Papertrade to Live Journal

Edit - 02Jan07

Thanks to all who contributed, but I have decided to discontinue the journal.

A Happy & Prosperous New Year.

Regards,

CYOF said:

Short 5 @ 10:09
Close 5 @ 11:15

This trade lasted a bit longer than I like but as my entry was incorrect - and no major volume follow through (for what is worth with FX?) - I decided to risk the value of the profit on the first trade.

This time is worked out - it will not always be that way so timing of entries have to be improved.

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Paper trading contra live trading is a world of difference, because as we all know in live trading your emotions comes into play. I would even say that too much extensive paper trading can hurt your performance when you get into the real game. Paper trading is in my view only good for getting use to the platform and to work out the overall settings of the strategy.

No offense meant and good luck with your trading!

gle101 said:

Paper trading contra live trading is a world of difference, because as we all know in live trading your emotions comes into play. I would even say that too much extensive paper trading can hurt your performance when you get into the real game. Paper trading is in my view only good for getting use to the platform and to work out the overall settings of the strategy.

No offense meant and good luck with your trading!

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I would agree paper trading is no match for live trading but, as you say, whilst learning and defining a strategy it would be unadvised to go straight into live trading until you know its going to work first! As the saying goes, only fools rush in......

wasp said:

I would agree paper trading is no match for live trading but, as you say, whilst learning and defining a strategy it would be unadvised to go straight into live trading until you know its going to work first! As the saying goes, only fools rush in......

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Well I thought I would get some scolding for that post, really nice to get a constructive reply.

Sorry if I'm being really dumb CYOF but what is the white line on your bottom right corner chart? Is it a line chart above the candle chart? If so, how? Looks quite a handy tool if so?

gle101 said:

Well I thought I would get some scolding for that post, really nice to have a constructive reply.

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I wasn't scolding, I was agreeing that paper trading isn't equal to live but neccessary. I'm sure CYOF realises this so will try not to go on too much in his journal.

wasp said:

I wasn't scolding, I was agreeing that paper trading isn't equal to live but neccessary. I'm sure CYOF realises this so will try not to go on too much in his journal.

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I agree, sorry, what I meant is that your reply was a constructive one, no scolding there at all. I have indeed respect of the intention in the posting by CYOF.

gle101 said:

I agree, sorry, what I meant is that your reply was a constructive one, no scolding there at all . I have indeed respect of the intention in the posting by CYOF.

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My bad. I am so used to arguments and disagreements on this board it gets to a point you just come to expect it! sorry CYOF, please continue :cheesy:

as long as one understands the difference then all ok
but it depends what emotions are playing most experience greed and fear in one form or another with a working system one can have the the confidence to trade live and keep a fairly neutral attitude
unfortunately there are those that losing money is not so much an issue but being right is the problem, then you have a whole world of other problems

CYOF said:

Is anyone using MT4 for stocks or futures - wasp, wasn't one of you journal posts for the Dow using MT4 - was this a live data feed or a file import - who is the broker?

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Hi CYOF,

cheers for the white line confusion, as I said, it looks quite handy and useful to have, may have a look at that further, see if it helps.

As for charts/brokers.... I used to trade through capitalspreads and they were such a joke, I needed three independant charts to trade anything as even their charts are 'indicative' and basically they made it up as they went along (I will probably get slated for that by some but I have seen and experienced it and know they are dodgy but thats a different story alltogether!). I changed over and now use Oanda and EFX/MB but have both metatrader and quotetracker running simultaniously, but metatrader is only for second views and different views and patterns etc.... I have never used a metatrader broker so wouldn't know anything about them I'm afraid.

CYOF said:

Thanks wasp,

I take it you mean MBT Navigator - I tried their demo FX trading platform and I think it is far superior to anything I have used previously, including Stock & Futures trading with IB TWS - historical data feed was a problem with QT for MBT FX.

I think QT is adequate for all charting needs - provided you can get the data in of course.

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I use DTN.IQ and they do the job just fine... prices vary obviously for amount of data required but still competitively priced...

http://www.dtniq.com/

HTH and good trading

CYOF said:

This one is for discussion - I have tried to put the trade decision (based on the current trend direction) process into logical steps - this is the first stab at it so please do feel free to make suggestions for improvement - or if you think it is a load of BS - just say it - no offence will be taken.

The purpose is to try and enforce (into my thick head) how important it is to know what the trend direction is - by filling in the details it may prove / disprove that it is always better to trade in the direction of the trend.

For some unknown reason - I seem to take trades in the opposite direction to the current trend -why, I never can really explain - but I always get caught when I do!

