Hi all, I'm new to these forums. I have been actively trading demo/sim futures accounts for over a year now and I'm perplexed by the results. I wanted to post thread this to gauge people's experience and opinions. I have been mostly demo trading futures, and at that mostly futures spread trading. But also sometimes options on platforms like Firetip, and OEC trader, Gain capital. To be honest I have made millions with these demo accounts, and particularly with Firetip, the trade fills are seamless and instantly profitable in some cases. I was thinking I was getting unrealistic fills at one point, such as when I open a Brent Crude/Gasoil crack spread on Firetip, it shows a profit of around 2 million dollars. I have mostly been trading futures spreads for risk mitigation and reduced margin benefit. When I contacted Ironbeam or the brokers about these results they seemed to brush it off and never bothered to give a definite answer. I also notice the Live chat feature has now been removed from the Firetip demo platform. What do you guys on here think? Is it possible to get these results on a live account? I don't want to commit real money until I am sure of this, and to be honest, the brokers are not convincing me very well at the moment. Thank you!
You spotted the main problem. Instant fills. If your strategy trades odd lots and holds a long time it might matter less. If you trade frequently the rapid fills will skew your strategy towards more profit since you will always get hit where you want. If you want you can probably pull your trades into an Excel sheet and adjust your entry and exit to the midpoint for a slightly better picture. However my experience trading futures spreads has shown you're not always hit at the mid. Especially on less liquid spreads. Remember there are no real market makers in the futures markets. Each trade is owned by a trader. This can skew where you're hit up or down depending on market conditions.
I did forget to mention, I am trading based on Market Orders. So I don't use Limit orders at all in my trading strategies. I know this makes a difference, as well with Limit Orders there is normally a waiting time to get filled.
There are a few differences you need to keep in mind from what i first read: 1. Liquidity, in demo you are able to open 10000 contracts in less than a second at one single price point, in real live that is not the case, not with any futures contract out there. 2.Execution, no slippage in demo, there is slippage when trading live, especially when trading very large size. Slippage happens while entering a trade (unless you use limit orders) and slippage happens while exiting an order (unless you use a stop limit order but then you might never get filled at all). 4. Another classic one, is the strategy doing so called martingale? Always seems lovely in demo, never sustainable in the long run with real money. In demo you can just keep adding to your position, or even doubling it every time it goes a few ticks against you. The difference here is that every time you do so your losses get bigger and bigger, something you can handle in demo but will not have the stomach nor the cash for while trading real money. 3. Maybe the most important/significant one, psychology. When trading live you will act and react completely different with real money on the line. A lot of traders lose and never stop losing purely because of psychology. Sometimes its arrogance, thinking they are the best ever and just had some bad luck, things will be different next time (NOT). Sometimes it is fear, fear of losing real money. After a few losing experiences traders start to take profits before it reaches the profit target, out of fear for losing the little profit they have now, but let losers run to the stop loss resulting in a negative risk:reward. Often even moving the stop loss even further in the hope things will turn around. You are right about trading demo first until you are sure, however there is only one way to be 100% sure, to find out all of the above for you personally and that is trading with actual money on the line, in demo you will never experience these examples that can make all the difference.
Are you able to test with small lots using real money, and compare how the fills play out compared to your sim trades?
[ I'll be honest, the drawdowns have been in the thousands depending on which side of the trade I have entered. But mostly, with the futures spreads I have been trading, it has been huge profit. Mostly based on the use of the Firetip demo platform, but I also had big success with OEC trader from Gain Capital.
Well, like @zoned_post_meridiem said, try with very, very small positions and see if you can still replicate these excellent results. If you lose you will lose peanuts, but if you keep winning then I guess you won't have to worry about your financial future (no pun intended) anymore.
You should tell us what size account you're using to generate these millions. Also, if you are just levering up huge size in calendar spreads, that sounds pretty flimsy. Where is @tradingismybusiness @trustedsource @REDP1800 @actualfuturestrader when you need him?