Trading is at least 75% mental. The best way to paper trade is have a pen or pencil, and a blank journal /pad of paper/stack of sheets, and trade actively in front of your real trading software. This is a big psychological boost, and will be the best way to keep your emotions in line while your real hard earned cash is on the line. Yes demoing is realistic, there is nothing inhibiting virtual returns versus real returns if your paper trading is real time. Just never underestimate the power of emotions. And don't forget to use stops - you'll be prone to loose it all if you don't!
Like everything there are similarities and differences. The most important point here is to make sure that you don't risk very much. To begin with don't risk more than 1-5% of your money on any one trade. This is because no matter what you do, you can always be wrong. You will be dealing with the same charts, and the same platform, but the psychology is different. Some say psychological makeup prevents people from being able to make money. I'm pretty sure trading is a learned behavior, so it can be taught.
1-5%? Do you want to be rich this year or next decade? Leverage does not cause you to loose money, being wrong consistently does. Leverage just speeds up the process in either direction. Don't leverage so much so that you lose the vast majority of your money with one trade. Leverage strong, and have tight stops. Simple as that. It's amazing how few traders there are on a webs tie called elite trader.....
1-5% is a lot depending on your account size (5% of 1m is 50k etc.), something tells me you failed elementary math. It's also because he's starting out. It's not to say that he shouldn't leverage strongly if he has a history of 95% winners.. which it sounds like isn't the case. The combination of being wrong and steep leveraging does cause one to loose money. I know this from experience.. If you leverage yourself into a position in which your stop is very close to your entry which is most often the case if you are betting big, you can and will be wrong a lot more (causing you to loose money) often than you will if your stop is in a logical place further away from your entry (as in the case of a smaller position size). I lost most all the money I made doing what you're describing above, trading the ES. Yes some days I would make 5k+ on ES doing this, but guess what? I wouldn't make a winning trade the entire next week and I'd be back to where I started. Read my journal. And I am a trader on this webs tie. How much of this webs tie have you actually read? I used your vocabulary so maybe you understand?
if you are consistently profitable using your strategy manually on a demo, perhaps it would be a worthwhile investment to get your strategy automated.
leverage strong on a few trades only, its amazing how many on ET,95% pedestrians,myself included,that condescend to the rest
I'm looking into it, its been 3 weeks testing now and only 3 losing days, 1 of which I went against my system on. Need programmers
Adam, I definitely do not have any beef with your post - you have very good points that frankly some people could take note of. Also, I didn't mean to imply that you're not a real trader. I just think there are a sizable number of ET'ers who are/have lost all of their money, or are demoing guys who have a little too much arrogance given their skill set. I especially 100% agree on your statement of over leveraging and being wrong via stops. IMO, this comes down to the preciseness of whatever system or indicator one uses (or news, but over leveraging on news is subjective and highly unpredictable from a precision point of view!). I believe there are some very solid 'tried and true' methods that may not yield as much as a complicated self-made system, but are always there and reliable. I won't mention them, for both of our sakes, in not depleting our edges!
If you are backtesting, platforms have very subtle bugs in them. The most well known is spreads. I have found literally hundreds of strategies that make all the money in the world, when I forget to set a spread. Even a single tick of spread turns them into losers. The second I found in Ninjatrader has to do with optimizing the parameters in walk forward testing. I can go into more detail if anybody cares, but it's very technical and would take my feeble mind hundreds of words to properly describe it. If you are live testing your system then these points aren't relevant. Don't forget to include slippage and commissions when counting your demo dollars.