Paper/Demo trading

Discussion in 'Trading' started by macal425, Jun 5, 2001.

  1. I know that paper/demo trading does not really give a realistic idea of how well one would actually do in real trading. However I think it is a good way to get used to trading software and to test whether or not I am on the right 'track' as far as my ideas and trading style are concerned.
    Does anyone have a realistic opinion of how much slippage to expect, on average, on each side of a trade at the beginning of a trading career. I realize that this is a difficult question to answer but opinions and tips on the best way to approach paper/demo trading would be appreciated.
  2. jsmith


    Paper trading does not come close to trading because you do not have the emotions that come with knowing that your money is on the line. But it is good practice if done correctly.

    Make sure you are serious when you paper trade and don't change your trades. Like when a trade goes bad, erase it and say I wasn't going to do it anyway. When you buy, record the ask price. When you sell, record the bid price.
  3. mjt


    I think the most important question to ask first is what timeframe you're considering. If you're looking to scalp, or trade fast markets, paper trading will tell you almost nothing, because so much depends on getting filled. If on the other hand, you're trading longer moves, like 1/2 hour to a few hours, paper trading can give you a fairly accurate assessment. Of course, you still don't have the emotional aspect. So do you have a trading timeframe in mind?
  4. I would be scalping/grinding, so I suppose I should start with the recommended 100 shares to get my feet wet and my execution skills honed and move up share size as I get comfortable.
  5. That's right macal, start out with the 100 share trades to get used to realtime action. I'm assumming you're going to use IB to minimize commissions and the learning curve loss, so get used to their software through the demo before you actually throw in the benjamins:D. TWS can be a little tricky so it takes some getting used to. So when you're ready, dive right in but make sure you cut any losses quickly b/c that will be the most valuable skill you will ever develop in this fast-paced ever-evolving field:eek: