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MDS37RB

Great on Paper - Not with Real Money

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Loads of people seem to knock sim trading, but I think it is essential to get everything down as much as possible before going live. Maybe its a mindset thing, but when trading sim in the past I treated it as a live account 100%. If you have thoughts during a bad trade of "I can just reset" or "oh well, a bad trade, never mind" then you are not trading sim properly. sim trading is not just about execution, it should be psychological training as well.

 

Firstly you say that you are ok in sim. Do you mean that your are in profit? that's not entirely relevant. Have you analyzed your performance correctly. Are you are in profit because you've had a few big winners? how many trades have you had? what's your average loss / winner? biggest winner vs biggest loser? risk reward ratio? win rate? what's your sharpe ratio? mae? mfe? etc. Ultimately what is your expectancy number. You must know your number.

 

If you know the answers for all of these. That you know your set ups inside out. That there is no ambiguity when taking a trade. That you review your journal and create actionable items for your strengths and weaknesses. That you are clear of purpose and confident in ability, then perhaps it's a psychological hurdle.

 

You can try and emulate pressure of a live account in sim. I assume you journal. Make your sim trades public. Even now as a full time live trader I tweet what I'm doing throughout my trading session and I use a twitter hash tag to collate all my entries for the day, which I use to journal. You don't have to use twitter, create a thread on a forum and post all your thoughts, trades etc.

You can also try and video your trades using something like camtasia. watch them back during post-analysis. You will get many "What was I thinking?!" moments. In early stages this is normal as live trading and hindsight are out of sync due to lack of intuition. Experience helps to make you "see" clearer in real time.

Basically you need to find any method that will make you feel accountable, sim or not.

 

I'm not sure 8 months is enough time to become an intuitive trader, which is absolutely necessary to become consistently profitable. Similar to learning how to drive. In the beginning you really have to concentrate to be in control of the steering wheel, indicators, gears, brakes...and then after a few years you can drive somewhere and when you get there you don't really remember the act of driving. You were on auto-pilot. Becoming an intuitive trader is only achieved by putting the hours in, recognizing and correcting your mistakes, enhancing your strengths, increasing humility and reducing ego. The less anxiety you feel, the closer you are to the end goal.

 

Once I went live that was it. I'm not sure I could go ever go back to sim. However I would think that if I ever had to, I would revisit sim with a live trading mindset. No messing around. Not sure if there are any traders on here who have done just that. If so, maybe they could offer on a perspective of how they treated sim first time around, before live trading and then how they viewed sim after trading live.

 

Not sure if what I have offered helps you at all, but good luck!

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You have GOT to be kidding right? Ever get into a CL trade and find yourself on the wrong side of a spike against you 50 - 100 ticks? Happens often in CL - NEVER in ES.

 

Or SILVER the most lethal ball buster of them all.

 

Maybe you got them reversed?

 

Sorry, I've been trading CL for over 10 years and I've never experienced those 50 to 100 ticks spikes those of you that trade time based charts experience. I strictly use volume based charting.

 

That being said, in the last 12 years I've seen spikes in the ES as well, on time based charts, though not the range that the CL generates. Time based charts are a problem on there own due to news and other events creating unmanageable volume spikes in the market.

 

I've attached a couple charts for comparison. The first is a 5 minute chart that shows how a Crude report creates a nasty spike after its release. You can also see on the 5 minute chart that open to close there was no discernible difference in price. The second chart is the same day but is show using a constant volume based chart. No spikes just a steady smooth flow of readable momentum. Same range but a more safe and readable area for extracting profit.

5aa711d0da663_MarchCrude02-29-125MinuteChart.thumb.png.c03cccce2de309bfb07454bc1f07eb57.png

5aa711d0e2121_CLJ2987022912.thumb.png.ebf01391b4d24e140718b4334db6af73.png

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Sorry, I've been trading CL for over 10 years and I've never experienced those 50 to 100 ticks spikes those of you that trade time based charts experience....

 

Don't get me wrong. I am NOT saying that CL is not a great tradable instrument, But to suggest that it is "safer" than the emini's is, in my opinion, ludicrous.