Regards,

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CYOF

You do some nice documents - which should give others ideas of how they can formalise their trading decisions. Just one thing - shouldn't the decision boxes for the uptrend read HH + HL ?

MRH and MRL are something high and something low - could you clarify.

If you want some discussion on this it might help to show a couple of completed examples with associated charts.

Clearly this decision chart would probably be backed up by more detailed analysis e.g. defining what slow and fast gains are, some qualitative analysis of the likely strength of the trend and so forth.

Charlton

CYOF said:

Cheers wasp,

Here is something that some FX traders may find useful - I done up this for FX trades as the candle formations seem to work most of the time with FX.

Regards,

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Have you tested this out on different time frames or are you sticking to one and the same?
These candlestick patterns can definitely give you an idea about what price is going to do next, but it might not be a bad idea to check out where these patterns occur. Do they occur after a substantial rally up, after a sell off? Is at at a previous support or resistance level? Is it "in the middle of nowhere"...

CYOF said:

We all know that the real test of any trader is trading the market with real money - but for me, the use of papertrading to prove / disprove my ability to place high probability trades (and the ability to exit the market quickly if required ) prior to trading with real capital, is a must.

It enables me to test in real time without actually losing my trading capital - but I do take it seriously and place each trade as if I was using real money.

Here are some affirmations that I say to myself that helps me to take papertrading seriously:

"I am only fooling myself if I do not take papertrading seriously"

"I am only wasting my time if I do not take papertrading seriously"

"No one else really gives a damn whether I make it or not - so I will do what I have to do"

Here are yesterdays results for testing YM short term trades using a Renko Chart with various box size settings.

The Renko testing will be discontinued as my current setup does not allow me to place high probability trades - and also limits my ability to exit the market quickly based on my exit strategy.

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I don't know what exactly you were testing as no chart is provided from that day, but looking on the results I would conclude the following:

- your position size is not based on anything determined in forehand, but is determined live by what you're seeing in your P/L balance
- you're letting bad trades run into bigger losing trades and you're not giving possible profitable trades a chance
- if you're placing that many trades within a time period of an hour perhaps you want to be a scalper more than a trader

These comments are quite general, but I think the numbers show erratic results. You need to find out why that is. If you don't know how much you can lose on any single trade, you're bound to get into trouble, you'll double your position size on the next one just to get it back. If that one fails too, you'll stop and reverse and quadruple your original position size. Only to get whipsawed in the process.

Edit: I don't know what exactly you are testing now because I read a post of you in another journal, but testing is much more than papertrading it for one day but you're most likely aware of that.

Just a suggestion here - turn off windows auto-update and have a regular day/week/time to do it yourself.

Also, after looking at the P/L data, I have to say this is a familiar route you appear to be forging! Whilst there is a + sign after six trades, there were also 6 trades, and your broker is very happy - thank you! This is what is known as the "death of a thousand cuts", and it eats in to your soul as well as your trading account.
The mini Dow is a spikey beast that can be tamed, but you need to be able to live with the spikes. In my opinion you need to take profit and give trades room to develop at the same time. I believe this is only achievable with effective scaling out, and money management, whilst remaining within personal financial risk management. With futures this is fixed by contract numbers, which is fine if you have the capital, if not you could use a CFD/SB provider and vary your risk per point size, thus effectively enabling scaling out.
All this gives you a "feel good" feeling about having winning trades, allows you to exit at breakeven more often, and allows the better trades to run at zero risk!
Hope this helps, and if you weren't after comments then just ignore all of the above - I have a thick skin and will NOT be offended!

Cheers
Quercus

CYOF said:

STOP!

OK, time for some serious thinking and cut all the crap out.

Lost about 60 points on the YM today - will post details tomorrow as I may wipe all posts and start from scratch.

I am now committed to testing daytrading the YM live, with restrictions in place, but not as mentioned previously with 3 contracts.

Why, well take today for instance, if I was on 3 contracts the loss would have been 180 points.

We tend to forget at times - me especially - that you must first have the basics right before you can move on.

So, back to basics, and the first lesson, which I had to re-learn toady, is:

ALWAYS TRADE WITH THE TREND - NOT AGAINST IT

Regards,

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Don't wipe all your posts. Once you get to the point where everything starts to work out, you will have something to look back at. Once the pieces come to fall into place, you'll have something to reflect on. You have no idea of the stupid mistakes I've made in the past.

