Paper Trading

This is a discussion on Paper Trading within the First Steps forums, part of the Reception category; Hello All! I would appreciate any advice on a quality platform for virtual trading/ paper trading. I see you can ...

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Old Nov 30, 2004, 3:32pm   #1
 
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Paper Trading

Hello All!

I would appreciate any advice on a quality platform for virtual trading/ paper trading. I see you can register on almost every broker website for a free 100,000. I am keen to simulate the day trading experience as close as possible.

I know you are excluding the emotions here, but at least I can measure for say 3 months what I would be doing with 30k (win or lose).

I look forward to any suggestions.

Cheers
Swiss2004
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Old Dec 1, 2004, 2:12pm   #2
 
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Cannot really suggest any good platforms, as I don't really think there is a lot of diffeence between one platform or another with regards to simulated trading. I would advise that if you know what it is you want to trade and have an idea of who you want to trade with, then go with their simulator as you will get used to the quirks of their platform. One word of caution on paper trading on a simulated platform, I have noticed that fills can be a long way from current inside bids and asks, the major problem with this for what you are trying to do is that in a fast moving market you will get into, and out of trades at prices, that in reality you could never achieve, for example while trading on cybertraders simulator I would place a limit order at say .55, watching closely I see that price has moved beyond me to say the area of .65/.66 bid/ask, and bing I get filled at .55. Clearly in realtime I should not be in this trade. The main reason for this is that most simulated platforms are not designed to test trading strategies etc but simply to familiarise you with using the features of the platform. For me paper trading to test a strategy was better done studying the price and volume action and determining if it was reasonable to assume that I would have got in and out at the prices specified.
Something to consider.
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Old Dec 2, 2004, 11:16am   #3
 
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swiss2004 started this thread Thanks for the advice guys, I can see the value in trading small, this also lets you experience parting with money as well as testing strategies.
Its easy to buy and short 50K of fantasy money and still not get a true flavour of trading.
I guess the mind set should be much the same as trading paper compared to real cash flow as long as you believe in your strategy and principles.

Swiss2004
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Old Dec 2, 2004, 11:49am   #4
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My own opinion is that paper trading doesn't teach you much....others may disagree. There is a danger that it can give you a false scence of security if it goes really well. If you want to test strategies then one should back test. If you want to lean/feel what its like to trade then trade real money in a small amount. Having said that I'll contradict myself now. When I backtest I do try and pretend I am really trading what I'm backtesting and I note down my feelings with the trades. I'm trying to see if I could really trade it in real life given the ups and downs. After a few hours of doing this I feel really mentally exhausted and I've normally given up a few times thinking the system stinks.
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Old Dec 2, 2004, 12:03pm   #5
 
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Would agree up to a point Tufty, however once you know what it feels like to trade and you are simply strategy testing I find paper trading works fine, just don't use a simulator to do it, not a fan of backtesting. Trading in hindsight is easy.
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Old Dec 2, 2004, 5:33pm   #6
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papertrade

Quote:
Originally Posted by swiss2004
Hello All!

I would appreciate any advice on a quality platform for virtual trading/ paper trading. I see you can register on almost every broker website for a free 100,000. I am keen to simulate the day trading experience as close as possible.

I know you are excluding the emotions here, but at least I can measure for say 3 months what I would be doing with 30k (win or lose).

I look forward to any suggestions.

Cheers
Swiss2004
With training, time and patience, paper trade futures can turn the unskilled novice into an active, futures-educated investor. With paper trade futures your losses are only a matter of pretend figures.. as are your profits. Once you have confidence in your abilities, it might be time to abandon the paper trade futures and step into the genuine futures trading markets.
http://www.infinitybrokerage.com/fut....aspx?ref=JBAR
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Old Dec 4, 2004, 5:23am   #7
 
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I paper trade on a simulator because it keeps me honest. My clicks are recorded. It provides an easy record for me to journal. It is a valuable tool for the lesson I am currently working on: Now that I can recognize certain setups and patterns in hindsight, can I recognize them in real time, and act at the appropriate moment? If not, then it is back to the drawing board to further define my setup and action. My goal is to pull the trigger when the plan says to, so if I'm looking at the simulator, and I don't know what to do (sit tight, enter,or get out), then that tells me my plan is incomplete.

I am amazed at how much b.s. I can generate and swallow if I don't simulate and journal. The simulator doesn't leave any wiggle room. Yes, I'm getting the good setups and trades now, but I am still entering too often, and the simulator shows just how the commisions and spread grind down the stake. Without the simulator and the journal,I tend to discount the little losers and accentuate the larger gainers. I rarely look at the $$ value while I'm trading - just the chart position. Can't tell you how many times I ended the day thinking I was up a decent amount, when in fact the simulator showed the truth - I was break even or down a little.