 

I use a 4-6 tick stop successfully ES risking $50 - $75 per contract. In CL .. basically anybody who trade sit will agree that you need a min 10 and most likely 15 min tick stop risking $150 per contract.

 

If it were safer it would carry a lot smaller margin - but the margin is at least DOUBLE the ES. I guess the orginal poster I was replying to figures that the CME doesn't know how to set margin - or why?

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Don't get me wrong. I am NOT saying that CL is not a great tradable instrument, But to suggest that it is "safer" than the emini's is, in my opinion, ludicrous.

 

I use a 4-6 tick stop successfully ES risking $50 - $75 per contract. In CL .. basically anybody who trade sit will agree that you need a min 10 and most likely 15 min tick stop risking $150 per contract.

 

If it were safer it would carry a lot smaller margin - but the margin is at least DOUBLE the ES. I guess the orginal poster I was replying to figures that the CME doesn't know how to set margin - or why?

 

In my environment, volume based charting, CL provides us a better win rate, less draw down, larger daily range, tighter stop placement (3 to 5 ticks) and more profit per trade than any of the Indices. To us, these equate to a safer trading environment.

 

I can see if you are trading the ES using time charts and the parameters you listed, then that is best for you but not everyone.

 

There are plenty of markets to trade and all kinds of systems and methods. This is what makes this such a great business.

 

Me, a data scientist, researcher and trader with going on 20 years of precise experience of charting and earning a living in this environment (with no experience in chemical engineering) telling JM Eagle how to improve their manufacturing of plastic pipes . . . now that is ludicrous. ;-)

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You have GOT to be kidding right? Ever get into a CL trade and find yourself on the wrong side of a spike against you 50 - 100 ticks? Happens often in CL - NEVER in ES.

 

Or SILVER the most lethal ball buster of them all.

 

Maybe you got them reversed?

 

Oil spikes, and there is slippage, but I have never experienced more than 8-10 ticks even during the volatile days of the arab spring (good times).

 

Silver got me good for about 15 ticks and that was the last time I traded it. I don't know if there are bigger in silver. F silver.

 

The spikes you see do have bids and offers occurring so you won't find yourself without a bid or offer in 50 to 100 ticks of either. Is that what you mean?

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Great on Paper - Not with Real Money

 

2 Ways to cure it:

- make your trading more mechanic so that it's not up to your feelings how much to trade and when to exit but it's up to your method, developed and backtested and which you trust.

- as a (long time ago) great trader suggested, a good idea is to NEVER trade virtual money, it's so different than real money that it actually has no value. I don't completely agree but if you have some extra money to lose it can be tried.

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Great on Paper - Not with Real Money

 

2 Ways to cure it:

- make your trading more mechanic so that it's not up to your feelings how much to trade and when to exit but it's up to your method, developed and backtested and which you trust.

- as a (long time ago) great trader suggested, a good idea is to NEVER trade virtual money, it's so different than real money that it actually has no value. I don't completely agree but if you have some extra money to lose it can be tried.

 

Ah, the long time ago great trader again. Another long time ago great trader said that anybody who puts down real money without having the least idea whether or not his strategy -- if any -- holds water could save himself a lot of time by putting all his money into a big pile and setting it on fire.

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If you’re really going to embody - > “Be more prepared than the challenges you will face” then sim has EXTREMELY limited benefits.

Get real… BEFORE the markets force you to get real...

 

For all but a few, sim = how to train yourself to be a non survivor.

 

Before you have developed genuine resilience and toughness, sim is ‘undertraining’.

After you have developed some resilience and toughness, then sim has a viable, but still limited, function.

 

jmo... not expecting to change the minds of the 80% pack that disagrees ... but maybe help one trader move out of the pack... and get real

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More Get Real (which 78.6% will find a way to disagree with...)

 

... as a (long time ago) great trader suggested, a good idea is to NEVER trade virtual money, it's so different than real money that it actually has no value. .

 

re: that “(long time ago) great trader”

With broad strokes - instead of lingering with you to discuss the pro’s and con’s of real vs sim, I’d bet that “(long time ago) great trader” was quickly getting ready to steer the conversation context back to proper capitalization and sizing when developing (and testing) a method or strategy …

Said another way, sim will never come close to the compensation for undercapitalization that the big pack of losers come in wishing it would be.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

...

