It is not about testing your method (discretionary); it is about SOP. You have no skills and you do not "get it". Don advises you to go back to standard blah blah ....; you have NO standard anything. Someone posted a list: enter, exit stop. Maybe he meant enter, stop , exit....who cares..... You do not know how to set up a screen, monitor a screen if you had one set up, be able to sense signals, be able to compare signals with standard blah blah, use your trading account screen display. etc, etc..... If you did know any of the above you would not be chatting about how you think what you have been doing actually works. You post stuff about your space and your space is very different than a trader's space. To say that you are a discretionary paper trader is an unusual possibility. Think for a moment.......do you know how a discretionary system is backtested?..... Think how forward testing a discretionary system would work based upon discretionary back testing....... Do you get the picture that the whole above paragraph has no answers? Somehow you have reead books. done this or that and you have woven a path to paper trading using a discretionry plan? approach? something? You proceeded to evaluate it based upon collected data that you chose to collect and measure in the manner you picked to do measurements. This is all you doing your thing in your space. So the alternatives? The paths you chose not to take that are in the books and the posts? You are saying that as the trading day goes by you are always at choice as what to do. And, and as such, you get stats on your results that are different (better) than people who have narrow specific SOP's that are less profitable. For your experience level (none as has been pointed out to you) probably the first step (the next step) would be to rename what you think you are doing and see if you can define what you think you ar doing. As has been pointed out to you, you are learning a lot about not being in the market as you are watching some aspects of the market that may or may not be important for making money. When will you get to a place to be able to set up your computer for watching the markets? Watching to be able to see what is required to make money. Not soon. When will you develop a sufficient set of signals to be able to do even one kind of frquently occurring money making trade? That will come after you get your computer set up to be able to even see signals. Look at the list of signals you have posted in this thread. Your statements on how money manaegment affects your discretionary trading are lacking in a few aspects. Actually all aspects are lacking. When a person has a screen set up and has a set of signals in mind, he reaches the beginning point and basic starting point for figuring out how to work with the market to take money out of it. His vaste knowledge of how the market works is where the "standard blah blah..." comes from. If oyu haven't gotten the screen and signals straight, then composing the discretionary system to deal, based upon the beliefs and knowledge youhave gained by repeated experiences is goiong to be very shallow. It may be that you have not as yet gained any knowledge and beliefs from experience. generally one of the first beliefs that a person gets it to know to focus on specifics. And the specifiics are far apart and few indeed at the beginning. Knowing that you know little is very hard to find out for you. Some multimillionaire who has hundreds and hundreds of clients paying him money every day o the week says to you .............. and you reply should I do this next? In effect, you were told that you do not know anything about how the market works and to consider getting oriented to Standard blah blah..... Paper Trading VS the Real Deal........ If you go somewhere to look at the Real Deal....or if someone takes you to a place to look at the Real Deal.........you will not come up with the idea of paper trading and especially not using discretionary trading as the approach on paper trading. Go to a workshop and hope to meet another attendee who is not papaer trading. From that point on, see if that person can help you find to highway you need to begin to travel.
Grob - I think our terminology is different, I should have clarified. When I said discretionary I meant not mechanical, not a computer executing my buy and sell orders based on parameters I programmed. You're right I am a newbie. I do have entry/exit/time rules. And yes I know that I don't know ... I know I'm not ready for live trading yet. I consider myself a realist so I appreciate the honest replies even if they seem grim. I never for one second thought trading would be easy, but I love it and will continue to learn. Thanks, jho
My automation software had a bug that blew out my simulation account in a few minutes. That was way different than my backtested results showed I can empathize with those that blow out real accounts, so I learned that much from it at least. I heartily disagree with anybody that says simulation is not worth it after that experience. I'm going back to automated simulation next week, and will go live the following week, I will try to remember to post the percent difference here.
