who should I give my hard earned to?

[trendie]

I have re-read it - and my post does not contadict yours !!

I agreed with you with "Paper-trading is a start. but only a start".

But if trading is 80% psycho - then paper-trading gives you only the easy 20% bit.
The difficult bit is trading with real money.

I ma actually agreeing with oyu, merely putting the paper-trading into context.

Please re-re-read.

 

[trendie]

if trading is 90% psycho - then paper-trading is the easy 10% bit.

Please re-re-re-read.

 

[wisestguy]

BC's original point was : papertrading is not worthless . I happen to agree , nothing more nothing less .

 

[stevet]

paper trading for a beginner for a week or so is probably a necessity - but after that - money on the line is the only way to learn

using paper trading to evaluate results of specific methodoligies is only something a succesful trader can do - a learner can only use paper trading to get an understanding of the absolute basics

 

[BeanCounter]

BC's original point was : papertrading is not worthless . I happen to agree , nothing more nothing less .

It does seem to be sneered @ by those above: either that or the reasoning that a lack of confidence would trigger a short term move back into paper trading. But, I cant get my head around why any form of testing would be a bad thing under any circumstances. TA is concerned with the analysis of historic data with the objective of predicting future movements to achieve a profitable trading outcome. And paper-trading tests hypothesis.

Maybe its because I havent yet experienced the physcological issues referred to. Ive lost more money in pensions, ISA's and other forms of "investment" than I have done in trading: and I genuinely dont see any correlation between the sums involved and the decision making process, so for me pulling the trigger just does not come into it (especially since I use the standard 1/2% of capital risk on every trade). For me, using this rule, it doesnt matter whether your risking nothing (ie a paper trade), £30 or £30,000: its still 1/2% and it boils down to the stength of the TA. But I suppose that is an individual viewpoint rather than the norm.

 

[BeanCounter]

using paper trading to evaluate results of specific methodoligies is only something a succesful trader can do - a learner can only use paper trading to get an understanding of the absolute basics

Why? I just cant seem to get my head around the reasoning

Are you saying that a beginner would not be able to assess the results of any testing / correctly interpret the results into a meaningful conclusion? If so, that boils down to the strength of the TA: which is one of the principle reasons for testing in the first place.

 

[stevet]

a beginner is not able to evaluate the use of TA in relation to trading successfully and a beginner is not able to evaluate the results of paper trading

only through having money on the line with real trades can a beginner start to learn about trading successfully and then once they can trade at least to some degree successfully with a methodology that works ( probably a year or so to get here) , they can then correctly go on to use paper trading to evaluate further methodologies

 

[Pippppin]

Test, Test, Test

BeanCounter

I think your strategy is very sensible. A successful marketer always "tests, tests, tests". Trading is no different.

Once you have properly quantified your strategy over a long enough period of time, you will then know +/- x% how successful you are likely to be, assuming you do not allow other factors (eg. emotions) to override your strategy once you are trading for real.

Far better to test, test test until you are comfortable enough, and most importantly, preserve your capital.

If you lose half of your trading capital quickly, you will need to make a 100% return on the remaining capital to get back to where you started. Try telling a professional fund manager that they have to make a 100% return on capital this year, and wait for their response.

Test, test, test

 

[Zenda]

Test Test Test - Action - Then the markets move 180 degrees in the opposite direction - Ask the majority of traders!

 

[BBB]

a beginner is not able to evaluate the use of TA in relation to trading successfully and a beginner is not able to evaluate the results of paper trading

only through having money on the line with real trades can a beginner start to learn about trading successfully and then once they can trade at least to some degree successfully with a methodology that works ( probably a year or so to get here) , they can then correctly go on to use paper trading to evaluate further methodologies

Hey newbies, Id listen up to what this guy has to say if I were you.

As someone pointed out earlier, trading is 90% psychological, especially if trading without an automated system. Therefore, your emotions and attitude to risk alter when its real money, not that paper stuff, or spread betting for 1p a point or whatever meaningless ways newbies like to waste their time with.

If I were you guys, I'd try and grow some balls, put some real money on the line and see how you act then. I bet you it will different to how you were acting to when you were playing around on simulators, monopoly broker.com etc.

Be lucky.

 

[stevet]

beginners believe that testing is the key - and they normally develp this theory after trying to trade and losing - and therefore grasp for something

the fact is that you neven lose - you are merely given a chance to learn

paper trading is just wasting your time if you are learning - and at the same time - you dont start as a professional trades

professionals are trading with large size ( a lot of money on the table) on each trade -but as a beginner - you learn by trading for the minimum amount and then use each loss as a way to learn how to find the right route to trade

 

[Zenda]

BBB is the Man!!!

Hey newbies, Id listen up to what this guy has to say if I were you.

As someone pointed out earlier, trading is 90% psychological, especially if trading without an automated system. Therefore, your emotions and attitude to risk alter when its real money, not that paper stuff, or spread betting for 1p a point or whatever meaningless ways newbies like to waste their time with.

If I were you guys, I'd try and grow some balls, put some real money on the line and see how you act then. I bet you it will different to how you were acting to when you were playing around on simulators, monopoly broker.com etc.

Be lucky.

