Demo trading vs Live trading

[TheBramble]

So you believe that a traders recipe strategy book is good with only one recipe. So you are master of one setup .. does that make you a successful trader?

Uh?

I said the same absolute risk per trade regardless of setup – not limit your setups.

When on an airplane what is more important to know how to take off or to know how to land ... or to know how to handle an unpredicted emergency ... I would not suggest to any trader just to have one trading strategy ... markets change constantly so do conditions .. you mastered your 1st strategy .. it becomes boring .. stable .. why not use the free time while trading .. to develope a new strategy .. or you are going to wait and see that your strategy no longer works and only then go out to test a new one??? As for the 75% only automated trading has a 100% rate on following rules .. I would like to see statistics on manual trading with 100% rule following ratio...

I’m going to leave this thread to you now as I have absolutely no idea what you’re talking about anymore.

 

[GammaJammer]

I’ve never grasped this issue GJ. If I were an SB (I assume that’s who we’re talking about) and operating the business model they do (very good one), I’d be delighted to have mug punters try and scalp. It’s tough enough to do so with pro rates and feeds so I reckon damned near impossible using an SB platform.

What would scare me a little would be the consistently successful big-hitters which although few and far between and who appear to be taken out by other means anyway would be the only real danger to my aim of eventually capturing all my clients’ money.

On a tight enough set of spreads, without re-quotes, it would be a piece of p*ss. Just pick a cross that has been priced artificially tight (gbp/jpy is often a good example). Then wait for stops to get triggered in one of the legs (i.e. cable or usdjpy in this case). The key is how tight they price the cross. What people here call 'scalping' is basically a form of latency arbitrage as far as I can tell. People are trying to profit from ultra short term moves, basically by 'picking off' prices that shouldn't be there.

Now I know the arguments that go along the lines of 'my broker should happily stand by all the prices they make - if they don't want me hitting their price they shouldn't publish it'. These are all well and good, but here is a very important thing that none of these scalpers seem to mention when they bleat out this mantra......

(it merits a post of it's own I think)........

 

[TheBramble]

But you’d need a pro quality setup in terms of multiple ultra-fast feeds and execution facilities to have any chance of hitting the numbers. I’d be surprised if your average mug punter (who I thought you were talking about) gets anywhere close to pulling this off.

 

[-oo0(GoldTrader)]

markets change constantly so do conditions

1. No one can predict the future.
2. All things change.
3. You do not know the unknowable risks.

will never make anybody a good trader. Newbs should go straight to live trading.

When your system works, you can trade on a shoestring and accumulate quite a pile.

Doesn’t matter what the setup. If you’ve calculated your pips/points to stop loss form entry – that’s your risk. You risk the same absolute amount every trade.

That is not your risk. You do not risk the same amount in each trade.

so most new traders start their journey into trading with this advice and believe they are on the right track

Is that how most new traders start

Skills development is a more proper way to define this first objective .. this is the first rule broken by new traders ..

oh!

Applying fixed % 'rules' means that two traders who are equally inexperienced will take different risks purely on the basis of their trading capital available.

??

on fixed absolute value related to trading capital.. this is true on the context of the total amount of trading capital on the account .. but not as a fixed rule when entering a trade

This 1% stuff is a bunch of baloney. These rules were made to restrain ivy league college kids from blowing their family’s fortunes speculating.

When we trade with our own funds seeking financial independence, double or triple required margin is plenty. If you have so little faith in what you are doing that you leave 80% of your capital unused, you might want to consider another game.

I am saying that there is a propensity for traders to behave differently when they are paper trading to when they are live trading.

Real trading certainly feels differently.

You should trade an amount that discourages you from taking reckless trades but at the same time, not so much that it creates fear and hesitation in execution.

You got this where, Jessie Livermore or Stanly Kroll?

The amount of money at risk should never be a determinant in whether to take a trade or not.

The amount of money I risk is always a factor in wheather I take the trade or not.

but no matter how small you are trading,, your emotions will still come into play when real money is on the line .. the worst you do is completely blow out your .. account it's still a cheap lesson learned.

Tuition

You should trade an amount that discourages you from taking reckless trades but at the same time, not so much that it creates fear and hesitation in execution. "Without faith in his own judgment no man can go very far in this game."

Or any game.

Best way .. go live in a small way.

Shoestring should be enough!

The more you act like an adult,

You talk like an Adult is a good thing! Child like innocence might be better off.

Don't forget if after all your efforts you still can't make money in a demo account you are absolutely not going to make any by going live.

You never know!

It can use many "dishonest tricks" such as surge of spread, bad delay and many others.

Did I hear the word slippage?

You will have gradually upped the risk from a fraction of 1% to a full 1% per trade during your proving period on the demo account.

If you are only trading with 1%, where did you get the money to trade at all. When you trade on a shoestring after a short time all the capital comes from winnings.

When you’re confident in your system, your style, your timeframe and all the other factors that need to be solidly in place before venturing out with real funds,

Then the real world will change.

one is not using real money therefore it is easier to handle the risk.

Paper trading is upside down trading. If your paper position loses, you gain because you did not risk real capital. When your paper trade wins, you lose because you did not trade with real capital.

 

[new_trader]

1. No one can predict the future.
2. All things change.
3. You do not know the unknowable risks. When your system works, you can trade on a shoestring and accumulate quite a pile. That is not your risk. You do not risk the same amount in each trade. Is that how most new traders startoh! ?? This 1% stuff is a bunch of baloney. These rules were made to restrain ivy league college kids from blowing their family’s fortunes speculating.