I'm not saying paper trading is a complete waste of time. Most traders, at some point, will use it and for some of them there are very good uses for it. Like: learning a new platform, testing unorthodox trading styles, automation. (I know, I'm turning into a broken record) Beginners who are not prepared for trading live money should NEVER trade simulation. The habits and logistics / reasonings they acquire from simulation will screw them up when the emotions of LOSING REAL MONEY come into play. When a beginner truly thinks they are ready to trade, they should open a live trading account and stare in awe of it. Learn how it works, take the platform tutorials, learn the level 2 screen, edit charts, use the stock finder tools, learn basket orders, how orders are routed, how to change the setup of the screen to suit their style. Then paper trade in order to understand the intricacies of how their platform operates (not to learn their system). When you are ready to trade, you're ready to trade. period. Becoming great on paper (without first attaining a certain level of respect for how unforgiving the market truly is) seldom helps beginners become even above average traders when real money is on the line. To each his own, but if you're a beginner that doesn't know every aspect of his/her trading strategy, platform, and risk management; then starting a paper trading regimen is likely going to be detrimental to your actual trading success. I think... MTE Jayford nitro Lamont_C dandxg hypostomus Don Bright StacyTrader1 Quark bitrend let it run rols volente_00 ...know what I'm talking about
Paper trading is okay to learn the system and the tools your broker is providing. You can see how many different brokers are listed at this site. IB seems to have the most users, but others see value in using other brokers. I use Cybertrader. If you are going to daytrade you have to use a good direct access broker's system. Reading some of the responses to your question are varied as are traders. I think the biggest reason why live trading is totally different is going to be your response to wining, and most losing money. Ask the question about doubling down when your stock is going against you. Most folks will tout that it is one of the big no no's of trading. But it has pulled my butt out of the hole more times than I can count. Would I suggest it for others, no, basically it's a pretty good rule. Anyway back to your psychological reaction to losing money. Some people hang on to grab a few more cents or dollars, and then sit there and watch it turn into a loser. A lot depends on the size of your account and buying power. Some can afford to hang on, while others sell everything as soon as the trade starts going against you. When you lose money, how will you handle the next trade, and more importantly how will you handle the next trade that is very similar to the previous loss. And you will only know that when you start with real money. You can hang on for ever as most trades will move your way eventually. But real money is like night and day. Are you in a situation where you can ride out a -10, 20 or- 40k draw. The smaller your account and/or if you plan trading for an income how long can you go without taking money home. So yes there is value in paper trading, if used right. But there is a big big difference when you have money on the line. Check some one and two year charts. You give much info about yourself or how you plan to trade. That can and should be flexible. Some do better at options, futures, stocks etc. etc. Good luck
Not even close. I got a good chuckle out of this one. You get good practice using your system and placing trades. This is true. But using your brain in the exact same way? Night and day with about 99% of the population I'd estimate. Gets MUCH harder to pull the trigger, and even harder than that to let profits run. Piece of cake without real money on the line. I've personally worked with about a dozen traders as they've done their transition from paper to real life, and it was the same for every one of them, as it was for me. Your brain does not engage the same way when you really have something to lose. So as I said before, paper trading can help you learn the system, but I believe you should go live as soon as you got it down. Just go with really small trades. This can help you project future potential of the system. Trading with nothing on the line will not. LOTS of guys have profitable systems in which they could never make a buck when traded live. The brain just short circuits the system (not following it, ignoring it, anticipating it, etc.). Jay
You seem to want miss the point: paper trading live for a novice or trainee is valuable as a prelude to real trading. It engages the brain in relation to making 'buys' or 'sells' using a live moving price. Of course first you need to have established a thorough understanding of the market you are proposing to trade in. If not, then pulling the trigger, as you seem to have noted, leads to the unsettled emotions you describe; they will accompany either not knowing what you are doing or not knowing sufficiently what you should be doing.
No, those emotions will be there when you go live no matter how well you have practiced. It takes many live trades before they settle down. I did conceed that paper trading is beneficial to learn the mechanics of your system, and how everything works in general. It does not, however, begin to prep you for all the psych variables that onslaught the brain once you go live. It most definitely helps if you have a proven system, but you will still experience all sorts of stuff you didn't before. I'd wager that anyone who disagrees with this is a career paper trader. I know lots of traders having both worked in a prop shop, and been in the biz for 20 years. EVERY ONE of them went through the same thing. Jay
Cheese .. you have got it DEAD WRONG, perhaps you work for the gov. What you mean is .... " Of course first you need to have established a thorough understanding of yourself. " You have the cart in front of the donkey, which is the amateurs approach to the markets.