Alright, I have had enough of TOS's taking my money. I understand that it is a normal thing for traders alike, but I feel as though I have been flagged as a "take this guy's money" trader every time my order is executed.
I have traded options all my life up until a few months ago when I started on the S&P Mini (/ES on TOS). Each day with 1 contract I would make upwards of $1,500 ON *PAPER TRADE*. It was not until about a week ago that I had started trading with real money that I found that no matter what I was doing, I would lose money.
I used the same methods that would gain money on paper trade, on real trading, and would ultimately lose a few hundred. While I can see how that may not be a lot, I have not gained ANY profit through the futures. Not to mention, each time I trade with real money, I lose a few hundred (at least).
Then it hit me; is there a difference between paper and real trading?
SO! I set up real trading on one monitor, and paper trading on the other monitor and put in the SAME order on both monitors. Both were executed at the same exact time, but while my paper trade account was gaining hundreds (in profit I might add), my real account was losing the same amount.
The charts were the same on both monitors but I feel as though I am missing a significant difference between the two trading options (paper and real). Could anyone shed some light on this situation?
One thing that can matter is that fills are never the same in real life as they are in simulation.
Some platforms attempt more realistic simulated fills than perhaps others, and I don't know about TOS on that score. But if your sim trades always have your entries filled exactly where you want and expect them, and your exits the same, you may have a shock with fills in the real market. Expect a tick of slippage, and sometime more, especially in fast-moving markets and definitely in thin markets. This is because your orders are going to get matched wherever there are opposite unmatched orders, which may not be where you would like or expect. Also, your order is in a queue, and orders ahead of you may get the good matches first. You can't know exactly where your fill will be.
If your strategy takes fairly short-term trades, where the expected profits are perhaps a few ticks, then slippage can and will hurt you.
You are by no means the first one to find this out.
The general idea of how to fix this is to stop trading sim (paper) once you have learned the basics, because it teaches you to expect things that often don't happen. I also have no idea about the quality of fills on TOS -- perhaps someone else can chime in -- but I wouldn't expect that to be that big an issue, with trades being routed to the exchange. I would expect there to be differences, potentially, between real and paper trades, though.
Last edited by bobwest; February 29th, 2016 at 10:04 AM.
Of course, I was thinking more of market orders. Limit orders may not be filled at all, if the available market orders at your price are all matched and your limit did not get a match. But then price would just go on without you. I assume that is not your problem.
Then I would say that there may be a different issue with the TOS simulation. If you look at the differences between the two sets of trades, you may be able to see what is going on.
There is still always a difference between real and simulation: one isn't real.
If the differences between the two sets of trades is due to fill differences, whatever the cause, then your basic issue is that you can't lean too heavily on sim results.
Someone else may have more TOS experience and may be able to add more.
If you are trading with paper money using the TOS platform, all limit orders are filled on touch. When you trade with real money, as opposed to paper money, most of your orders will need to move through a given price in order to fill your limit. This, likely, is what accounts for the big discrepancy between the paper results and actual results. Commissions are a little on the high side at TOS and there are better data feed options. There are positives as well - not limited to but definitely including access to a wide range of market internals, end of day sweeps to interest bearing accounts, ACH money transfer, etc. In general, paper trading is useful to learn the platform but then you'll need some skin in the game to keep learning. Go slow and think for yourself. Good luck.
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I had forgotten the TOS data issues. I think it shows up in tick charts; I'm not sure about time charts, but maybe even there if they don't update the bar with complete data. I recall that TOS gets its tick data in bundled form -- that is, not really all the ticks (trades), which means the charts (tick charts, anyway) can never be completely trusted -- although the issues do tend to be small, they are real. (I used TOS years ago, and this may not be up to date now.) Also, I do remember that sometimes there were data lags, which would mean that your charts would not really show current prices. On the whole, I can't say I had big problems, but I noticed them.
Both your sim and your real charts would then have the same inaccuracies, but when the order went to the exchange, it would be filled at the current real price, not the chart price.
I do not know if any of this would be enough of an issue to explain the problem, but it could contribute. So could problems with the paper trading simulation fills just being wrong.
To the best of my knowledge, there is not a "one size fits all" when it comes to picking your broker. The 2 criteria most important for me are 1) fast, reliable execution and 2) low commission / fee rates. There are literally dozens of other factors, including clearing firm, financial stability, products offered, inactivity fees, hardware infrastructure, geographic proximity, customer support.... In other words, based on the information I have, I'm not qualified to recommend one broker over another. The great thing about this forum is that you can get lots of input based on exactly the criteria that is most important to you. Good luck.
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I do notice on ToS, paper trading's TS is about 1s faster than live trading's TS. I did verify by switching computers to one another on a slow day. Both of them are direct connect to the same router.
Since I've resigned to the fact that I shouldn't rely on speed, all of my entries, stop losses & exits are all predetermined w/ minor adjustments here & there. And I only use paper trading to get used to w/ their platform, back test etc...