Why you shouldn't demo trade

Penny Picks

Member
67 6
Both sminicooper and Penny Picks have brought up some valid points and on the surface seems great......but:

@ Penny Picks

Many new wannabe traders will grab hold of patterns, as you've mentioned, triangles and 1,2,3 patterns etc. If I may give others advice that are reading (as I assume you already know this). 'They' do not work. It's you that make them work. Now this is obvious to the likes of you and me as we understand that it is us that makes the trade work or not, however, new comers think or believe or are simply on the understanding that they can see a pattern, trade it and make money. Like seeing money on the ground in the leaves, once seen, you simply bend down and pick up all that cash. But that ain't the truth.

Lee
Price patterns do work. That is if there are at least 3 indicators to qualify the price patterns. ie: 3 of the most common
  1. RSI
  2. Stochastics
  3. MACD
Divergence is a must do for the indicators to show you may have hit a winner
These work exceptionally well with the 123 pattern.
I also use the ADX +- DI indicators and the Adroon.

A 'Bull or Bear' flag usually follows a 123 pattern and is a big help in indicating where prices may go to after a break-out.:cool:
 

brewski1984

Senior member
2,025 343
Price patterns do work. That is if there are at least 3 indicators to qualify the price patterns. ie: 3 of the most common
  1. RSI
  2. Stochastics
  3. MACD
Divergence is a must do for the indicators to show you may have hit a winner
These work exceptionally well with the 123 pattern.
I also use the ADX +- DI indicators and the Adroon.

A 'Bull or Bear' flag usually follows a 123 pattern and is a big help in indicating where prices may go to after a break-out.:cool:
My bucket shop gives me all the indicators I could ever need and more. They spend millions on the latest technology to make sure that I have access to all the best technical analysis available, not only on my computer but also my phone so that I can sit in the pub trading. They offer me courses on how these indicators work and how the best way to utilise these are.

You do have to ask yourself why the hell would they do that if I could throw up a simple MACD and RSI and then start taking money out of their pockets?
 

Lee Shepherd

Senior member
2,164 570
I would disagree if you are trading a system that you haven't backtested. Trading live would be considered as foolish gambling.
If you have backtested the strategy for atleast 3 years and it shows a positive expectancy in the medium to long term then by all means start trading with a live account.
Morning wallstreetking,

Back testing over 3 years is simply too long. Markets and behaviour change over this period of time and is akin to getting in to a trend at the end before the bend. Hence why so many still lose money and on a regular basis. Also, the major problem with backtesting is that curve fitting is always prevalent.

Still, it's not about the system, algo, method or whatever. It's also not about MACD's or RSI's etc. It's about the player. Let me explain for those that do not know how simple trading really is:

Once you have created a system that consistently loses money, do the opposite (ie, short when it says long and long when it says short), and you will make money...... guaranteed. Why? Because if you find a system, robot or whatever someone wants to call it that loses money, by doing the opposite, you will make money and win instead of losing. Ok, so that's really obvious yes, so why do most actually pay no attention to this simple rule, or worse still, argue against it? Therefore making money in the markets is really that simple. But....... why does it not work or more to the point why does the 'trader' not make it work......well...... you'd have to ask them that, and they will only know from what their book and diary say's, that's if they bother to keep strict management of time and emotions.

PS: Apologies for my rant last night. I was p1ssed and pumped when I read the post and my mouth got ahead of my brain. Still, I stand by the original rant. Sometimes an F bomb (or several) can get the message across better than a long drawn out explanation. I hope you didn't take offence as none was intended.
PPS: I act the same face to face as I do on line, I'm no internet warrior. :) Peace and love.

Have a good day trading.

Lee
 
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skyknight

Newbie
6 0
Thank you for your sharing! I got a lot out of it!
 

new_trader

Legendary member
6,211 1,266
Everything is supply & demand

Morning wallstreetking,

Back testing over 3 years is simply too long. Markets and behaviour change over this period of time and is akin to getting in to a trend at the end before the bend. Hence why so many still lose money and on a regular basis. Also, the major problem with backtesting is that curve fitting is always prevalent.
(n)

The law of supply and demand never changes and its effect on a market can (and should!) be studied and observed as far back as there is available data for your chosen instrument. Markets go through phases, but the fundamental principle of supply and demand never changes. Once you understand how the law of supply and demand operates in your chosen instrument, you can apply the principle to any instrument your heart desires.
 

Lee Shepherd

Senior member
2,164 570
(n)

The law of supply and demand never changes and its effect on a market can (and should!) be studied and observed as far back as there is available data for your chosen instrument. Markets go through phases, but the fundamental principle of supply and demand never changes. Once you understand how the law of supply and demand operates in your chosen instrument, you can apply the principle to any instrument your heart desires.
Hey new_trader,

As a long standing member (since you joined in 2006), I will not argue with your methodology or point of view. I refuse to go head to head with someone who is a full time successful and profitable trader. I'm here to help the new ones look to succeed only - whichever path they choose or who they listen to.

My only advice to new comers is to listen to those with proven track records. The rest can be dismissed.

Lee
 

DionysusToast

Legendary member
5,963 1,498
I've edited your post with numbers corresponding to my answers for ease of reading for others.

