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My suggestion for an approach: Use the paper trading account as long as you develop your system and have found confidence.
Then start trading with real money - but start with very small trades. You will find out that it makes a difference.
When you are successful trading with a very small amount, double the size of your trades for a while.
And so on. Build on your success - and in case you fail, go back to smaller amounts. Be aware that many systems work for a while under certain circumstances, and then fail for a while.
When you show a consistent, profitable trading record. Make sure you record every trade you take on sim, with some notes as needed, and review them regularly. You need to be on top of why/when/where you enter and same for your exits at your profit targets or stop loss levels. In summary, when you are comfortable trading successfully on sim, it is time to start trading live with very small size - then, gradually and systematically, increase your positions.
I strongly disagree with this. Very few people are going to have robotic or no emotions. Humans are emotional creatures, ignore this at your peril. If you keep telling yourself to not have emotions or to act like a robot you will fail over and over. You need to recognize your emotions and deal with them, let them pass - be okay with them. The key is to recognize your emotions and make a conscious decision to not act on them.
My advice is to stay on sim for as long as you're defining your strategy and determining your edge. You cannot look at the last X weeks/months because market conditions change over time. You need to backtest during different market periods to understand how your strategy will or won't perform over different market cycles. Sim trading is capital preservation while figuring out what you're going to do and how your going to do it when you actually live trade.
As has been said, live trading is vastly different than sim trading from an emotional standpoint. Depending on your platform, you will also get different (worse) fills. This may or may not matter. If you're trading ES/MES on a 30 minute timeframe or similar then losing a tick here or there isn't going to be a big deal. If you're trading YM/MYM on a 15 second timeframe or similar then it's going to be a big deal.
Move to live trading as soon as you have determined that you have an edge. The quicker you move to live trading, the sooner you'll be able to start addressing the emotional side of the trading challenge.
I believe I did a webinar on this very topic. Having backed many traders in prop and seeing how traders progress through brokerage, I feel like there is a typical pattern. The key element is to ask yourself whether or not you are truly doing "the work" to trade right. Quitting when you have given 150% in terms of effort, process and execution is one thing. Quitting because you aren't making money and are burned out or have blown up (not necessarily in your case) is entirely another thing, in my opinion.
I'm not sure if this video or not, but this may be helpful:
Risk Disclaimer: Trading Futures is not suitable for all investors. Past Performance is not indicative of future results.
If you have any questions about the products or services provided, please send me a Private Message or use the futures.io " Ask Me Anything" thread
This is obviously an individual thing. But I have to say that I regret going live to quickly. I took loses that hurt me long term. I would not have made them had I known then what I know now. It is not a simply question of time. In my view you should fully understand and have confidence in the trading methods and systems you are using. This would include risk and money management.
Sometimes though paper trading can be a waste after a certain amount of time. I think trading live with small amounts is better. The lessons you learn from mistakes will still sting. But you can limit the amount of pain.
My only regrets about going live quickly were:
1) trading too many markets that I didn't understand instead of focusing on one.
2) taking too much risk right at the beginning. The micros were not available until about 6 months after I started so those early losses were bigger than they should have been and have led to confidence issues that I've been sorting out.
My takeaway from this experience was to trade small, develop a consistent daily process, and strive for consistency before considering scaling up in size or adding additional markets.
@FuturesTrader71 would you ever back prop traders again or is it too much risk/liability?
After being profitable on SIM, you can move to Micro contracts that will give you a better picture of your profitability and to understand how you enter the queue for execution
Forget what other traders do. You are not them. Gauge your own confidence, abilities and enjoyment. Then ask yourself if at this time if you are at ease with jumping in the water with the sharks.
Will you be ok with losing? How much? Learn how to lose.
One thing is for sure, you will answer your own question when you go live.
There always seem to be unending questions: "What do I think? How do I think?".
As we (I) interact with the market, we (I) find that it is a great educator. It's a great disciplinarian. It toughens us. It teaches us to "GROW UP". We surely to benefit.... If we don't give up.
I'm going to offer another perspective. Trading on sim for a long time can hurt and help you at this same time. This ultimately depends on what sort of person you are. I can only speak from my perspective. I finally answer the question at the end.
How it helps you:
Athletes practice most in a non stressful environment. Professional athletes do not train more real games than they do practice ones. Because while practicing they are crafting their skill until it becomes muscle memory and this is where it starts to pay off. It is possible to practice so much that when it's "game time" it feels like another practice run. I'm a nurse and I remember when training for my board exam I practiced so many questions and simulated exams that by the time I sat down to take the exam that gives me my license it literally felt like just another practice session. I passed the test on my first try with the minimum question requirement. I felt no stress before, during, or after the exam and I feel that was because I practiced hundreds of questions EVERY SINGLE DAY.
Now in the case of trading. You can practice your strategy and setup so many times on Sim that once you go live it feels like your Sim trading. It helps reduce the emotions and produces confidence. Now this is where it can also hurt you
How it hurts you:
Doesn't matter how much an athlete practices. If he practices wrong he will fail in real games. There's a difference between a basketball player who practices a strategy and anticipates his opponents moves in a structured manner than a basketball player who is just throwing the ball up at the hoop all over the court; not even practicing his ball handling skills. Yes, the ladder player is putting in the time but he is not deliberately practicing.
So if you're on Sim and you just throw trades around trying to see what sticks then you are hurting yourself. Because you will do the same thing live. You will not have confidence and now the negative emotions that accompany a bad trader will take over.
Here's what you should do:
Don't just practice. But practice deliberately. Look up how to do deliberate practice if you're unfamiliar with this term. Backrest your strategy. Journal what you notice (market condition, catalysts etc). Journal your trades AND your emotions. Why did the trade succeed? Why did it fail? Even if you don't place trades you are still practicing. Simply just sit on your hands and watch the market. Anticipate moves and observe what drives it. Placing a trade can cause a bias and skew your learning.. This was actually hard for me even on sim. If I felt the market was going to go up I would click the buy button because I didn't want to miss out. I WAS SIM TRADING. This helped me realize that I was trading impulsively and for ego.
So I say this long post just to say that you are ready to go live when you have deliberately practiced your strategy with a good understanding of market conditions so much that even when you trade live it still feels like sim in the sense that you now have
brain- muscle memory and confidence. Long post but hope that helps.