 

 

 

 

 

Yes, you would probably be better off not putting all your money into a big pile and setting it on fire.

And just as true - for all but a few - if you have a need to ‘ease yourself in’ to this game via pretend, you would probably be better off not trying out at all…

 

 

 

 

 

...

 

 

Re: developing viable” strategies” .

Build it dry, then get it wet

Yes ... It can be done, but it’s best not to try to build a boat while already going down the river …

Yes... It can be done, but it’s also best not to develop “the least idea” of a strategy that “holds water (in or out)” (and evolve beyond basic prototypes) from ‘in(side)' live stream charts.

 

Once designed and prototyped, then find out if what you have developed and built 'floats' (or not) in the real world, not in a simulator.

And, note, most subsequent and significant improvements on your designs will unfold from experiences in ‘real water’ not from fkn algorquations or sim tunnels/chambers/modules. See How a Boat-Plane Hybrid Shattered the Sound Barrier of Sailing | Autopia | Wired.com for a ‘physics’ example. (and btw, don’t get sidetracked in ‘the realm of form’ here … yes...trading is not physics, yada yada – ie what we’re talking about here is the manifestation of ideas.)

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I didn't post very often in the past few months (in fact I didn't post at all eheheheh).

Btw, just my two cents: go mechanical, 100% mechanical, and possibly stay out of reach of your keyboard. If you feel tempted of changing every parameter you just included in your strategy, let the machine do all the work and stay away.

(of course this will expose you to many other risks, like bad executions, software/power failure and so on... but this is another story).

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OP - you can read over and over, many posters telling you to have a rules based system. It IS REQUIRED. You have trading rules that are objective, possibly programmable, then you can verify or disprove that your approach is mathematically profitable. Once you know your Win Rate and Reward to Risk numbers over 100 trades (generally, more is better, dep. on your system random periods tested over time is better) - you can run Monte Carlos to see that you have a good chance of making money with those numbers or not..

 

That part is 'having an edge'

 

You can STILL have the problems you described even when you have an edge! Its in your head ---- THE ONE THING UNMENTIONED THUS FAR IS REVIEW ---

Reviewing your actual trades and comparing this with your rules can reveal, especially when starting out or returning after a break, that you may have thought you were following your system when in fact your behavior was ... something else. Its crazy and illuminating - we can know what to do and do something else (and feel like we were doing the thing we were supposed to)... or something like that. Anyway - Review your trades, make sure they line up with your rules based approach. Get a rules based approach if you don't have one.

Peace

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OP - you can read over and over, many posters telling you to have a rules based system. It IS REQUIRED. You have trading rules that are objective, possibly programmable, then you can verify or disprove that your approach is mathematically profitable. Once you know your Win Rate and Reward to Risk numbers over 100 trades (generally, more is better, dep. on your system random periods tested over time is better) - you can run Monte Carlos to see that you have a good chance of making money with those numbers or not..

 

That part is 'having an edge'

 

You can STILL have the problems you described even when you have an edge! Its in your head ---- THE ONE THING UNMENTIONED THUS FAR IS REVIEW ---

Reviewing your actual trades and comparing this with your rules can reveal, especially when starting out or returning after a break, that you may have thought you were following your system when in fact your behavior was ... something else. Its crazy and illuminating - we can know what to do and do something else (and feel like we were doing the thing we were supposed to)... or something like that. Anyway - Review your trades, make sure they line up with your rules based approach. Get a rules based approach if you don't have one.

Peace

 

Since the OP has made only one post, and that was six months ago, we are all most likely just talking to ourselves. But his central problem is contained in this sentence: " I learned a price action method for day trading the e-minis a few weeks ago." If one buys or borrows or steals somebody else's system, he will either quickly or eventually have problems. If he doesn't develop the system (or method or whatever) himself, he won't completely trust it. If he doesn't trust it, he will second-guess it, he won't take the signals, he will wander off into the weeds and into blind alleys. Typically he will complain that the system "doesn't work". And then he'll move on to another system that he had no part in developing. And another. And another.

 

How does one develop his own system? The Trading Journal (more).

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