I could talk along time on this subject but I wont. I think paper trading with a "GOOD SIMULATOR" is a great thing for new futures traders. especially if you are trading very short term. I traded futures live for a year before I ever used a simulator. I have to say that the simulator gives realistic fills and will help a new trader develop the skills to watch the charts and react fast to the triggers. It will force him to think about stops and targets, After this new trader watches the market close every day... I mean really close.. they will start to adjust their stops and targets for different conditions. they may try some reversals, They will move the target up when they think the move will continue. They will get stopped out on trades that they thought they had in the bag. Having a good front end is like having your thoughts connected right to ACE or Globex. I agree that none of the above will cure fear to pull the trigger when they go live, It wont stop them from moving their stops lower giving a loser a bigger noose. They wont really know the fear when IB or Globex goes down but it is still valuable experience. I must also mention that a max amount of contracts must be used during simulation. If you plan on trading 2 contracts for the first year don't even think about buying 3 or 4 to try to make up those losses. Trading is a very humbling thing. You must be very honest with yourself during the learning process because when you go live with futures.. the market don't give a rat's ass what you let your self get away with on the simulator. Find a good simulator and have some fun.
I think Paper-trading provides two *real* benefits. 1) A safe way to learn the mechanics of trading. 2) A preliminary test for a trading methodolgy. The first is an obvious benefit, the second is not so obvious. The second effectively means that if a trader cannot make money paper-trading, they will *not* be able to make money trading real money. However, this does not mean that if they *can* paper-trade succesfully, they will be succesful trading real money.
-------------------------------------------------------------------------------- Quote from ertrader1: Read any of the Market Wizards, PIT BULL, etc....they did very little PAPER TRADING and many all most lost all of what they had before "it" clicked for them. -------------------------------------------------------------------------------- the logic is astounding from some people, isn't it?
Absolutely not true! I have never been able to paper trade successfully because I have never felt that it was a serious trading so I simply could not concentrate enough. But when it comes to real trading, I do make money. Papertrading is good only to practice placing orders, you cannot really draw any conclusions regarding your real life performance based on your success or failure while papertrading.
I must say that the idea of paper trading does not appeal to me as people have said - there are no emotions as nothing is at stake. Being new to trading index futures I have started trading in the smallest amounts available - via finspreads. This amount is 1penny per point which I find does elicit strong emotional responses - accepting that they will not be as strong emotions if it was £10 a point! I have found this real, real-time, small risk, learning invaluable. And because the values I'm trading are so small, I can't use limits or stops, which means I have to be extra disciplined to get out at my stop (especially) or at my target - hence I have to use market orders always. Not having used a simulator I can't comment on their value, but I suspect that it suffers the same fundemental limitation of paper trading - ie. there is no risk, hence no emotions, its not very useful when it comes to trading the market. Having said that, I can see it may be useful in learning about placing the different order types etc. Mutters
I have been trading "for real" for a couple of years now. But when I get a new idea or hear about an interesting strategy I will not risk a dime on it until I "papertrade" it for at least a couple of weeks. I know a trader that does very well with options. He papertraded three years before he came up with a method that he had enough confidence in to risk his money. Its true some people learn to swim when someone throws them in the water but that does not mean its the best way to go for everyone.
You think not having an emotional attachment to your trade is a bad thing? Isn't that what everyone says is the goal? "Be like Mr Spock", they say. What you guys are really saying is, the emotional state you are in while papertrading is too superior to your normal emotional state. That is a flaw in you, not in paper-trading. If you want to induce some drama in to your paper-trading, add some excitement too it. Keep an icepick next to your desk. If you have a losing session, you have to stick it through your left hand. Pre-arrange for a trip to the emergency room. Think of an explanation in advance, "I was breaking up a block of ice, when I accidently hit my other hand!". Suddenly, paper-trading isn't so boring anymore. Like I said before, people that insist paper-trading is not realistic are arguing about the existence of their own flaws. And who can argue with that?
So has anyone ever achieved this "Dr Spock" state? I think not. I know the goal is not to be INFLUENCED by the emotions, but that is a completely different thing to having no emotions!! I would much rather "waste" a SMALL amount of money in the markets than waste a LARGE amount of time on a largely useless endeavour. I can always earn that money back - I can't get the time back! ps. I'm using a speadbet account - which means each trade only costs a few pennies also.
Seems to me that the detractors are saying a great deal more about themselves than they are about papertrading. The question is not whether they experience the same emotional turmoil while papertrading than they do "for real", but why they continue to experience this turmoil at all. They should have gone past all that long ago, which leads me to suspect that they are not the traders they claim to be.