Nothing is more valuable that using a simulator, once you have 50 consecutive winning trades on a simulator, you could try real trading.
If someone can't make consistent profits on a demo account, what's the possibility of making profits with real money? Even Jesse Livermore papertraded. I do agree that there's a good chance that there is no sense of risk or emotion with demo trading... but then again is the real thing supposed to be emotional? We are human, so there will always be that sense at times when we are not performing at our peak. I think it's good practice to start out with proper habits. Learning proper trading mechanics is already a challenge... why start off with bad habits and make things tougher? I always hate it when new golfers are out on the golf course. They don't even know the rules or even know how to play the game. They just ruin things for everyone. I practiced for hundreds of hours before I actually went on the course. After I got good enough I started playing competitively... but trading is not like golf. So I can see how newbies are encouraged to trade before actually practicing..... At first I didn't think demo trading wasn't necessary... I guess I was in a hurry to become rich, which can be dangerous in our field. In my opinion I think that is the main motivation to start off trading with real money, using the excuse that they'll learn faster. I suppose you can learn faster, and become broke at the same time. my two cents, Andy
I'll agree with the post in a limited sense. You need simulated papertrading in order to determine that your strategy and edge is truly workable. All starting out traders will bounce between strategies and nifty indicators like wide-eyed children following the bright, bouncing bauble, desperately searching for that Holy Grail. Papertrading and backtesting would definitely be necessary in order to determine that what you have is the real deal, taking into mind that simulations can never truly capture the real life ebb and flow of slippage. However, simulation and papertrading can never be used to conquer the emotional aspect of trading. If there are so many strategies that are backtested to be shown as profitable, why than are the VAST MAJORITY of traders unprofitable? Even profitable traders have only a 20% chance to have one profitable year out of four and that percentage drops to 2% to be CONSISTENTLY profitable year in and year out. It's the hard grind, the mental and emotional stress of being in the breach, weaving in and out of the market like you've got a 250lb man-killing linebacker on your ass that wants nothing more in the world to maim your sorry pathetic ass. Every day is an adrenaline rush, every day you get battle scars, every day you experience the highs and lows of euphoria and depression. Every time you step into that gladitorial arena of the markets, its like being in the Super Bowl every day. What a F$CKING rush that is. No amount of simulation and papertrading, no matter how good the strategy, will turn you into that calloused, emotionally dead, and profitable market mercenary. Look around, pansies, at your fellow forum members. It's nothing but scared, dumb newbies on market Ecstasy. 9 out of 10 of you won't be here next year. And its not because they didn't have a good strategy or setup, it's because they couldn't get discipline and control their emotions.
Win rates donât tell the whole story. Need to look at win rate and profit factor together. Why not just judge systems on Sharpe ratio, or even better, on the ratio of daily/weekly/monthly return divided by maximum drawdown? What is the name for that ratio?