Paper trading is widely discussed regarding its merits, and whether it is of value to a sellers as they try to make the adaptation to a real income sellers. One viewpoint is that since paper trading is not real, the gains are meaningless, and are binomo no indication of a real income earning. An opposite viewpoint would state that paper trading is an important step up the trader’s learning advancement, and regardless of whether it is real, if the sellers cannot ‘properly’ paper trade, then they do not be able to a real income trade.
I began trading in early 1995, with the hopes of becoming an options sellers; my first trading education was by using an oex options teaching service. Besides options training, the service included ‘tape’ reading, trade management AND sp500 listing futures trading — also included in the service was the prevalent attitude that paper trading was for ‘sissies’.
So i was a new sellers, trying to learn and understand completely new concepts and ideas — what was called a trading method AND I was ‘practicing’ with a real income — because paper trading was for ‘sissies’. What did I accomplish, besides a big draw down in my account? I quickly introduced to trading mindsets and the related risks — something else I also knew nothing about. Losing money and a trading mindsets ‘wreck’, both from the losses and thoughts like I was too ‘stupid’ to ever learn how to trade, became a combination which took me out of futures trading, and then unfortunately carried over into my options trading i always had previously been doing well with. We couldn’t take it any more — I had to somehow start all over, or just quit for good.
Paper Trading Views
Consider: simulator fill prices are not real and won’t be attainable with a real income. Even if this is correct, is it really an issue unless the sellers expects to be a scalper, trading for microscopic profits, and thus each break is critical? Granted, but shouldn’t a beginning sellers be very selective, focusing on learning their method and the ‘best’ setups that method provides? This would be my viewpoint, and in this capacity paper trading fill prices are no problem.
Consider: the trades are usually now being done with no risk. No, there isn’t any financial risk in paper trading, but I actually haven’t met nearly as many profitable paper traders in concert might expect. Why would this become the case if being able to trade without risk was this easy thing to do? As well, notice speedier self-esteem risk, and an attitude like — how can i be so bad that can’t even paper trade? The risk feelings like these are probably greater than that of financial risk, and if they should surface, you would want to encounter them before trading a real income. As well, even if the issue was only one of financial risk — wouldn’t you want to choose the confidence of knowing that which you were paper trading profitable? It would be hard to imagine a losing paper trading being able to viably trade a real income.
Consider: there is no experiencing involved with paper trading. I was in our chat room watching a paper sellers post their trades in order for me to give them feedback, and I pointed out that one of their specific plan setups is not done. When i asked why, the sellers laughed and said that they were ahead during the day and didn’t want to risk those profits. But the profits aren’t real — how can you not take a ‘base’ method setup when paper trading — isn’t that the point? Would you be in agreement, that if paper trading profits could be viewed in this fashion, that it has the capacity to become very real and thus emotional to the sellers? I recommend that this is related to paper trading really not being ‘so easy’, and as mentioned above, self-esteem risk can be very emotional.
Besides examples like this, emotions can be added to the paper trading process. Throw away your simulator, and then go into a chat room and post all of your trades — no ‘youknowwhating’ around where you wait to see if the trade was profitable before you post it, like a number of traders that have seen. What’s the attachment site, and when you consider the underlying risks of ‘needing’ to do this — the issue certainly isn’t about whether paper trading is of value or not, but certainly best to find out before trading a real income. You must post immediately and without lag, giving your direction and entry price, along with subsequent posts of any somewhat profits, and of course your exit, which ultimately is the determinant of whether the trade was profitable. There is no need to make any comments, or answer any questions relating to your trades — simply post the particulars as fast and real-time as possible And see if you feel any emotions doing this in front of the other countries in the room while you go through a series of losses. Do you wish to add even more emotions? Feel the same posting process, but do so where all of those other room actually knows the procedure that you are trading, and what the trades ‘should’ be. You will quickly find out the correct way emotional paper trading can be — actually a very valuable exercise for the paper sellers to do.
Paper Trading And Making it Further Beneficial
I have two prevalent problems with paper trading, but this is with the trader’s approach, and not with paper trading by definition: (1) the sellers does ‘things’ paper trading that they would-could not do with a real income (2) the sellers views paper trading earning, instead of paper trading talents, as the guideline of whether or not they are ready to begin trading a real income.
I have seen too many paper traders, continuously and knowingly, over trade ‘non-plan’ trades, with trading size that is greater than they could pay the border for in a real account — besides accept the risk of loss, while also holding trades for risk amounts that they would not accept with a real income. Viewing paper trading as a ‘step’ in the learning advancement and adaptation to a real income trading, it’s vital that the paper sellers only trades exactly what, and how they would trade with a real income. Do not let yourself to turn paper trading into a game, supposedly because there is no risk — the risk of making bad habits that you can’t correct is tremendous, and will prevent any attempt to trade a real income. It is now time to learn YOUR basic trading setups, and make necessary adjustments to them and your entry-exit timing, in order to then make money trading them — this is not the time to turn your simulator into a pinball machine flipping at any ball that comes in your area.
There is a problem with focusing on trading earning -vs- trading talents. To begin with, earning places the focus on money instead of on plan. And what is earning — if you take 10 trades and make $75 are you profitable? Technically, if you are net ahead you are profitable, but what if those same 10 trades had a potential of $1, 500, and you only made $75 — are you really profitable? Precisely what I am referring to when i think of trading talents. Instead of focusing on the common metrics, such as win: loss or win size: loss size ratios, I am most concerned with the win size: potential win size relation, and want to maximize this percentage to the extent that is possible.
For instance, when a sellers asks about adding trading size, taking the attitude that if they can make $100 trading 3 contracts, they likely can make $1, 000 by trading 30 contracts, the first thing I ask them is what is their talents relation — why increase contract size and the identical trading risk, if you ‘should’ be able to make more money from smaller size? This is especially important for the paper sellers, where they should not regard simple earning as an indication of readiness to trade a real income, but consider talents — for instance, begin trading a real income when you are 60-70 percent proficient with your paper trades.
So what Is your Viewpoint Regarding Paper Trading?
I never thought that would ever make a dime trading, besides be able to trade for a living or get involved with trying to teach others to trade — was this merely a function of starting over and paper trading? Granted that is too bare-bones, however, I do know that it would have certainly changed the beginnings that had, while very much shortening my learning competition, and reducing a lot of pain.
Clearly, I am on the ‘side’ that believes that paper trading is not only beneficial, but that paper trading is also necessary — however the value received will be dependent upon the trader’s approach and attitude. Needless to say, paper trading as described is something that I have always strongly recommended.