"I think paper trading is the worst thing you can do… It’s like shadowboxing and then getting in the ring with a professional boxer. What do you think is going to happen? You’re going to crawl up into a turtle position and get the crap beat out of you because you’re not used to really getting hit. The most important thing to becoming a good trader is to trade." — Gil Blake, Inventor of mutual fund timing strategies Just trade small If I may add.
Paper trading has some worth. It will reveal strategies which do not work. When you find a strategy which appears to work on paper, you should try trading for real... just use small money for a while.
Paper trading is so important for me. I don't do anything live until I have done it so many times in paper that it just comes naturally. I'm probably the only guy that routinely resets my paper account back down to a reasonable level. I have to be careful if I have them both open because I have been known to enter trades live that were supposed to be paper. They both look and feel exactly the same to me.
Paper trading is a very good way to tell if a strategy won't work. That's extremely valuable information, and I'm not sure why you'd give up the opportunity to determine that for free unless you're simply impatient. Where most get into trouble is assuming that it also tells you what does work. It simply tells you what might work, at which point the trade small advice is certainly sound.
The above comment also applies to backtesting. Which many portray as a panacea, but many end up over-relying on it, and most do backtesting "wrong" anyway by overfitting etc.
So you would go without any preparation in the ring with a professional boxer? What do you think is going to happen? Before you can count till three you will be knocked out. And what's the next step? Get in the ring again, and get knocked out again? I was boxing for many years (as a hobby, never good enough to become a professional). Shadowboxing and slow motion boxing with someone else was essential to learn what to do and how to protect yourself. I have never heard of any sportsman that started in any sport immediately as a professional.
Paper trading is like practicing boxing before a match. Would you have preferred no practicing and then just throw yourself into the boxing ring to face a professional??!! If even after practicing, you can still lose a match, what do you think it's going to happen when you never practiced and then go blindly into the ring? If you actually practiced boxing with your team mate or coach before a match, you would still "crawl up into a turtle position and get the crap beat out of you", you think without any practicing in boxing, you would not "crawl into a turtle position" when facing a REAL professional opponent??!! Not surprised Gil Blake would say that cuz he's a mutual fund promoter. The ulterior motive is obvious.
These boxing analogies are a bit misguided. If you make this about taking hits, then you make a loss be about pain. When you do this, it all turns out to be a game of avoiding pain, and this isn't the proper way to trade. All of these guys claiming they have gone 20 trades with a loss, big fucking deal. A strategy to minimize loss might not actually be maximizing profit. Nobody wants to lose money, but if your strategy has a 50% win rate with a 1:2 risk to reward, then you are absolutely golden. If fact, you're much better equipped to take a loss because it happens to you on average every second time. If you get into a winning streak, when the loss comes, it might actually affect you more, and negatively. All of these posts about fighting professionals, taking hits, etcs. are just completely wrong in my opinion. Its only you putting on a trade that works or doesn't, and then you move on to the next trade. A win or loss should be handled the same way and is just an expected outcome from putting on a trade.