Simulators VS real trading

Hectormu7 · 04-02-2008, 09:06 PM

Hi David,
I've been studying, reading and paper trading as much as I can before opening an account to begin with real trading.
Your videos on youtube have been really helpful, thanks a lot for sharing.
And one of the things I've heard is that a lot of people do much better in the simulators than with a real platform, someone told me it's because the market in the S&P E-minis will always take aproximately one quarter point and also because of the commissions.
Is that true about the quarter point an why?
Thanks a lot.
Hector

David Waring · 04-02-2008, 11:23 PM

Hi Hectormu7,

Welcome to the community and thank you for your comments I am glad you like the videos and these are good questions you have asked.

I think in general no matter what market people trade they will almost always do better in paper trading than they will in real trading. There are in my opinion two reasons for this.

The first is that slippage, or the difference in the price where you click to enter a trade and the price where you are actually executed exists in real trading but not in paper trading. Here is article that gives a more in depth explanation of slippage.

The second and more important reason however is that psychology plays a huge role in the success or failure of a trader and when trading with paper money, you remove many of the psychological elements that are the downfall of so many traders.

It is for this reason that many people recommend trading live with small amounts of money shortly after you have your strategy down and understand the order entry techniques so you can bring that extra psychological element into the picture and start learning to deal with it with small money on the line before trading bigger money.

If you are interested in learning more about the psychology of trading see module 5 of the free InformedTrades.com video trading course and our trading psychology section of the site.

There is also a good article on why it is difficult to make the switch from paper to real trading here.

If anyone else has any input on this one please feel free to leave it in the comments section below.

Best Regards,
Dave

04-02-2008, 09:06 PM	#1 (permalink)
Hectormu7 Status: Junior Member Join Date: Apr 2008 Posts: 5 InformedPoints: 0	Simulators VS real trading Hi David, I've been studying, reading and paper trading as much as I can before opening an account to begin with real trading. Your videos on youtube have been really helpful, thanks a lot for sharing. And one of the things I've heard is that a lot of people do much better in the simulators than with a real platform, someone told me it's because the market in the S&P E-minis will always take aproximately one quarter point and also because of the commissions. Is that true about the quarter point an why? Thanks a lot. Hector Share This \| Last edited by Hectormu7; 04-02-2008 at 09:25 PM. Reason: misspelling

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04-02-2008, 11:23 PM	#2 (permalink)
David Waring Status: Community Host Join Date: Nov 2007 Location: Miami, FL Posts: 5,580 InformedPoints: 816 Blog Entries: 34	Hi Hectormu7, Welcome to the community and thank you for your comments I am glad you like the videos and these are good questions you have asked. I think in general no matter what market people trade they will almost always do better in paper trading than they will in real trading. There are in my opinion two reasons for this. The first is that slippage, or the difference in the price where you click to enter a trade and the price where you are actually executed exists in real trading but not in paper trading. Here is article that gives a more in depth explanation of slippage. The second and more important reason however is that psychology plays a huge role in the success or failure of a trader and when trading with paper money, you remove many of the psychological elements that are the downfall of so many traders. It is for this reason that many people recommend trading live with small amounts of money shortly after you have your strategy down and understand the order entry techniques so you can bring that extra psychological element into the picture and start learning to deal with it with small money on the line before trading bigger money. If you are interested in learning more about the psychology of trading see module 5 of the free InformedTrades.com video trading course and our trading psychology section of the site. There is also a good article on why it is difficult to make the switch from paper to real trading here. If anyone else has any input on this one please feel free to leave it in the comments section below. Best Regards, Dave