Your the man BBB - but I bet they won't learn? they are mostly newbie theorists not wishing to spend a dime - the chances they will risk £10 per point is as good as Margaret Thatcher becomimg Prime Minister Again - Sorry just couldn't resist it - it's the Devil in me - from a trader!! P.S. once you have traded Real money - you cannot possibly go back to "Paper Trading" those expounding different theories have never traded properly - my opinion (which really does not matter)

 

[Pippppin]

Grow some balls...?

Grow some balls...? Newbie theorists?

Not quite true... My first trade was over 8 years ago... I started trading futures... and I started by selling a Natural Gas contract.

It is not balls you need.......but a sound trading methodology...... most people who think they can trade the markets soon lose their accounts..... hence spreadbetting companies

 

[stevet]

it is not possibe to learn to trade without losing more than you win - its a fact of life - but the key is to learn why you lost - over time, gradually start to break even and then with more time - start raking in the bucks

you can paper trade till the cows come home - but you wont learn a thing about trading until you have bucks on the line - so paper trade all you want - but you are just treading water and putting off your trading career, until you start putting real money on that table

and definetly - dont start by trading any commodity product - or for that matter ever - unless you have some real powerfull inside line on it

 

[anley]

Go to a few courses (although not the expensive ones), buy a few books, read up on the web etc but as someone else said also get trading with small money.

Open an account with Finspreads and deposit a few hundred, then play around on the markets risking £5-£10 a trade (not a point) - You'll learn a lot by doing that and even more from the mistakes that you make.

 

[Pippppin]

Commodities

Natural Gas.... Microsoft.......... The pound against the dollar

If there is an excess of buying pressure, the price will rise. If there is an excess of selling pressure, the price will fall. Whatever is being bought or sold

Commodities are where it all started........................................

 

[stevet]

the skill sets for trading Natural gas, Microsoft or the pound against the dollar are completly different

experinded traders in one rarely cross the line except for some fun or for pairs trading strategies - but real rare

and spreadbetting is only for experienced traders as it is another level of difficulty on top of futures trading

the advantage of the low bet level may seem attractive - but people who give up due to losses with spreadbetting - may well have gone onto success had they moved quickly to futures when they had at least some understanding

better to make few trades - but really figure out what went wrong - than to spreadbet small amounts which add over time to al lot and then you dont learn because the odds are so stacked against you in spreadbetting

be careful of courses - since you will end up learning from someone who did not succeed themselves - the same is true of books - but they are cheap and you do need to get your head round terminology

 

[sidinuk]

I can't see any point in 'paper trading' what are you going to learn from it that you haven't already learnt from backtesting? You have backtested your method of course?

Backtesting, in my view, is essential. You need to know that your idea has at least made money in the past. The only way to know it makes money in the future is to trade it. Paper trading is exactly the same as backtesting, it tells you nothing that you don't already know, all your doing is extending your backtest period.

You learn far more when you actually start trading a system. Say you devise a fantastic system for gbp/usd globex futures which relies on entering a trade at 6am and closing it at 11pm. Great results in the backtest but when you trade it you find that the slippage is way more than you anticipated. Paper trading couldn't tell you that, only real trading. How about the wild swings in forex around economic announcements? on paper you can handle that no problem, in reality even with just 1 contract, losing $1000 in 30 seconds might freak you out slightly.

For each of my systems I compare each days actual traded results to the theoretical results that I obtain by using the exact same mechanical method that I used for backtesting. Only then do you know whether reality can match theory. If there is a big difference between the two then your backtest results are completely false - start again. Of course, systems are always evolving as more and more data (each day) becomes available.

 

[wisestguy]

paper trading for a beginner for a week or so is probably a necessity - but after that - money on the line is the only way to learn

that is hardly worthless then is it ?

 

[wisestguy]

BC ,

To me , Paper trading for begginers before doing it for real is a good idea .

bottom line : you have nothing to lose and something to gain . sounds very sensible to me.

people who say " it ain't worth anything unless you got some cash on the line " , are also heard saying
" no pain no gain or big risk / big reward " etc .

Personally , I feel this reveals their true instincts in the markets and that is as Gamblers not traders , they do not want nothing / limited amount to lose and something to gain . What they really want is a LOT TO LOSE A LOT TO GAIN .

Because it's the THRILL of the ride , the adrenaline rush as the market swing takes him to the brink of bankruptcy and then up again into the profit and then back down again, that he craves. Big Risk Takers , IOW Gamblers.

Of course why would these kinds of " trader " waste time on something like PT , even when they don't even know their price spreads from their jam spreads .

what's the point when all you want is to dive into the nearest bet . test ? test what ?

" I got gut feel man , winner take all ! "

no that's not for me .

My ex boss actually gave me one of those quotes , and I nearly threw up all over him , especially when I found out that he had never even traded before . Soon after I left and soon afterthat they went bust.

Like I said gambling begets booms and then ..... bust .


And I do agree to a large extent about effect ( of lack of ) that changes in the sum of money should have on your trading method. if it fails then , that is due to the method and not the amount of $ involved , though I have to caveat that , in that the larger the amounts , other technical and psychological factors will distort ones method to some degree.