Should You Be Paper-Trading?

[TradeCamp]

It seems a lot of people new to trading explore the use of paper-trading and demo accounts. My personal take is that paper-trading eliminates a key element of trading success - EMOTION.

Unless you're trading with your own actual money you'll just be playing with a trading simulator, this isn't going to help your trading education.

What do the more experienced members of the forum think? I'd be interested to hear people's views.

______________________
TradeCamp - No 'bs' Trading Education

 

[Mr. Charts]

If you paper trade you can't lose money, but no emotion so it's unreal.
BUT, if you paper trade and can't make "pretend" money there is no way you will make real money if you trade live. Result - no loss.
If you paper trade and make "pretend" money (assuming you do it honestly and don't kid yourself) then there is a chance you MIGHT make money for real in live trading - but no guarantee because of emotion.
So, can't make money with no emotion = can't make money for real, so don't risk real money
Can make money with no emotion = MIGHT make money for real
Richard

 

[TradeCamp]

If you paper trade and can't make "pretend" money there is no way you will make real money

Wise words!

 

[NetTecture]

THere are two reasons to trade on sim.

One: get accustomed to a platform. All the coolness will not help if you make technical mistakes. So, with a new software, a couple of days to a week are a must, EVEN for experienced traders. Same like pilots get used to a new plane model before real flying.

Second: proove that you can at least make money THERE. As said before - no wins in sim, no chance for wins in real.

 

[crxrc]

To familiarise yourself with trading software is a valid reason. Beyond that there is maybe only limited use as you would start again when trading real money. However if you approach a simulator correctly, like if you are in company with others and there is the peer group pressure to take it seriously and not disgrace yourself then it can give you most aspects of live trading. It really depends on how seriously you take it.
Also there is a difference between a demo account, if the price you have a limit order at trades then you are instantly filled, and a real time sim, Where your limit order is actually queued as in real money situation.
For a simulation to help beyond familiarisation there must be an 'emotional cost component' it must cost you something to lose. The only non monetary loss is probably peer group judgment,

 

[CookinFlatSix]

Any practice is better than no practice!

 

[crxrc]

Fair enough though the original point is that demo account trading might make one complacent as there are no emotions involved.

 

[CookinFlatSix]

Demo accounts are a step up from paper trading.

 

[NetTecture]

Yes. Also a demo account may be used to try out ideas. I acutally switch over from live to sim regularly to try out setups. A good sim, btw., does not give you instant filles but statistical fills (I.e. a touch may not be filled for a limit order). In my case (ninja trader) I find the sim to be alittle more conservative than the market

 

[A Dashing Blade]

. . . My personal take is that paper-trading eliminates a key element of trading success - EMOTION.

Unless you're trading with your own actual money you'll just be playing with a trading simulator, this isn't going to help your trading education.

What do the more experienced members of the forum think? I'd be interested to hear people's views.

Agree 100%. Any trading when you're starting out should be done with a meaningful amaount of money ie money you can comfortably afford to lose but would prefer not to.

Bottom line . . . 80% of trading revolves around emotional control, the need for this comes from the fact that you're playing with real money.

 

[tenbobtrader]

Train hard Fight easy

 

[tenbobtrader]

think if you are emotionally stable and have approached trading from the start in responsible way, you do not intend trading scared money etc

its the same

many I think come unstuck when profitable on demo or with small stakes

move live / jump up in stakes

then they attempt the cherry pick there own method approach to make more out of trading opportunities than their method indicates is possible

demanding the market pays to order

miss miss miss miss !!!

emotion up ......... ! ###

THE END


huge value imho, you should have the discipline to return to it later if required

you have a benchmark to measure personal performance from

 

[TradeCamp]

I don't personally have much regard for demo accounts either. How many traders here deposit 50k into their trading account to start with? Even if they can, the emotional difference between a fictional 50k and 50k of your children's inheritance is HUGE.

 

[TradeCamp]

80% of trading revolves around emotional control, the need for this comes from the fact that you're playing with real money.

This is so key. In fact, this unlocks another secret of trading. People often ask why people who can teach you about the markets, don't just go and trade for themselves. Emotion is the answer, they may logically and rationally know what to do, but when their own money is on the line, their emotional approach sets them back.

 

[A Dashing Blade]

This is so key. In fact, this unlocks another secret of trading. People often ask why people who can teach you about the markets, don't just go and trade for themselves. Emotion is the answer, they may logically and rationally know what to do, but when their own money is on the line, their emotional approach sets them back.

Which, to slightly go off at a tangent, I don't belive that a successful mentor should, neccessarily have been a successful trader.

 

[mama99ai]

Reason for paper trading

My reason for wanting to paper trade is that I am an equity trader by profession. Hence, I am restricted from trading equities on my own account in my current job. I am of course allowed to build a paper track record for future use which is what I am aiming to do.

Can any of you recommend a paper trading site / vendor which allow you to trade European equities as well, not just US equities? Or can you direct me to a post on this page where I can read more please?

 

[TradeCamp]

My reason for wanting to paper trade is that I am an equity trader by profession. Hence, I am restricted from trading equities on my own account in my current job. I am of course allowed to build a paper track record for future use which is what I am aiming to do.

Can any of you recommend a paper trading site / vendor which allow you to trade European equities as well, not just US equities? Or can you direct me to a post on this page where I can read more please?

Can't your own employer offer you a demo account? I'm not sure where you're based, and depending on what type of product you want to use (i.e. futures, CFDs, Spread Trading) but there are a number of providers that offer demo account with a wide range of equities. Try IG Markets or CMC Markets.

 

[montmorencyt2w]

Which, to slightly go off at a tangent, I don't belive that a successful mentor should, neccessarily have been a successful trader.

An analogy here could be star classical musicians.

As well as practising hard every day, I think they still have teachers, and voice coaches, etc, who may never themselves have been "stars" (although they will have usually been professional musicians).

Teaching is something of a gift, and if you have it, you should use it.
Not all star musicians or star traders may have that gift.

 

[mama99ai]

Paper trading system

Can't your own employer offer you a demo account? I'm not sure where you're based, and depending on what type of product you want to use (i.e. futures, CFDs, Spread Trading) but there are a number of providers that offer demo account with a wide range of equities. Try IG Markets or CMC Markets.

Thanks... I don't like setting up a demo account in my employer's system. It could so easily lead to a lot of questions from compliance etc.... I have had a look at what both can offer. IG Markets offered the most markets, but you were only allowed to have a demo account for 14 days - then it was deleted. CMC markets don't offer enough markets. I will have a look at what some of their competitors can offer, but I was hoping someone had experience with a pure sim trading application for mainly European equities which they could recommend.

 

[TradeCamp]

Thanks... I don't like setting up a demo account in my employer's system. It could so easily lead to a lot of questions from compliance etc.... I have had a look at what both can offer. IG Markets offered the most markets, but you were only allowed to have a demo account for 14 days - then it was deleted. CMC markets don't offer enough markets. I will have a look at what some of their competitors can offer, but I was hoping someone had experience with a pure sim trading application for mainly European equities which they could recommend.

Fair enough, I'm sure there must be a decent service out there, another provider you might try is SpreadCo, I know they offer a demo acccount but they are not a SIM. In any case good luck!