For me, simulator = stake preservation. There is no reason for me to put money on the line until my plan is generating regular gains and very small draw downs on paper. You don't have to win big in this game, but you have to gain consistently -compounding and increasing position size will take care of the money.

JO
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Old Dec 4, 2004, 12:34pm   #8
 
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Quote:
Originally Posted by swiss2004
Hello All!

I would appreciate any advice on a quality platform for virtual trading/ paper trading. I see you can register on almost every broker website for a free 100,000. I am keen to simulate the day trading experience as close as possible.

I know you are excluding the emotions here, but at least I can measure for say 3 months what I would be doing with 30k (win or lose).

I look forward to any suggestions.

Cheers
Swiss2004
Hello.
Id say that paper trading as a novice is probably a waste of time for most. An apt comparrison may be (driving along an ordinary road with few hazards OR driving up narrow twisty mountain road with a sheer drop and no guard rail) There both roads, but i can guarantee that the mountain pass will take far more from you emotionally if perhaps not physically than the average road.
A better course of action imho would be to download a few broker demos to see which one you prefer, then get to know it well. Open a realtime mini account and try your hand, as a novice it will be every bit as hard and emotionally painfull for you to place a 1 'mini' lot order as it would a pro to trade size.

GL
regards
dt
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Old Dec 6, 2004, 6:17am   #9
 
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Darktone, I don't understand your analogy. Are you saying that someone who has never driven a car might as well start on the mountain road?

I'd rather learn to operate the car in an empty flat parking lot. When I'm sure I know where the gas, brake, wheel, turn signal and defroster are located and how they work (paper trading), then I'll take an easy road (live trading with tiny positions). Then after a few weeks/months of successful driving in normal traffic on normal roads, I am more likely to successfully navigate the mountain road (trading full positions with real money).
JO

Last edited by JumpOff; Dec 6, 2004 at 6:19am. Reason: spelling
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Old Dec 6, 2004, 10:23am   #10
 
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Quote:
Originally Posted by JumpOff
Darktone, I don't understand your analogy. Are you saying that someone who has never driven a car might as well start on the mountain road?

I'd rather learn to operate the car in an empty flat parking lot. When I'm sure I know where the gas, brake, wheel, turn signal and defroster are located and how they work (paper trading), then I'll take an easy road (live trading with tiny positions). Then after a few weeks/months of successful driving in normal traffic on normal roads, I am more likely to successfully navigate the mountain road (trading full positions with real money).
JO

I could have directed my example better, granted, but the emotional comparative between real time and demo is true imho.

perhaps :
Quote:
I'd rather learn to operate the car in an empty flat parking lot. When I'm sure I know where the gas, brake, wheel, turn signal and defroster are located and how they work
To me =

Download a few broker demos to see which one you prefer, then get to know it well.


Then get yer L plates / get your hands dirty and stuff the car park


Paper trading generates a false sense of security and doesnt help in preparing you for the mental struggle of trading live with risk. So why prepare in a manner that is so different from the the task?
The reason most people fail is due to the emotional side of trading (in my opinion its 90% of what is required to be successful trader).
I know i wasted my first couple of years mixing with paper trading only to get blown away using real money, I was totally unprepared for the mental side.

regards
dt
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Old Dec 6, 2004, 11:28am   #11
 
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Quote:
Originally Posted by darktone


Then get yer L plates / get your hands dirty and stuff the car park


Paper trading generates a false sense of security and doesnt help in preparing you for the mental struggle of trading live with risk. So why prepare in a manner that is so different from the the task?
The reason most people fail is due to the emotional side of trading (in my opinion its 90% of what is required to be successful trader).
I know i wasted my first couple of years mixing with paper trading only to get blown away using real money, I was totally unprepared for the mental side.

regards
dt
dt

Agree with that and to start you need to risk just enough to set your stomach churning. If you're the sort of guy who can't bear to part with a fiver then risking 10 will do.

You need time in the car park, of course, but however well you prepare yourself on paper and simulators you won't even begin to recognise how emotions may affect you until you're trading live. You have to train yourself to become emotionless. 'Course you may be one of those who have an inbuilt emotionless trading persona (where did I hear that phrase ) but I wouldn't bet on it.

good trading

jon
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Old Dec 6, 2004, 4:47pm   #12
 
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To each his own. I'm sure you are right about paper trading emotions being no preparation for live trading emotions. Certainly I have no interest in telling other traders or wannabes how they should procede. It sounds like your beginning experiences are something I will want to avoid, and I thank you for sharing your experiences.

