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Sim Trading vs. Cash Trading
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Sim Trading vs. Cash Trading

  #1 (permalink)
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Sim Trading vs. Cash Trading

I thought it would be interesting to share my thoughts on this, and to hear from others.

I believe sim trading is an excellent learning tool, but it also can lure you into a false sense of security.

By that, I mean that you can sim trade and do very well, but the moment you go to cash you start losing money. I think almost always this is not because the market changed, your broker is out to get you, or any of that.

No, it is because you probably threw most of your rules out the window within a few seconds of pressing the 'execute' button.

Why do you think this happens, and how can you overcome it?

Mike

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  #2 (permalink)
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Mike,

It has to do a lot with pressure. When you sim trade, you never put any pressure on yourself. You have nothing to loose. Your account can get down to zero. You can always reset it, and start all over again.

When you think of it. There is no difference between sim trading and live trading. Everything is equal. So the scenario changes in your mind. All of the sudden you're trading live, and the whole perception changes from you have nothing to loose, to you have everything to loose. It's like forcing yourself to do your best. Whenever you do that, you never get it right. You feel tense, and not relaxed.

You're welcoming stress into your moment. Did you knew that, stress is there in order to permiate life. It has to do with survival. And in order to understand it we have to journey back to the ancient human. Back then our reactions were pretty much about fleeing or fighting.

Whenever man, was facing a danger, he reacted in two ways. He either stayed and fought or got out of there. In both cases, the heart is starting to pump faster, and all the blood is directed to ones muscles in order to be able to permiate that process.
This allsow means that, your brain is not oxigenated as it should be, because of all the redirection of ones blod into ones muscles.

Today, we don't have to do that anymore the way they did it back then. But it still there, that process, that reaction and that outcome.
Stress is equal to fear. Whenever we get scared, all the blod is redirected avway from the brain.
Fear and trading goes a lot hand in hand. Have you ever thought why it is so easy to overtrade?

/George

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  #3 (permalink)
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For me, sim trading is not a good thing, except for testing automatic strategies, that's all.
Like George wrote it, in simulation, you just have nothing to loose.
Example: your money management rules says, for example, add x ES contract after a 3 points loss, until you reach the maximum loss defined by your rules, let's say, 30 points. After -30 pts, game over for the day, you close your positions, with -1500$.
In sim, quite easy.
In real, how do you feel after the -500$, -1000$, -1400$ ? Ok, your MM says stop at -1500, you stop. Two days later, the market is going against you again, you scale in. At -800$, you may think "sh.., it happens again, why should I wait -1500$ before stopping this nightmare ?". And you stop it at -800$. But if you followed your plan, at the end of the day, you might have +500 instead of -800...
Or maybe this happens only to me ? Not sure...

So, sim for autotrading, or for testing the last hotkeys you've configured on your trading software, but only for that.

George, your stress definition is the right one.

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  #4 (permalink)
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mind control

you have to force yourself to think of the sim money as real cash,i do this buy relaxing and telling myself your not trading sim its real money man so be responsible and follow your rules,and i trade and add the emotion in on purpose to make my mind think its real money and this seems to help.but even if you cant do that just get really good at sim trading i mean so good that you can do it with one eye open and then everything should be ok but its easier if you just pick one market and master it before you move to another. im still trading the same thing everyday and im scared to try another market because ive invested so much time and focus on the zn that i dont want to go thru the nitemare of learning another market...sam/sharky

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Market replay data

I consider sim trading as an important preparation for the real trading. As an idea, could anybody share market replay data collected at the end of each week? For some personal reasons I am not always manage to collect it from my IB connection, or collecting it only during trading hours 9:30-16:00, but for some indicators to work correctly 12-12 range is required.

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  #6 (permalink)
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record100,

Here is some market replay data I uploaded today that may be useful:
https://futures.io/ninjatrader/81-market-replay-data.html?highlight=market+replay

I will try to keep the thread updated.

Mike

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  #7 (permalink)
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Mike, thanks for sharing this topic. I have done this a lot and end up washing my cash account many times.

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  #8 (permalink)
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Hi there

When you trade Sim on NT, the buying/selling is really quick, does this mean I get no slippage in Sim, compared to real?

also does that mean when trading Sim isnt a true reflection of trading for real?

Thanks

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  #9 (permalink)
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tellytub View Post
Hi there

When you trade Sim on NT, the buying/selling is really quick, does this mean I get no slippage in Sim, compared to real?

also does that mean when trading Sim isnt a true reflection of trading for real?

Thanks

I started a thread a few months ago asking something similar. I'd hoped to be trading live by now, but...

When you went live

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  #10 (permalink)
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Sim is real


I back Sharky and others up.
for me Sim is real - at the end of a session or replay it's important that I am up - otherwise why do it?

The only difference is that the colours on my ChartTrader change colour!

As Sharky says you have to get to a point where executing the trade just becomes like blinking.
Also all thinking is suspended whilst in a trade - observe by all means but DO NOT alter your rules mid trade. Note it down take a screen shot and then at the end of the day (or following day even better) - review your trades and see if you still feel the same way.

If you find your observations are correct and profitable - then you change your plan.

The number of times I have wanted to 'save a certain loss' only to see the trade bounce right back and be great - countless. The only thing that has kept me sane are the rules that are written down.

Great exercise go over your day and note the planned entries and exits profits and compare with actual - you will find it's not the plan that is usually at fault :-)
I am sounding evangelical now - time for a glass of wine.

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