hard, mainly due to way the trader thinks and acts, so, it stands to reason that a all a losing trader needs to do is think and act differently until the profits are way bigger than the losses. However, unless the trader also keeps the profits, then the whole exercise has been futile and just a complete waste of time and money. J_S
To bring discussion back here from Yukoners psychological thread, just doing a small bit of reading about oil as I know absolutely nothing about the oil markets, and I came across this interesting article which is sort of backing up some thoughts that have being repeatedly turning up in my mind the last few months. http://www.oil-price.net/en/articles/will-collapse-in-oil-price-cause-stock-market-crash.php excerpt: Should energy loans start to default, we may be looking at a snowballing effect in the order of the 2008 banking crisis with a caveat: low oil prices do help reduce the cost of transportation and services and may be a blessing in disguise for the economy. However this plays out, our FFT analysis illustrates that volatility is on the cards. Fasten your seatbelts for a bumpy ride, and keep an eye open for opportunities. As Warren Buffett once said: "Be fearful when others are greedy and greedy when others are fearful." Of course, there is another saying, in that "a stock price is never so high that it can't go higher" J_S
I do agree that it's easy to get out when losing, so that makes it hard to understand why most traders can't execute on this portion. On the other hand, the difficult part is letting a trade run to maturity. Traders seem to have no problem letting losers run but can't let winners run. Ideally, the trade would be removed when an unmistakable setup in the opposite direction occurs. However, this requires the trader to sit through pullbacks and retracements and makes a situation ripe for doubt and fear to creep in. If you can keep from counting the unrealized profits as already made, then this is a great way to trade. But realistically, most folks aren't able to do this, so a good bet for most is either a predetermined target, or a simple diagonal trendline drawn outside the noise as a trailing stop. This will keep the profits from escaping too far for most tastes. One caveat--if a predetermined target, it absolutely has to be at least 3 times the stop loss. Actually more in order to cover commissions.---For me though, I like to let trade run to opposite set up or let it stop me out outside reaction lows/highs.
3 to 1 is not easy, but attainable I would say. I feel we are now getting somewhere, as there is nothing worse than a bad discussion where some people just speak rubbish and try to cut other people down - any person that tries to cut someone else down, for whatever reason, just shows how little they really are. I think it takes a big man to admit he is/was wrong, and not until this happens does one start to see the difference in dealing with other people, for it should be obvious to any logical minded person that it is very important with whom we associate - mix with fools and you become a fool, mix with clever people and you become clever. There is no magic in all the old textbooks and old writings, it is just now we operate as human beings! I think that if we continue as is that we just crack this and show how simple it really is to make some good money J_S