1) Where I come from a professional is called a professional because they are just that. Someone is not called a professional just because they get paid to do it and you are using the term loosely which is disrespectful of those that are professionals.
Example: An amateur (see its even in the title) actor gets a paid job as an extra or even a one line pop up scene - that does not entitle them to put on their CV professional, and then there's the argument of how long that title stands for. If that's the case then I am a professional school boy, paper boy and kitchen porter.

2) I will not comment on a generalisation of people here as that would be presumptuous of me to do so. It's also inappropriate for you to state this as not all traders on here are 'more like interns'.

3) I cannot compare as I simply do not know the answer to this. However, I would never dare compare myself in anyway to that of a professional trader. As is stands I am a retail trader and for the benefits of HMRC (Tax revenue in UK), I am just a gambler. But again, this does not stop me from hanging around professional traders (for which I will be doing shortly and am due out to the clubs till the early morning - it's just gone 6pm here). Its good to note though, as much as I do not compare myself against the professionals, I do actually earn more than some of them. This still does not entitle me to the title professional. Although I do kick some f**king good trades.

4) You cannot 'reset' a real account - you have to put in more hard earned cash and by doing so, changes and hardens the person each time they do this. They will concentrate more, or in some cases not. I know of so many people trying for years and still burning money or 'making' (term used lightly like a gambler 'makes' money from the 1 time spin on a Friday night) insignificant money. You succeed or you go home. This ain't brain surgery.

5) See my other posts relating to this.

Lee
Some very convoluted responses.

The bottom line is pretty simple. Prop firms want interns to make money on demo first.

Then they put traders on live accounts if they do ok on demo.

Then they put traders back to demo if they slip up live.

Telling people to "just trade with real money" when they aren't ready is irresponsible.

OF COURSE trading live money is different... But intern doctors practice in SIM too - with a more experienced doctor looking over their shoulder having a say in when they are ready when to go it alone.

Demo. When ready, go live. If that goes badly, go back to demo.

Going from demo to live and back makes a lot more sense than your "never demo" mantra - which basically comes from your personal theory, not from any firm on planet earth.
 
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Penny Picks

Member
67 6
(n)

The law of supply and demand never changes and its effect on a market can (and should!) be studied and observed as far back as there is available data for your chosen instrument. Markets go through phases, but the fundamental principle of supply and demand never changes. Once you understand how the law of supply and demand operates in your chosen instrument, you can apply the principle to any instrument your heart desires.
It's a very good principal if you are a long term trader or a fund manager, in theory. However, the average trader doesn't have deep pockets or thinks long term.

There are "Thousands", if not more, stocks to trade. Most traders view trading as a psychological game; I think this market is going up. Never mind that the market is in the ""BEAR" mode. The trader believes the "BULLS" are going to take over the market; that's "psychology" in play.

Me? I'm in it for the short haul. Get the most money possible in the shortest time. What the world is doing that effects the markets doesn't get that much attention from me. My indicators give me the "Short Hand" version of what is going on in the markets.

IE: At the end of a down trend the Bears try to keep control, or the Bulls try to take control. That's a 123 up pattern in play. That's when I get in the game. (y)
 

DionysusToast

Legendary member
5,963 1,498
(n)

The law of supply and demand never changes and its effect on a market can (and should!) be studied and observed as far back as there is available data for your chosen instrument. Markets go through phases, but the fundamental principle of supply and demand never changes. Once you understand how the law of supply and demand operates in your chosen instrument, you can apply the principle to any instrument your heart desires.
Stocks have finite supply (the float). Even so - that rarely impacts price. There's always stocks that have a supply problem at any specific point in time but supply never impacts all stocks.

So yes, some stocks have supply issues. Not all.

Futures have infinite supply. How can understanding supply and demand in a stock (finite supply), help you with supply and demand in a futures market(infinite supply)?

Wide sweeping statements like yours should be explained, lest they be passed off as some twot trying to sound clever like... :cheesy:
 

new_trader

Legendary member
6,211 1,266
Everything is supply & demand

Yes, that’s right. The law of supply & demand is always at work, from small daily movements to weekly, monthly and yearly movements.(y)
 

DionysusToast

Legendary member
5,963 1,498
Yes, that’s right. The law of supply & demand is always at work, from small daily movements to weekly, monthly and yearly movements.(y)
It is speculation that makes the markets move.

The law of supply and demand is an economics term that does not in any way explain or pre-empt moves in the market.

Speculation on the other hand does an outstanding job.
 

hscot

Member
74 3
I don't agree with the point that demo account is needless. One the one hand, it's useful because when you open a real account right away, it will lead to the money drain. On the other hand, to trade on a demo account for 3 years, as it's suggested here, is silly. It's better to use a cent account instead, to start trading with real money.
 

Kaeso

Established member
836 91
It is speculation that makes the markets move.

The law of supply and demand is an economics term that does not in any way explain or pre-empt moves in the market.

Speculation on the other hand does an outstanding job.
it does have a real meaning in trading as well:

buying demand at market
supply of sellers at this price

shortage of supply makes the market move...
 

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