I prefer to break the task down into smaller pieces and to gain compentencies where I can with the least amount of risk. As an individual trader, I can choose my path - no one is breathing down my neck saying that I must be trading live by xx date. I expect that being able to recognize one or two simple setups, having a written plan action plan based upon tested patterns, and knowing how to operate a simulator will allow me to devote all my attention to managing the hardest part (the emotional issues) when I am ready to do that. Actually, I expect these skills and plans may make dealing with the emotional issues a little easier. I am sure I could not handle having real money on the line (even small amounts) unless I was sure I had some kind of edge.

Call me lazy, crazy, slow, - but I would never go to the casino unless I was hitting the blackjack table as a card counter, or I was just planning to blow some cash and call it entertainment.

JO
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Old Dec 6, 2004, 4:56pm   #13
 
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So much of the quibbling about paper-trading stems from misunderstanding just what it is that paper trading is supposed to do. If one expects something else, he's going to be disappointed. And, of course, there's always the problem of not doing it right.

Paper trading has nothing to do with emotion. To think that paper trading is in any way going to simulate the emotional response that one feels when he is trading with real money is, at best, naive, and to state that it is pointless because it does not spark these emotions is unfair.

There are two chief reasons why one might want to paper trade. One has to do with getting used to the feel of trading itself, i.e., creating the order, transmitting the order, managing the trade, getting used to the platform and where everything is, hitting the wrong key, fixing it, and so on.

The other has to do with determining whether or not one's method or system or approach or strategy or whatever you want to call it is profitable, at least in simulated trading. That it turns out to be profitable does not necessarily mean that one will trade it profitably for real. Nor does it mean that it is in fact profitable, particularly if one isn't paper-trading correctly. However, it is a sure bet that if the strategy isn't profitable in paper trading, it sure as hell isn't going to be profitable if one trades it for real.

Additionally, if PT isn't done correctly, it is largely a waste of time. PT is the end of a series of steps which include studying the charts, defining the setup, backtesting the setup either manually or automatically, "forward" testing the setup using old charts, then, finally, PT the setup in real time, using the same new data that everybody else is receiving and trading. It is also critical that a trading journal be kept throughout so that one can deal with glitches, anomalies, and address whatever emotional responses may manifest themselves. And one must be careful not to play games with himself, recording a trade seconds or even minutes after the trade is resolved, thinking Oh, yeah, I would have taken that, or Oh, no, I wouldn't have taken that. If one is going to PT, he needs to make whatever decision needs to be made AT THE TIME, not five or ten seconds later. Your broker won't be giving your money back if you have an oops. Therefore, take it or don't take it, but make up your mind, recording why you took it or didn't take it, then recording why you think it did or didn't work out. Only by doing so can one improve the plan and avoid most if not all of the emotional murk that one wades through because he didn't plan sufficiently or PT that plan.
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Old Dec 6, 2004, 5:12pm   #14
 
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Quote:
Originally Posted by JumpOff
To each his own. I'm sure you are right about paper trading emotions being no preparation for live trading emotions. Certainly I have no interest in telling other traders or wannabes how they should procede. It sounds like your beginning experiences are something I will want to avoid, and I thank you for sharing your experiences.

I prefer to break the task down into smaller pieces and to gain compentencies where I can with the least amount of risk. As an individual trader, I can choose my path - no one is breathing down my neck saying that I must be trading live by xx date. I expect that being able to recognize one or two simple setups, having a written plan action plan based upon tested patterns, and knowing how to operate a simulator will allow me to devote all my attention to managing the hardest part (the emotional issues) when I am ready to do that. Actually, I expect these skills and plans may make dealing with the emotional issues a little easier. I am sure I could not handle having real money on the line (even small amounts) unless I was sure I had some kind of edge.

Call me lazy, crazy, slow, - but I would never go to the casino unless I was hitting the blackjack table as a card counter, or I was just planning to blow some cash and call it entertainment.

JO

JO

Sorry, hadn't meant comment to sound like an instruction . As you say, each to his own.

As usual DBP hits the nail on the head.

Good trading

jon
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Old Dec 6, 2004, 6:51pm   #15
 
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Quote:
Originally Posted by swiss2004
Hello All!

I would appreciate any advice on a quality platform for virtual trading/ paper trading. I see you can register on almost every broker website for a free 100,000. I am keen to simulate the day trading experience as close as possible.

I know you are excluding the emotions here, but at least I can measure for say 3 months what I would be doing with 30k (win or lose).

I look forward to any suggestions.

Cheers
Swiss2004
Paper trading is nothing to do with reality and did not help me one bit other than to get used to the platform
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