Making paper money but losing on live trades

Hi Guys,
I am new tto your forum, as I can gather there is a lot of experience here. I have been practicing intensely for the last 1 month and have even developed a nice little TA based system. When I use it on the virtual money I make a nice return, however when I apply it to my live trades, I am either stopped out or i take my profits too early or the market just turns against me! Is there something I am missing in my FX trading?

Mbeca said:

Hi Guys,
I am new tto your forum, as I can gather there is a lot of experience here. I have been practicing intensely for the last 1 month and have even developed a nice little TA based system. When I use it on the virtual money I make a nice return, however when I apply it to my live trades, I am either stopped out or i take my profits too early or the market just turns against me! Is there something I am missing in my FX trading?

Click to expand...

It happens all the time!

real money trading is different to trading DEMO

suggest you do MICRO lots - ( Not MINI) andruthlessly follow your system.
If your system is back tested and you are happy with it then have FAITH in it
It will work

NEVER EVER EVER have doubtin the system, because the doubts will manifest into a loss
Unless your system is NOT doing what you expect it to do

I think you should re-do the paper trading strategy... and also read something about trading psychology

Mbeca said:

I am new tto your forum, as I can gather there is a lot of experience here. I have been practicing intensely for the last 1 month and have even developed a nice little TA based system. When I use it on the virtual money I make a nice return, however when I apply it to my live trades, I am either stopped out or i take my profits too early or the market just turns against me! Is there something I am missing in my FX trading?

Click to expand...

There could be several reasons why your trading system is working in simulation, but not when you are trading live.

One of the most common reasons for beginning traders is the additional emotion that comes with trading their own real money. The fear of losing money is a very strong emotion, and can cause even experienced traders to hesitate before entering a trade, or to move their stop loss to break even too early, or to take a smaller profit than they would normally. If you have tested your trading system thoroughly, and it consistently makes a profit, then you need to have faith in your trading system, and follow it exactly.

Keep a record of every trade that you take, including the entry, the target and stop loss settings, any changes that are made (such as trailing the stop loss), and the exit. At the end of the day (or week), go back over the trades in simulation and compare the simulated trades to your trading log. If there are any differences between the simulated trades and the live trades, it should be easy to see where (and hopefully why) the differences are occurring.

Adam Milton

DayTradingGuide said:

There could be several reasons why your trading system is working in simulation, but not when you are trading live.

One of the most common reasons for beginning traders is the additional emotion that comes with trading their own real money. The fear of losing money is a very strong emotion, and can cause even experienced traders to hesitate before entering a trade, or to move their stop loss to break even too early, or to take a smaller profit than they would normally. If you have tested your trading system thoroughly, and it consistently makes a profit, then you need to have faith in your trading system, and follow it exactly.

Keep a record of every trade that you take, including the entry, the target and stop loss settings, any changes that are made (such as trailing the stop loss), and the exit. At the end of the day (or week), go back over the trades in simulation and compare the simulated trades to your trading log. If there are any differences between the simulated trades and the live trades, it should be easy to see where (and hopefully why) the differences are occurring.

Adam Milton

Click to expand...

Thank you, its quite consoling to know that this is common, I have also discovered other threads here on the same issue. Will keep your advise in mind next when I trade.

Hi Mbeca,
Welcome to T2W.
The problem you have is indeed a common one - I'm a fellow sufferer - so you're not alone! The solution is to go back to paper trading just to confirm that you can make virtual profits. When you start to use real money, start small, VERY small. So small in fact, that you could lose all day every day for weeks on end and it would barely register on your account. If you're day trading, go for at least one full week - and preferably two full weeks - trading the same small size. IF and only IF, you are able to have more winning days than losing days (i.e. 3 days plus) AND you are net profitable at the end of the two week period - then and only then increase the size slightly. So, for example, if you're trading shares, start with 100 shares and then move up to 200, 300 and so on. If you fail to achieve the target of more 3 plus profitable days per week AND being net profitable at the end of it - then go back down a level. Slowly build up to the maximum size that your account and risk management strategy permits you to trade. Take it easy, take it slowly: by the inch it's a cinch, by the yard it's hard. Good luck.
Tim.
P.S. For the record, this isn't my idea, it's what Dr. Alexander Elder recommends in his book 'Come Into My Trading Room'.