For 'short term' trading, consider working with longer time frames, ETF's and smaller positions, with 'bigger' stops, willing to hold overnight .... until you get your sea legs or, just as an ongoing trading style. Use 'significant' support and resistance areas -- as shown by price on hourly/daily charts -- as buy and sell points.
Also consider spending lots of time -- while you patiently wait for the short term trades to develop -- looking for stocks that might be 'ten baggers', taking extremely small positions in them after id'ing, then buying and holding .....
Afraid? Yes, of course, how not be but... Is the real, real?
I heard some days ago someone speaking about simulation trading and the need to do trading in real. That is the same that I always thought because one time you have your system that seems to work it is nonsense to continue in simulation, what are you expecting in this way?
But, I have to be realistic and explain something that I saw and I don't understand yet but has a heavy weight before to make the decision of coming back to "real": Why is so different simulation and real market? Why something what is supposed is your training works so differently depending of one or another way, so different that changes everything?
I would like to give an example about what I mean:
I work with limit orders and when I set my order in the market at the same time I set my stop and my target order automatically. I move, maybe, in this moment this target further or closer depending supports, resistances or others technical aspects, but after I don't move this position because following the theory my target order is in the queue as an execution order and I don't want to lose this position, logical? Suppose so.
But it seems that it is not absolutely true, because I had the luck to see something really strange working in real, something that I had never seen before in simulation and I cannot take off my mind: I saw how in my target price there were around 800 contract (MiniSP), so I could be the last but if after appear more contracts in the same price we do have to suppose that they will be executed after my order. But not... In this moment I had a volume bar chart with 500 contracts in each bar and when the price touched my position I could see how only after six bars this was closed, more than 3.000 contracts... It was in a moment of high volatility but what happens when there is no so high volatility? Easy: You can see your position touched one and other time and continuing open, something that we know well.
The opportunity for seeing something like this was very funny and I know that is a very extreme example, but more than something that amazed me it gave me a new confirmation about some bad feelings that I had before, because before this experience I have felt that something wrong happened in the real, the stops are immediately executed, as the theory say, but the limit orders seem to exist in a different order, another space, having a very, very long life, maybe there is latency for the limit orders and not for the stops? (Of course you have the option of a direct order, but as you know the price that you receive is always the worst, and that is no the matter about what I speak now).
Thinking about what I have seen I ask: What more things in the real happen that you cannot see or understand but are hurting you?
You can learn different systems, capital management, techniques, grow for overcoming the "psicotrading" but, are the markets really fair with us or there are something under the carpet that could not be handled, something thought for doing very hard to win in this game if you are not a big shot...?
Further the psicotrading and others really is the same to work in simulation or in real or really when you change this aspect there are more things changing that you cannot control, things that do not depend on you, your knowledge, your training, your abilities, your skills...?
Last edited by bpr17; April 15th, 2012 at 10:18 AM.
I think demo trading is good to warm up the brain before trading real money (especially as scalper).
Also, if you execute like you would do it real, sizing and riskwise, you train yourself and so get more confidence in your workflow/system. I think this is important to get rid of the anxiety that buit up in real trading.
Also demo practice helps you to watch yourself in thinking and emotions and learn to cope with it.
Stops are executed market at the wanted or worse available price, limits are executed fifo at the exact price, like you said.
When somebody accepts a smaller price (and fills the orderbook with lower limits than yours, some iceberg order or algo executing market at lower price) then your limit will not be filled, the move is exhausted. You would also have had the possibility to decrease your limit or close market if you see price not going further. I think Ninjatrader has a very realistic demo executionn wise.
Last edited by CFuture; May 31st, 2012 at 10:10 AM.
Reason: added NT demo comment
You think very well, "NT has a very realistic demo execution" is absolutely true, but a very strange execution in real too...
I mean (and in addition to the written before): I have received a NT in basic version for free, as my broker promised to me before to open my account, but this NT is too far to have a "realistic execution". I can understand that things like strategies or other could not be included, but the basic version is so basic that really is nearly dangerous, especially because there are something really strange on other things: I am used to set the orders with "limit orders" just one tick above (short) or below (long) the price with the ask or bid option. With the demo the "noise" permits that in the 80% ore more of these orders are taken, but in the "real version" (basic) is just the opposite, less than the 20%. Maybe the latency...? Maybe but...
On the other hand, I do can say that there are other differences that I cannot understand, e.g.: I have traded with two different PC, the best with the NT in real account (RNT), the worst with the NT demo account (DNT) at the same time and both with a simplified version of W7 (without Aero and others). In the RNT when the one minute chart has finished the minute is normal that there is a time in which the platform stops, and after you can see that the clock starting maybe in 52 seconds, but also in 34... Not always, but a lot of times, and almost 30 seconds without information... But the DNT in the other PC with the same Workspace and all exactly all the same the platform doesn't stop... How is possible? When you have to work in real this is frightening. Again the latency...?
It is very easy to blame always the same thing, too easy, because I am speaking about two computers with the same network and the same platform, the unique difference is that one is in demo (with all the features) and the other is in real (with the minimum of services). I'm not a computer programmer, but by experience and computer literacy I think that there are more things that are different in the RNT and the DNT, not only some features that doesn't work, I don't know where or in what, but these things are always against us, no in our favor.
I am waiting for more than TWO WEEKS (no bad) that my broker give me another platform that he promised to give me, it seems that this platform set the orders directly in the data-feed, if at the end I can have this platform I will to say you if it was the latency, but I have my doubts seeing the other issues.
Last but not least... My experience says that it is very difficult to win in the trading not only for our awkwardness, but also for all these things that muddy the work, ┐could you imagine that your car stops each minute or the speedometer jumps a few miles to the other like in a quantum leap...? ┐The petroleum latency...?:tape: By my experience we are not only working against our own problems, lack of knowledge or the market, and it is something that does not worries me, I know so well that anyone never created the trading thinking we could earn money... The trading is something that some people created for earning our money and we are fighting against their rules and games, and I think that the shame is that there are more business behind the trading that in the trading, and the people that is supposed that have to help you don't do this too often... I mean: Brokers, courses sellers, notices agencies, data-feed, etc, etc.... All these people want your money but... Are they fair? In too many cases I am not so sure (for this reason I am in futures.io (formerly BMT), here there are some different people) .
Afraid to trade? Of course, how not?
P.S.: If someone is thinking to suggest that I buy the Standard Edition thanks, but my money management says that I have to try other things before to expend money in something that I don't feel reliable, because if on the contrary the Standard Edition works different in real that the Basic that gave me my broker that would be something that, if it could be true, was criminal.
Revisiting this thread in almost a year later, and I believe the solution to this thread is: don't do discretionary trading. It's subject to human errors, biases, emotions, imperfect memory and rationalizations, which a computer is not. In theory, most (any?) discretionary trading systems can be programmed then backtested. And many strategies which are breakeven or slightly losing can be perceived to be winning, as they may be in the green for 6 months until finally revealing their true value.