Just another thing: if you start trading live with the mindset "I have ... that I can afford to lose" the only thing sure too happen is that you're going to lose it. Been there, done that...
:|

CYOF said:

So, back to basics, and the first lesson, which I had to re-learn toady, is:

ALWAYS TRADE WITH THE TREND - NOT AGAINST IT

Regards,

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So, have you thought about how you're going to define "the trend".
Have you a plan about what to do when you can't find a clear trend?

CYOF said:

FW,

I recall looking at a technique in the past called One Time Framing.

OTF is used by non pit floor traders on the CME - using 30 min bar chart.

I will dig out the details as I have it in some course I purchased in the past from Larry Levin.

It may be worth trying with this approach - as it only requires one trade to determine if you are right or wrong - if my memory serves me correct.

It also has the added advantage that you need only check the chart after 3 x 30 min bars are completed - you then enter if the setup is right.

Any experience with this approach?

Regards,

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I'm sorry to say I haven't really heard of it.
But then again, there are much more experienced and knowledgeable traders around this forum than me... The things I looked at when I first started were VSA, candlestick analysis, PV analysis,...

CYOF said:

Very good points FW.
You are of course right - I will leave the posts, even though some are pure crap.

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You should see some of the things I wrote and did when I first started to give this business a shot.

CYOF said:

I see some major problems as follows:

1) I am trading using tools that are risky for the type of trades I am trying - will put up chart.
2) I am distracted at times - people in room talking to me.
3) I have not clearly identified when I should enter, where I should place my stop, and where the target exit may be - not too worried about the exit at the moment as the entries are the problem.
4) This is not the way I like to trade - my past trading was daytrading stocks with a sound method for entering, defining initial risk, and exiting.

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1) If you feel that way then I think you should change the tools that are available to you. Trading is risky enough already...
2) Distraction can be a hassle. I have to admit I don't really like having people around when I'm trading. Focus is everything.
3) Basically this seems to me is your problem. Without a clear definition of when to enter, when to exit, without knowing what to look for, without having some kind of plan defined before you start the day, you're bound to get yourself into trouble.
4) What was wrong with the stocks daytrading you did in the past? If you were profitable then, why don't use apply the same methods to whatever is it you're willing to trade and see how much adjustment they need. Or at least try to use the same principles you had at that time as you yourself say it was a "sound" method...

CYOF said:

The last few days were live testing with different charting layouts ranging from Bar, Candles, Lines and Tick, using various MA's to try and clearly identify entry points.

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It also looks to me as if you're changing things too quick without testing them long enough. Ok fine if what it is you're doing clearly doesn't work, but you can't tell after a day. It's a good thing exploring different styles and methods, but then you shouldn't be trading real money in that exploratory phase. Believe me, I did and yes you will lose money. Even if you say you can afford it, rest assured you will have ample opportunities to lose money.

CYOF said:

Oh, a very important point as per your last post -how I am going to identify the trend.
Good question - I have about 20 or 30 books that show me clearly how to do it - use different time frames, use candle formations, use this and use that.

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Then why not pick one out of that and focus on that?

CYOF said:

I think, and this may be 100% wrong of course, that I need to clearly define when to enter on a chart signal - let it be 123 bar setup, Candle DT/DB, S&R Levels as in Double T&B, etc.

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Sure, start with one setup and see how that goes.

CYOF said:

FW,

Very good feedback in relation to my long post.

I will add one thing - I am a firm believer in moving on quickly if things do not seem right. there is a good argument in that I am not allowing enough time to test the setup, but the fact is that it is my way of thinking that causes me to make the errors.

If I hit on the technique that suddenly works well, then that is the one to go with testing seriously over a set number of trades.

In other words, I am trying out all the usual stuff, which should work, but does not work due to the way the individual thinks. By suddenly recognising an approach that actually works - then you will have the confidence to move on to trading that approach seriously.

Some may call it Serendipidity - others may call it Stupidity.

The main thing is to learn from the errors and make adjustments - some errors will continue no matter what, and these are the ones that require the major shift in approach.

Lets see if what I say has any merit - I will try the One Time Framing and see if I am just doing the same thing again, or will the act of using a defined approach that I actually think has more to offer than the normal approaches actually make any difference.

Regards,

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Thanks and good luck in your next steps.
Each one must find out for him what he feels comfortable with. It's just that through this process you better papertrade instead of putting real money on the table. Because after all the struggles I've been through to get this thing headed in the right direction, I have a huge hole in my wallet to close first before. You don't want to do that to yourself, it can be frustrating to say the least.

I hope others will add comments on your progress and give some more feedback because most of the things I can tell of based on my own (limited) experience in the markets.