Demo vs Live dispute

why most of the traders consider, there is a far difference between demo and live ?

any opinion you have ?

 

its a very common dispute between live and demo. generally we take demo for improving our trading skill but in real we for bring profit . that's really clear.

 

Demo fills are unrealistic, in live trading you will have limit orders that are not filled if not enough volume isn't traded at your limit price level. With most demo's you are filled once the price touches your limit level.

In demo there is no slippage, which can eat up quite a big portion of your profits if you are a scalper.

But most of all the psychologic effect is completely different. You don't care about losing virtual money, you do care about losing real money.

 

IMO, a paper-trading/demo/Sim environment has value to get comfortable with software or a new asset class. Sim executions are often not the same as real and more importantly, Sim has no sense of fear and greed. For a manual trader, the decisions you make are just not the same. For an automated trader, results rarely match. I have seen many tear sheets from nascent managers that show simulated trading that always have lower returns in real trading.

 

its a very fine reply

 

according to me, there is no technical different between two. its all about psychological issue , nothing without it.

 

There most certainly is a difference as i have mentioned before, both in slippage and limit order fills.

 

Slippage is very real and I thought I had a very good trading system I was trying out. Was very profitable in simulation and backtests by a lot. So, I decided to test it by going live, placing small trades and because of the slippage alone, it turned into a huge loser by a mile. Most of the trades ended up losers.

 

I guess it depends of which sim env you're using.
IB sim env (paper trade) is simulating the worst case, meaning that your orders are always placed at the end of the queue. My experience with the IB sim env is that it is giving worst results than real env, not the other way around.

 

Yes, another one of these "I'll agree with everyone else that SIM always gives way better fills than real, to sound smart".

I traded some SIM during COVID, while also trading a real live account. Some days I actually performed worst on the SIM. Not to mention as you said, not all SIM gives you magical fills either.