When we trade with our own funds seeking financial independence, double or triple required margin is plenty. If you have so little faith in what you are doing that you leave 80% of your capital unused, you might want to consider another game. Real trading certainly feels differently.
You got this where, Jessie Livermore or Stanly Kroll? The amount of money I risk is always a factor in wheather I take the trade or not.
TuitionOr any game.
Shoestring should be enough! You talk like an Adult is a good thing! Child like innocence might be better off.
You never know! Did I hear the word slippage?If you are only trading with 1%, where did you get the money to trade at all. When you trade on a shoestring after a short time all the capital comes from winnings. Then the real world will change.
Paper trading is upside down trading. If your paper position loses, you gain because you did not risk real capital. When your paper trade wins, you lose because you did not trade with real capital.

Shoestring should be enough...

I will give the CME a shoestring so that I can open a trade on the ES contract.

 

[new_trader]

This forum gets worse everyday...

 

[TheBramble]

If you are only trading with 1%, where did you get the money to trade at all. When you trade on a shoestring after a short time all the capital comes from winnings. Then the real world will change.

I think you may be confusing relatively small percentages with account size. Even on a demo account with the ubiquitous $100K starting capital, a 1% risk represents $1000 per trade. And even on a 1:1 system |(with appropriate W:L of course) that’s a net profit of $1000 per profitable trade, or more importantly, 1% of your trading account.

Of course, the reward will be a function of position size which is itself a function of the delta on the stoploss to entry levels. $1000 risked on a winning trade with a 100pip stoploss will yield only 1/5th of the profits of the same absolute risk with a 20pip stoploss. Which is why the skill (patience?) to pick those trades that most favour your profitability and most effectively leverage your capital is a tremendously important one to develop.

It’s important not to confuse % risked with potential absolute profit which is, as I say, I direct function of your stop size.

 

[new_trader]

1. No one can predict the future.

With study and practice you can make fairly accurate stock market forecasts...I suppose you've not bothered.

2. All things change.

No, they don't.

Another lesson that I learned early is that there is nothing new in Wall Street. There can't be because speculation is as old as the hills. What ever happens in the Stock Market today has happened before and will happen again.

Now, I got that from Jesse Livermore, a trader who definitely knew what is what.

3. You do not know the unknowable risks.

Price goes against you, trade with a STOP...obvious isn't it?

 

[-oo0(GoldTrader)]

Slippage

Price goes against you, trade with a STOP...obvious isn't it?

Your stop is not your risk.

 

[-oo0(GoldTrader)]

Rom

On a trade with $500 margins, running, double margins $1,00.00 gain is 100%. That is 100% of the trading account.

a 1% risk represents $1000 per trade. And even on a 1:1 system .. that’s a net profit of $1000 per profitable trade, or more importantly, 1% of your trading account.

 

[new_trader]

[F new roman] Your stop is not your risk.[/FONT]

Go outside and look up....see any asteroids??? :-0


UNSUBSCRIBED!

 

[Alex411]

You risk confusing trading on a demo account at a broker or whatever with demo trading. This could be done on paper if you want (trick if you're doing this though is to accurately simulate pricing that is available to you.

And as for brokers changing the rules on you, if they're doing that it usually means you're p*ssing about (i.e. 'scalping' as retail traders like to call it, or 'sniping' as it is labelled within the bookies). If you treat the bookie as you would want to be treated in their position you will find that there are some out there that will not abuse this. The more you act like an adult, the more your live trading conditions will resemble your demo ones. And that way you don't have to whinge all the time either. So you'll be a happier, more well adjusted human being. Surely this a far better way to live your life.

p.s. please explain to me why 'surge of spread' is dishonest. I am a little bit confused, but you seem very certain so I'm sure you will have some compelling reason to share with the class.

GJ

Of course I understand that brokers must change conditions of trading for their own profit and market circumstances while. But I think that the brokers must provide the SAME rules for live and demo. I'm not against broker I am for the honest trade.

I'm not exactly understand why trading rules are differ...

 

[-oo0(GoldTrader)]

Rules

Alex if you were creating a simulation?

brokers must provide the SAME rules for live and demo. ..

How would you simulate:

1. Your trading activity’s impact
2. Slippage
3. Your emotions of a position without risking anything?

I'm not exactly understand why trading rules are differ...

Jesse Livermore gave the first explanation almost a hundred years ago when he found the difference between trading in bucket shops and on an actual exchange.

 

[NetTecture]

Hm

To simulate:

1: not relevant. Assuming simulation is a handfull of contracts, then impact will be neglegible. Simulating a 100 million account is nice, but unrealistic - traders should simulate what they will later start trading.
2: easy. Tick chart, take worst of next x ticks meeting the size, or 4xsize combined volume. This is possibly a LOT worse than what you will get realistically
3: you dont have to. I mean, simulation is not perfect. But - if one can not win there, without emotions, how can one win in real? Simulation is only preparation, but still something worth pursuing.

The livermoore reference is irrelevant given that at that time... there was a HUGH time delay. A proper simulation can delay orders by 1-2 seconds and be pretty realistic. Bucket shows hardy had proper l2 information to actually simulate real trades.

 

[-oo0(GoldTrader)]

First steps

Nice going NetTecture

1. Your trading activity’s impact
2. Slippage
3. Your emotions

Ok I can see that.

1: impact will be neglegible
2: take worst
3: Simulation is only preparation

But in all cases I have to go with what Jazzidee pointed out.

Demo accounts are for seasoned traders who wants to test a new trading strategy. :idea:

Paper trading is for experianced traders testing a trading strategy not for newbies taking first steps.